The Promise of Guaranteed Income

New research center investigates the impact of basic income

Guaranteed income, also known as universal basic income or citizen’s income, is the concept of a government-guaranteed payment that each citizen receives. The idea has varied historical roots. It first appeared at the beginning of the 16th century and continued to evolve through the 20th century, when it began to be discussed more intensely. The world’s first fullblown basic income scheme was launched in 1976 with the Alaska Permanent Fund, which provides annual dividends to all inhabitants of Alaska.

Guaranteed income is intended to provide an economic baseline. While it carries the expectation that most recipients will work, the guaranteed income acts as a safety net. Those who become unemployed have time to pursue the best options for their situation rather than feeling desperate to take whatever work they can find. The cash enables self-worth, allowing people the economic freedom to make their own choices.

Assistant Professor of Social Work Stacia West and Amy Castro Baker, an assistant professor at the University of Pennsylvania, served as coprincipal investigators of the first mayor-led guaranteed income pilot, the Stockton Economic Empowerment Demonstration, or SEED, launched in Stockton, California, in February 2019. SEED led to the founding of Mayors for a Guaranteed Income (mayorsforagi.org), an initiative that includes several pilot programs and 40 mayors across

the country advocating for a guaranteed income.

To explore the concept further, MGI and the University of Pennsylvania School of Social Policy and Practice established the Center for Guaranteed Income Research (penncgir.org), housed at Penn and led by West and Castro Baker. Through the center, they will work with other leading researchers to guide MGI pilot cities through a learning agenda and oversee research design and implementation.

The goals of the new center are to consolidate the key learnings from pilot programs in MGI member cities, to address knowledge gaps in the contemporary understanding of guaranteed income’s impact for Americans, and to allow the organization to layer data with anecdotal evidence in federal advocacy.

MGI member mayors are signing on to the learning agenda with an eye toward moving the needle on poverty and matching the urgency of the current economic moment with evidence-based policy proposals. The agenda builds on the existing body of cashtransfer literature as well as the implementation and research lessons learned in Stockton to build an evidence-rich pilot-topolicy pipeline.

MGI was awarded a $250,000 grant from Arrow Impact, a newly established private foundation focused on improving economic opportunity for low-income families and strengthening the efficiency of the philanthropic ecosystem.

GUARANTEED INCOME INCREASES EMPLOYMENT, IMPROVES FINANCIAL AND PHYSICAL HEALTH

Following the first year of the SEED guaranteed income study, West and Castro Baker released their preliminary analysis in March. The findings, which received national coverage including articles in the Atlantic and the Economist, show that guaranteed income drastically improves job prospects, financial stability, and the overall wellbeing of recipients. The study counters long-held narratives that unrestricted cash payments disincentivize work.

SEED is a randomized control trial distributing $500 a month for 24 months to 125 recipients. The cash is unconditional, with no strings attached and no work requirements, and recipients were selected randomly from neighborhoods at or below Stockton’s median household income. An independent evaluation of the program was funded by the Evidence for Action program of the Robert Wood Johnson Foundation. The program’s entire $3 million budget was funded by philanthropic dollars, including a $1 million grant from the Economic Security Project.

Results from the first year show that recipients obtained full-time employment at more than twice the rate of nonrecipients. Recipients were less anxious and depressed, both over time and compared to the control group. They also saw statistically significant improvements in emotional health, fatigue levels, and overall well-being. Recipients had a greater ability to pay for unexpected expenses, which was particularly important as the research period covered in these results concluded just as the pandemic began.

“The last year has shown us that far too many people were living on the financial edge and were pushed over it by COVID-19,” said Michael Tubbs, former Stockton mayor and the founder of Mayors for a Guaranteed Income. “SEED gave people the dignity to make their own choices, the ability to live up to their potential, and improved economic stability going into the turmoil of the pandemic.”

People spent the SEED money on basic needs, including food (nearly 37 percent), sales and merchandise (22 percent, on home goods, clothes, and shoes, and at discount and dollar stores), utilities (11 percent) and auto costs (10 percent). Less than 1 percent was spent on alcohol and tobacco.

Full findings from SEED will be available in 2022. After the conclusion of the MGI demonstration projects, the center will release a report that includes national findings from all sites addressing key research questions.