Cities drive surge of pilot programs to combat poverty with no-strings cash

They haven’t quite won the lottery, but thousands of low-income Americans are receiving regular government payouts as part of a sweeping social experiment to answer the question: What would happen if we addressed poverty by sweeping aside the programs, regulations, the means-testing and the oversight and just gave people unconditional cash?

It’s a time-honored idea offered by figures as diverse as Napoleon Bonaparte, Huey Long and Martin Luther King Jr. and championed by socialists, libertarians, Silicon Valley tycoons and right-wing economists such as Friedrich Hayek and Milton Friedman.

Today, more than 100 primarily liberal-tilting cities and counties have pilot programs for guaranteed basic income, delivering no-strings-attached payments via debit cards to create an “income floor” to sample populations on the edge of solvency.

New mother Keisha McCann is one of 800 low-income people randomly selected to participate in the Compton Pledge, the California city’s basic income pilot that wrapped up this month after a two-year run. Participants received $300 to $600 per month, depending on their number of dependents.

“What this has allowed me to do, besides giving me the extra funds to buy those diapers or get that formula, it has also helped me with saving money to eventually become a homeowner of my own,” Ms. McCann said at a 2021 community discussion. “It has definitely been such a big help, and I’m just grateful to be a member of this amazing program.”

Supporters of guaranteed basic income say the goal is to lay the groundwork for a national program. Free market proponents say such a policy could replace the $1.1 trillion federal social welfare network and its vast bureaucracy. For many liberals, the idea is not to replace the system but to augment it.

As the Fund for Guaranteed Income puts it: “Our vision of a guaranteed income is to supplement, not replace, the existing social safety net as a tool for protecting livelihoods and enabling economic and racial justice.”

Michael Tanner, a senior fellow with the Foundation for Research on Equal Opportunity, said he is intrigued by the concept of basic income but doesn’t see a way to implement it on a federal level without breaking the budget.

“I call myself a sympathetic skeptic,” Mr. Tanner told The Washington Times.

“I think that the logic behind it is very good, a very solid theoretical case. I think it has a lot of advantages over the existing social welfare system. That said, I haven’t yet seen a way that makes the numbers work without a massive increase in spending.”

Indeed, handing out money isn’t cheap. A universal basic income program giving each American $1,000 per month would run an annual tab of about $3.6 trillion, more than half the fiscal 2022 budget of $6.3 trillion.

Most advocates aren’t calling for the classic concept of a universal basic income, meaning checks for everyone regardless of income, wealth or living conditions, but rather a guaranteed or unconditional basic income targeted to low-income Americans.

Supporting the local campaigns is a national network of private foundations and community organizations backed by advocacy groups, including the U.S. Basic Income Guarantee Network, Income Movement and Mayors for a Guaranteed Income.

Monitoring the results are university partners led by the Stanford Basic Income Lab and the University of Pennsylvania Center for Guaranteed Income Research.

Sean Kline, associate director of the Stanford Basic Income Lab, said about 50 of the 104 programs that the university is tracking are still active. Most will wrap up in the next two years, although other initiatives are coming online.

In Maryland, the Prince George’s County Council has voted for a two-year experiment to give about 200 people payments of $500 to $800 per month.

Like many other programs, the county’s effort represents a public-private partnership. The county will provide $2 million for the $4 million project, and private philanthropies will fund the rest. The Greater Washington Community Foundation has pledged $1 million.

“The important thing about all these pilots is they’re signaling a renewed interest in a very, very old idea explored by both conservatives and liberals and looking for new ways to apply it in a period in which all of us can agree there’s a lot of uncertainty,” Mr. Kline said.

Broad appeal

The universal basic income concept has a long intellectual pedigree and deep roots in American history. Thomas Paine, a radical writer during the Revolutionary War, championed a form of government-guaranteed payment for every adult citizen.

King advocated a “guaranteed annual income” as part of the struggle for civil rights in the 1960s. Friedman, a free market economist, proposed in 1962 the “negative income tax,” a version of the basic income idea, as a replacement for public social welfare programs.

Interest in the policy has waxed and waned over the years. Entrepreneur Andrew Yang renewed interest in universal basic income by making the idea a centerpiece of his 2020 Democratic presidential campaign.

Also fueling the recent proliferation of pilots is the convergence of three events: the COVID-19 pandemic, the mass Black Lives Matter demonstrations, and the Stockton Economic Empowerment Demonstration.

The pandemic stimulus checks of 2020 and 2021 introduced government payouts to most Americans — with no expectations other than helping them through difficult times. Some cities have tapped into the 2021 American Rescue Plan to help fund the pilots.

The 2020 Black Lives Matter protests pushed the well-being of Black Americans to the forefront of the national social agenda. Then came the results of the Stockton experiment, a seminal guaranteed-income initiative launched in 2019 by Michael D. Tubbs, who was the mayor of the hard-luck town in California’s Central Valley.

The study’s first-year results, released in 2021, found that the 125 low-income participants didn’t quit their jobs or blow the extra $500 per month on extravagance. Most of the money went toward necessities such as groceries, utilities and automobile maintenance. Only about 1% went toward alcohol.

The share of recipients working full time rose from 28% to 40%. The increase was partly attributed to the participants’ ability to work fewer hours, giving them time to complete coursework, finish certifications and apply for better jobs.

“There’s several studies out there that look at how low-income people spend windfalls, or spend cash if they’re given cash instead of benefits,” Mr. Tanner said. “There’s no evidence that they’re more prone to vice goods than the general population. They’re not more likely to use it for liquor or drugs or even frivolities like movies. They spend in about the same proportion on these things as the general population.”

Program enrollees repeatedly said that the extra cash didn’t reduce their incentive to work but instead gave them “room to breathe.” Los Angeles County even named its guaranteed income program “Breathe.”

“This is an opportunity to give not a handout, but a leg up,” Los Angeles County Supervisor Holly J. Mitchell said at the program’s launch last year.

Tax the rich

The Los Angeles County program is one of the nation’s largest, with 1,000 participants receiving $1,000 per month for three years. None of the pilot programs has the scale to predict how a permanent federal program injecting billions of dollars into the economy would affect inflation, work incentives and the labor market.

President Biden’s 2021 stimulus payments, in particular, have been blamed for stoking inflation, and those were just one-time checks.

“People design these small-scale, fairly convoluted temporary programs, and it doesn’t really change people’s work history, and then they say, ‘We could give money to everyone and everything would be great,’” said Allison Schrager, Manhattan Institute senior fellow. “Generally, I’m not a fan.”

Despite the “universal” name of the concept, she said, some programs are designed to favor certain demographic groups. The Denver Basic Income Project is focused on the homeless as well as “transgender, gender non-conforming and gender non-binary” residents.

The Portland, Oregon, Black Resilience Fund gives up to $2,000 per month for three years to 25 Black individuals and families. Georgia’s In Her Hands initiative gives an average of $850 per month for 24 months to 650 Black women.

A Minnesota guaranteed minimum income program gives $500 per month for 18 months to “75 artists, culture bearers, and creative workers” in St. Paul and Otter Tail County, Minnesota.

“They keep calling it universal, but it’s really not,” Ms. Schrager said. “If you decide to give certain people an amount of money based on certain characteristics, then you’re giving people money based on characteristics. That’s not UBI.”

Has there ever been a real universal basic income? Advocates often cite the Alaska Permanent Fund, which gives all state residents annual payouts tied to oil revenue. It can range from a few hundred dollars to $2,000 per person.

Without deep cuts in other social spending, conservatives would likely dismiss any federal proposal as a massive income redistribution scheme. Some advocates are already stoking the class warfare narrative with calls to pay for the program by sharply raising taxes on high-income earners.

“The combined wealth of U.S. billionaires increased by $1.6 trillion during the pandemic,” Income Movement said in a Facebook post. “Simply tax the rich and corporations fairly. They will still be filthy, filthy rich.”

On the other hand, the idea of allowing people rather than government bureaucrats to make their spending decisions should appeal to conservatives, Mr. Kline said.

“I think there’s convergence in one area in particular, and that is giving people the choice and freedom to make decisions about their own lives because they’re the ones that know their needs best,” he said. “If you had a Venn diagram, that would be a strong point of overlap, this theme of freedom and agency.”

Basic-income fever is spreading to other areas. The San Francisco reparations task force’s draft proposal includes a recommendation for a guaranteed annual income of $97,000 for 250 years for eligible Black residents.

Ms. Schrager said another factor driving the payout push might be years of low-interest rates that made borrowing money virtually costless.

“Sometimes I wonder if all these years of zero interest rates created a political class completely disconnected from costs,” Ms. Schrager said. “So I think they’re like, ‘Let’s just firehose money at everyone, or people that we have some sort of political affinity to, and nothing’s going to happen, and we can afford to do this.’ We have a generation of people who just need to sort of wake up.”