Amongst the current economic upheaval caused by the pandemic, the idea of a universal basic income has become a hot topic. But, some fear that giving people money would encourage them to loaf about instead of becoming productive members of society.
The former mayor of Stockton in California put this to the test. Michael Tubbs created the Stockton Economic Empowerment Demonstration (SEED), which gave 125 residents $500 each month. He found that the program reduced unemployment.
Tubbs told Insider, "My belief in it came from being raised by three amazing women, including my single mom […] The issue wasn't that they couldn't manage money. The issue was they never had enough money to manage."
This insight was echoed by participants in the program. "It's really made a huge impact on my quality of life and being able to go do just normal things that a lot of people take for granted," reported one participant. "Whether it's go out to eat once every two weeks and sit down for a nice dinner, or whether it's, you know, my mom's birthday and I just want to get her a birthday present."
Participants were randomly selected based on their income. The program targeted those who lived in neighborhoods with households that made less than $46,000 a year. There were no stipulations on how they could spend their money. Yet, the participants spent the money on essential things like food, home goods, utilities, and gas. They were also able to pay down some of their debts and help family and friends in financial difficulties.
Laura Kidd-Plummer, a recipient of the funds, explained, “It let me pay off some credit cards that I had been living off of, because my household income wasn’t large enough, […] It helped me to be able to take care of my groceries without having to run to the food bank three times a month. That was very helpful.”
One participant used the security to quit his part-time job to find a full-time job. Now, “Every day I get to wake up and enjoy my kids,” he says. “My wife, we enjoy time together. We didn’t have that before.”
One of the main outcomes of the program was that it gave people stability in their lives. This decreased their anxiety and depression compared to those that did not receive any funds.
Tubbs rejoiced, “tell your friends, tell your cousins, that guaranteed income did not make people stop working.”
Many countries offer family benefit programs to low-income families. But these programs are uncommon in the U.S. In fact, of the countries in the Organization for Economic Cooperation and Development, only Turkey spends a lower percentage of its GDP on family benefit programs.
A similar program in Vancouver, Canada, gave 50 homeless people $7500 with no strings attached. Within a month, the participants reported being food secure. They also were able to find stable housing much faster than those who did not receive any money. To put this in perspective, that $7,500 saved the shelter system $8,100 per person because they no longer required their services.
Tubbs has made waves among his peers. Forty mayors across the U.S. have joined Mayors for a Guaranteed Income, with many of them planning similar projects. The California Legislature is also considering a proposal to support those who age out of the foster care system with $1000 a month.
Federally, Republican U.S. Sen. Mitt Romney of Utah wants to expand the child tax credit for American Families to at least $250 a month. If these programs have a similar impact as SEED, this could transform many lives.
"How the pendulum has swung," said Tubbs.
