COLLAGE BY ANDREI COJOCARU
Guaranteed Basic Income
This article first appeared in the Solutions newsletter. Click here to learn more about the newsletter and sign up.
Consider the prospect of a city just giving money to low-income folks, regularly, with no strings attached. You can imagine a conservative’s pessimism: They’ll quit their jobs and waste taxpayer dollars! Or a progressive’s optimism: No, they’ll use it as a springboard to improved housing, education, and self-sufficiency!
We needn’t dwell much longer in the hypothetical. Dozens of cities and counties across the United States are already trying guaranteed basic income (GBI)—that is, the consistent and unconditional transfer of public funds to residents below a certain income threshold. (This dashboard lists them all.) The City of St. Louis is gearing up to join them. The question for now is how it should do so.
The idea of an income floor is centuries old. Variants of it have attracted all sorts of backers: Thomas Paine, Martin Luther King Jr., the Black Panthers, Milton Friedman, Richard Nixon, Andrew Yang, Richard Branson, Charles Murray. One famous variant is universal basic income, a regular benefit that everyone in society would receive. This variant appeals to some on the left (insofar as it shrinks poverty) and the right (insofar as its simplicity enables a dismantling of the safety-net bureaucracy). But none of the municipal efforts underway right now are universal; rather, they’re targeted to low-income people and, where possible, add to the safety net rather than replace it. So support for this more targeted approach appears to be squarely on the left. The national group Mayors for a Guaranteed Income, for example, has 148 members, a spokesperson told me, and all are Democrats.
One of them is Mayor Tishaura Jones. In December, when she signed the bill that reserved $5 million in American Rescue Plan Act funds for a GBI demonstration, she spoke of it in a press release as an “investment” that would make St. Louis “stronger and safer.” But the city stated a much wonkier objective when requesting proposals from prospective contractors: It said it wanted to learn about the policy’s impact on economic mobility and to “support existing research” on guaranteed basic income. So where does that research stand?
Perhaps the most buzzed-about municipal demo so far began in Stockton, California, in 2019. In its first year, independent researchers found that the $500 monthly payments on debit cards had no statistically significant impact on employment (i.e., the 131 participants didn’t drop out of the workforce en masse). The research team was able to track about 60 percent of participants’ spending and saw that the biggest category was food, followed by sales/merchandise. (Less than 1 percent went to tobacco or alcohol.) In a peer-reviewed study published this year, the researchers lasered in on a different kind of outcome: the participants’ well-being. The pandemic marred the program’s second and final year, but the researchers still found that overall, when compared to a control group, the participants reported “lower rates of income volatility…lower mental distress, better energy and physical functioning,” and “greater agency to explore new opportunities related to employment and caregiving.”
Those are good outcomes, though not the last word on the wisdom of guaranteed basic income. Stacia West, a professor who co-authored that paper and founded the Center for Guaranteed Income Research at the University of Pennsylvania, confirmed in an email that, in general, “There is an absolute paucity of evidence at this point.” She and her colleagues are currently evaluating more than 30 GBI programs in the U.S. Most are randomized-controlled trials—the gold standard of behavioral science because one group gets the treatment while a similar group doesn’t. Many of these programs will wrap up within a couple years, West says, and as they do, causal inferences can be made.
For now, West’s general advice for cities such as St. Louis is to focus less on whether the policy changes lives (because other cities already are) and more on how and why it does so. That could be teased out with in-depth interviews, she says; separately, St. Louis could set up a “storytelling cohort” of participants who choose to go public with their experiences.
You can glimpse such experiences in West’s paper on Stockton. A participant named Pam noted how guaranteed basic income alleviated stress from financial and time scarcity: “I [previously] had panic attacks and anxiety… I had to take a pill for it. And I haven’t even touched them in a while.” Parents spoke of being able to “breathe and do homework” and watch TV with kids “instead of yelling.” Kent landed an internship only because the payments allowed him to quit his previous job; “you can take so much risk,” he observed. St. Louis could, if it chooses, gather more qualitative data like this, West says.
Another way that St. Louis could add to the body of research would be disbursing the payments through escrow accounts, suggests Sean Kline, associate director of the Stanford Basic Income Lab. For one thing, this method could temporarily avoid the funds being counted as income by an entity that’s trying to calculate, say, a participant’s tax liability or eligibility for student aid. It could also help a participant shield the funds from a bad actor in the household (such as a perpetrator of domestic violence). Lastly, it could create a small but possibly useful barrier to spending. Says Kline, “When we have a place to keep money safe and a little out of reach, by design, it can make it easier to save a lump sum for a planned expense or an unanticipated emergency.”
So St. Louis has many options. The details that have surfaced so far from city hall look similar to those in other cities. The plan for now is to randomly select 440 eligible households to receive $500 per month for 18 months. To be eligible, these households must (a) have been negatively affected by the pandemic; (b) have a kid in St. Louis Public Schools; and (c) receive an income at or below 170 percent of the federal poverty line, which would equal about $25,000 for an individual. The city aims to disburse the money through debit cards. These would allow at least some spending to be tracked. When I asked Jones’s office for an interview about other outcomes that it hopes to track, a spokesperson replied: “not much to share at the moment beyond that these often take nine to 12 months to set up.”
A last point about tracking spending: In Stockton’s first year, about 40 percent of the funds were moved by participants into bank accounts or converted into cash. While some reported doing this for practical reasons—e.g., it was easier to split bills or pay rent with cash—others did it because they feared the program was a scam. Trust is a big part of success, writes Kline in the guide for municipalities he authored at Stanford. He suggested that participants be asked their opinion on how the program could best meet their needs. “Deep community engagement” he told me, “will be important.”
