St. Louis’ guaranteed basic income pilot showed some uplift

As the city of St. Louis releases today the results of its guaranteed basic income pilot program, your take on whether it succeeded will depend on how you define success.

When Mayor Tishaura Jones and Treasurer Adam Layne announced, in October 2023, the details of the $5 million program—giving $500 a month, no strings attached, to 540 low-income parents of public-school kids for 18 months—Jones said in a press release that the policy, being tried in cities across the country, was “an exciting way to financially empower families and lift them out of poverty.” 

The pilot did not quite lift anyone out of poverty, according to an evaluation authored primarily by investigators at Washington University’s Brown School. It did, however, show certain signs that it “encourage[d] upward social and economic mobility”—the program’s “primary aim,” according to its website. In particular, participants used the money to pay their debts in a more timely way, thereby improving their credit scores by an average of 12 points over a comparison group. 

But it also hinted at the intractability of poverty among the participants. The great majority were Black mothers, and two-thirds had household incomes under $20,000. One of the evaluators, the WashU professor Stephen Roll, said the transfer of a monthly, unrestricted $500 to these families is “a vast improvement over the status quo,” but also that “it can’t solve all their problems.” 

Unlike universal basic income, which everyone would get and which some in the tech world believe will be necessary if AI replaces human workers, guaranteed basic income is targeted at specific populations. It’s favored by the political left as a supplement to, not a replacement for, the social safety net.

Dozens of GBI experiments have cropped up in just the last decade. One common finding, according to the Stanford Basic Income Lab, is that recipients of unconditional cash tend to spend it on basic needs—a rejoinder to the assumption that, as one of the St. Louis participants memorably put it, “they’re going to blow it on Pop Rocks and bubble gum or whatever rich people think low-income people do with money.” The evaluators here found that 99 percent of GBI spending was on “daily needs (food, transport, household goods, etc.) or financial services.” Roll says that that makes sense, given the “rigorous screening process” for applicants. 

Scholars at the Center for Guaranteed Income Research at the University of Pennsylvania have gone to various cities to run randomized controlled trials—the gold standard of research—and found an “overall positive impact,” although the results have varied. A trial in Stockton, California, for example, made headlines for showing promise early on, and its final result showed lower income volatility and better measures of physical and mental well-being. But more recent high-quality experiments, such as one for disadvantaged kids and another backed by OpenAI’s Sam Altman, reported lackluster findings. (To sample some recent debate in the left-of-center commentariat over how much weight to give recent lukewarm results, see here and here.)

St. Louis chose not to do a randomized control trial. (The Treasurer’s office did not respond to our request for comment; they also declined to make any program participants available to discuss their experiences.) As a result, it’s impossible to know for certain whether any improvements detected by WashU were triggered by the program itself, by external forces, or by something unique about the participants (who might have applied for the lottery-based program because they wanted to make life changes anyway). 

But let’s assume the program was the cause of the reported shifts. Those shifts included improvements in the percentage of participants who fully paid off their utility bills or rent, who ate when hungry, and who had up to $500 saved up. Those metrics, like many others, moved by no greater than about 16 percent of participants. In other words, on those metrics, the majority of people in the program did not report an improvement. Roll says that that’s a result of poverty being multifaceted and the cash being unrestricted: Some might direct it toward transportation; others, toward health. “You’re never going to see everyone moving in one direction on these things.” 

The biggest contribution that this program will make to GBI research writ large, in Roll’s opinion, is the finding on credit scores. Juxtaposed to a comparison group, the participants showed no significant change in debt amounts, but their credit scores did improve by 12 points (from 578 on average at the start to 593.) What drove this was the number of delinquencies going down as participants paid off their credit cards on time. (Interestingly, late payments worsened temporarily when a lawsuit brought by the Holy Joe Society stopped the city’s transfers, but improved again once the James S. McDonnell Foundation stepped in with private funding to keep things going.) 

The uptick in credit scores did not boost these people out of the subprime category, on average. But Robert Boyle, the CEO of Justine PETERSEN, a nonprofit that helps low-income folks with home finances, considers the movement encouraging in the sense that the pilot offered no financial literacy courses or coaching. “I think that’s good because they’re teaching themselves,” he says. “That’s saying something.” 

It’s heartbreaking, though, to see that so many participants planned at the outset to catch up even more on bills, reduce debt, and put aside an emergency savings fund, yet ended up spending a lot more than they’d planned on essentials, food, and transport. (The evaluators attributed that, in part, to inflation.) And while it’s true that at the program’s end, 58 percent were planning to enroll in higher education, training, or career development, only 10 percent actually had—and “a large majority” saw the terminated payments as “a looming return to financial instability.” 

The deeper question behind all this is whether GBI, as an anti-poverty tool, gives you the most bang for your buck. A team of Penn and MIT economists who surveyed the landscape of such tools found that direct investments in the health and education of low-income children yield the highest returns. Yet returns can also be high for adult-targeted programs, they concluded, if there’s a spillover effect to kids—for example, the Moving to Opportunity experiment, in which poor families used housing vouchers to move to low-poverty neighborhoods. Those benefits were substantial but took a generation to notice. 

According to the Treasurer’s office’s summary of the St. Louis pilot program, there were some signs of spillover, however preliminary: 70 percent of participants said their child’s performance at school improved, 75 percent said that they could afford more and better tutoring, 86 percent that it was easier to afford sports, scouts, and clubs. But the long-term effects of an 18-month program can’t yet be known. 

Roll says it’s unfair to expect too much from guaranteed basic income. Consider social security: It’s one of the largest outlays in the federal budget and still hasn’t lowered the number of destitute seniors to zero. Says Roll: “A lot of people, they want the big marquee headline—that, I finally found the solution, this one lever that we can pull that can unravel all the complex intergenerational effects of poverty. And I would love that if we could do that. But that’s just never been the reality for any program.”

Editor’s Note: A grant from the James S. McDonnell Foundation is funding St. Louis Magazine’s economic mobility coverage. That funding does not influence our editorial decisions. For more information, click here.