California Experiment Shows Giving People Cash Dramatically Improves Lives

As part of the Stockton Economic Empowerment Demonstration (SEED) pilot program, 125 people in the California city received $500 per month for 24 months starting in February 2019. The program, initiated by former Mayor Michael Tubbs, chose recipients in neighborhoods at or below the city’s median household income of $46,033. The money, in prepaid debit cards, was unconditional, meaning people could spend it as they chose. 

A study released Wednesday based on the first year of the project, from February 2019 to February 2020, found that beneficiaries got full-time jobs at over twice the rate of non-recipients, were less anxious and depressed over time, and reported improvements in emotional health, well-being and fatigue. 

The randomized control trial, conducted by independent researchers funded by the Robert Wood Johnson Foundation, also found that recipients were better able to pay for unexpected expenses.

A federal report from 2019 found that nearly 40% of Americans could not afford to cover a $400 surprise expense. In a news conference on the study Wednesday, researchers said that 52% of the group that received the guaranteed income were able to cover a $400 unexpected expense, while only 28% of the control group who didn’t get the monthly extra cash could do so. 

What’s more, the guaranteed income enabled people to be able to afford taking some time off to find full-time employment: At the start, 28% of the group that was set to get the $500 per month had full-time jobs, and after the first year of the program, 40% were employed full time. For those in the control group who didn’t get the cash, 32% initially had full-time jobs and, after a year, 37% had full-time employment. 

The people who received the extra cash spent it on basic needs, such as food (37%), belongings (22% on home goods, clothing and discount stores), utilities (11%) and car costs (10%). Less than 1% of the monthly $500 was spent on alcohol or tobacco, according to the study.

“Now we have real-world data that proves that a lot of the lies people have about who deserves money, about what people do with money… just aren’t true,” Tubbs said in a news conference Wednesday. “A guaranteed income is actually helpful… a way that we as a body politic and as a country can truly live up to our values.” 

The idea of a basic income, or free money with no conditions, to improve economic and other outcomes for low-income people is not new. It’s been tested at significant scale in countries such as Kenya and India with positive results, including improved nutrition, and in Finland, where preliminary results showed improved health and well-being. And universal basic income became a popular topic in the 2020 Democratic presidential primary when candidate Andrew Yang pushed the proposal. 

Here in the U.S., some pilot projects have shown promise: A program by Magnolia Mother’s Trust in Mississippi gave $1,000 per month to Black moms, who said it made a difference. And a new program in San Francisco will give $1,000 per month to Black and Pacific Islander pregnant people aiming to improve maternal and infant mortality rates. 

Tubbs is hopeful that the Stockton program can set an example for a guaranteed income as public policy. He founded the Mayors for a Guaranteed Income group last June, bringing together 40 mayors advocating for a guaranteed income in the form of direct, recurring cash payments. 

Amid the pandemic, millions of Americans have received direct cash payments from the federal government in the form of two rounds of stimulus checks. Congress is currently negotiating a third coronavirus relief package, which would also include direct payments to most households. 

“We’re going into a year of this pandemic that’s decimated any semblance of financial stability millions of Americans had,” Stacey Rutland, founder of Income Movement, a grassroots group of organizers fighting for a guaranteed income, told HuffPost on Thursday. “We need a guaranteed income to ensure Americans can keep their homes, feed their families and cover their basic expenses.” 

Rutland pointed out that the results of the SEED program study show “cash works.”

“This isn’t about a lack of evidence, it’s about a lack of political will,” she said. 

Stockton’s $3 million pilot was funded by philanthropic dollars. The study of the program is ongoing, with more findings from the full two years of the project expected next year.  

Stockton’s pilot program took place in a racially diverse city with a poverty rate twice the national average. Participants were 47% white, 28% Black, 13% Asian and 37% Latinx. 

One recipient, Tomas Vargas, said at Wednesday’s news conference that thanks to the $500 guaranteed cash, he was able to move from a part-time warehouse position to a full-time job. 

“It was a big change in my life. I was very depressed, just down and out. SEED brought me back,” Vargas said, noting that his income is “way more” than it was before and he’s been “less stressed.” “If SEED wouldn’t have happened, I don’t know what would have happened to me.”

Phil Lewis contributed reporting.