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Wave of US cities to pilot guaranteed income programmes

16 March 2021

by Sarah Wray

Earlier this month as he revealed the preliminary results from the Stockton Economic Empowerment Demonstration (SEED), former Stockton Mayor Michael Tubbs said that when he first announced the idea of piloting Guaranteed Income (GI) in 2017, many people “thought we were crazy, that it was a joke”.

But the concept of providing direct cash payments to specific, targeted communities of people is beginning to gain traction in light of growing evidence, political shifts and the economic fallout from the pandemic.

Inspired by Stockton and rallied by Tubbs, who went on to found Mayors for a Guaranteed Income (MGI) in July 2020, several US cities now plan to launch their own pilot schemes which could help increase awareness around GI among communities and policymakers.

The Stockton Economic Empowerment Demonstration, which was funded by private donations, distributed US$500 a month for 24 months to 125 recipients. The cash was unconditional, with no strings attached and no work requirements, and recipients were selected randomly from neighbourhoods at or below Stockton’s median household income.

Critics of SEED and GI said people would use the money on drugs and alcohol, and that they’d be disincentivised to work. Results so far haven’t borne this out.

Evaluation by independent researchers of the first year of the Stockton pilot, which spanned February of 2019 to February of 2020, found recipients obtained full-time employment at more than twice the rate of non-recipients. 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 wellbeing. Further, participants had a greater ability to pay for unexpected expenses, which was particularly important as the research period concluded just as the pandemic began.

“Hopefully we can put those tropes to rest and have a constructive conversation about what [it takes] to summon the political will to act on what the data and the research tells us – that a guaranteed income is necessary [and] helpful,” Tubbs said on a recent press call about the SEED study.

Although the trial results are enlightening, the number of participants is small. The next wave of pilots is set to scale the research to tell a bigger story about how GI works in different types of communities and with different variables, and could provide evidence to support and shape state or federal-level programmes.

As many as 25 cities, including Columbia, Madison, Pittsburgh, Paterson, Providence, Tacoma, and New Orleans are set to launch their own GI pilot schemes, kick-started by a grant of US$15 million which Twitter’s Jack Dorsey donated to Mayors for a Guaranteed Income in December.

Compton, Richmond and Saint Paul have already launched schemes.

Most cities will supplement their share of MGI funding with philanthropic donations, without using any public money – though St Paul and Richmond are examples of cities also using CARES Act funding.

Data-driven programmes

Data will be fundamental to deliver hard facts and tell human stories about GI.

The Center for Guaranteed Income Research, established by Mayors for a Guaranteed Income and the University of Pennsylvania School of Social Policy & Practice, will release early snapshot data from the pilots taking place in MGI member cities. This will include demographics and spending behaviours published as data visualisations on a dedicated website, alongside personal stories. The dashboard will feature city-level filters.

The research will leverage SEED’s existing infrastructure, with a common core of survey data for each city and added questions based on each city’s context.

What Works Cities, a Bloomberg Philanthropies initiative focused on data, recently ran a programme with MGI and the Economic Security Project to help cities understand and think through GI options and approaches.

Simone Brody, Executive Director, What Works Cities, said: “As with any programme that a city chooses to implement, data plays a critical role in defining the problem, identifying and developing potential solutions, and guiding design decisions of the programmes. A Guaranteed Income pilot is no different. Digging into the data will allow a city to answer critical questions to make the best use of its resources and understand the impact of the programme.”

Tacoma in Washington is designing a GI programme for ALICE residents – that is, those that are Asset-Limited, Income-Constrained but Employed.

The city’s mayor, Victoria Woodards, said: “These are people who wake up every day and go to work, but still don’t make enough money for themselves and their family.”

Woodards said there are already plenty of people who oppose the GI programme for a variety of reasons.

“And there are people who don’t agree with providing supports at all,” she said. “But my goal is to take care of those in our community who need our support the most.” She said it has been important to reinforce to residents that the money for the pilot does not come out of the city’s budget.

Alongside the MGI funding, Tacoma is now in the process of raising additional money in collaboration with several local anchor institutions.

The details are still being finalised but the programme will likely be a monthly stipend of US$500, with the number of recipients depending on the amount of money raised.

“I want to go deeper as opposed to wider,” Mayor Woodards said. “The length of time for a pilot is at least 18 months so you can get really good data to see what it’s going to take and the impact that it has.”

She said that while many of the data points will be the same across cities, local context is important.

“There’s data and there’s hard numbers,” Woodards said. “And then there are those stories with anecdotal data and there’s great value in both.”

Measuring success

Brody said some of the basic data cities should be tracking includes who’s getting the funding, how it’s being spent and what impact it may be having on the short and medium-term outcomes of those receiving it, from lower debt burdens to increased money available for food.

She noted that some of this may include new data for cities, which sometimes may come from private companies, such as credit card spending.

“One area where data might be particularly useful in a GI pilot is to identify and measure some of the harder-to-quantify medium-term outcomes,” Brody commented. “Whereas cities may already track data around economic security indicators, understanding how life-changing and empowering it can be to access another meal each day, pay bills on time, pay down debt, and so on, requires cataloguing new kinds of qualitative data over time.”

This could include ‘trust indicators’. Trust emerged as an issue in the Stockton trial, for instance.

Sukhi Samra, Director of MGI, said: “In marginalised cities like Stockton, trust in public and private institutions alike remains low. As such, many recipients took a leap of faith even in responding to the SEED mailer and completing the online survey. Even after meeting with a SEED staff member for orientation, many recipients did not trust that the US$500 a month would continue for the promised [period].”

This initially affected uptake and the first round of 1,200 invitation letters was expanded by another 3,000 with ‘nudges’, including a handwritten note from members of the SEED staff and a printed note on the envelope flap.

“We later heard from recipients that they were initially hesitant to respond because they thought SEED was a fraud,” said Samra.

Other useful indicators could include those around racial and economic justice, health and wellness, mental health, civic engagement, housing and underemployment, Brody said: “This qualitative information can be critical to understanding the overall impact of these programmes and to sharing stories in a way that purely economic metrics can’t.”

This use of data will likely see cities’ Chief Data Officers and Chief Innovation Officers brought into GI pilot planning and monitoring. This reflects a trend during the pandemic of city technology leaders supporting a broader range of projects and a shift in what comes under the ‘smart city’ umbrella.

“Being a data-driven smart city starts with deeply understanding the needs of your community and identifying the appropriate programmes/policies to meet those needs and create opportunity for residents,” said Brody. “All government programmes must start with a set of resident outcomes they are working to achieve, and then the data and technology tools are a means to the end of those improved resident outcomes.”

Partnering

Harsha Mallajosyula, Chief Data Officer, The City of Paterson, NJ, is taking a key role in the roll-out of his city’s Guaranteed Income programme. The scheme will see 110 participants receive US$400 per month for 12 months. They will be selected via a lottery-based system. Single applicants must earn less than US$30,000 annually and families must earn less than US$88,000 annually to be eligible.

At the height of the pandemic, Paterson’s unemployment rate rose to as high as 28 percent.

“This programme would have benefited our community even before the pandemic but now because of the pandemic we think it’s actually crucial to provide some kind of an income flow to families that are really struggling,” said Mallajosyula.

A key finding of the Stockton programme was that people typically spent their GI money on basic needs, particularly food at 37 percent.

Paterson will partner with a local food bank CUMAC which will provide free food and groceries to participants in the GI programme. GI recipients will also be referred for money management counselling.

“We want to see if this pairing with our local food bank can show whether participants in our programme save on average more than guaranteed income participants elsewhere in the country,” said Mallajosyula. “That could also strengthen how our state and federal government thinks about enhancing SNAP [the Supplemental Nutrition Assistance Program], so that is one additional component of the programme that we’ll be tracking.”

Guaranteed income is meant to supplement, rather than replace, the existing social safety net, and pilots such as this could demonstrate how programmes can be structured alongside other benefits.

Mallajosyula said one of the key things he took away from the What Works Cities course he participated in was “the power of storytelling”, which data can support.

“It’s not just data that is making policy; it’s how it’s impacting people’s lives.”

This could include collecting softer data such as survey input on people’s emotional wellbeing.

“If we see improvement in emotional wellbeing, a big sense of belonging in the community, that could be a measure of success,” he said.

Community engagement

Gaining local support as well as challenging misconceptions or misunderstandings about GI are important. A takeaway from the Stockton initiative was that activities like town halls and public data releases help ensure transparency and demonstrate to residents that research is being conducted “in tandem with, rather than on, the community”.

Providence, RI has so far raised over US$1 million for a GI pilot, including US$500,000 from Dorsey’s MGI donation, and has received a commitment from the State of Rhode Island to provide support for staff to administer the pilot.

The city is aiming to provide 110 residents with US$500 per month for one year and is now running a community engagement process to collect feedback on ideas for which residents the initiative should target.

“We very much do not want to make that decision, until after we get feedback from the community,” said Hannah Kahn, a policy associate in the Mayor’s Office.

The team in Providence is working with MGI and the Center for Guaranteed Income Research on finalising the information that will be collected to track the success of the programme.

“Our survey will ultimately look very similar to the one used by the City of Stockton,” said Ben Smith, Director of Marketing and Content at the City of Providence.

The city will also run education campaigns around the pilot, including a dedicated website and online advertising to help people understand the basics of the programme. Later, there will be direct email marketing campaigns and email newsletters with stories from GI participants to keep residents informed.

Smith said: “We’ve seen a growing number of not only people on a national level calling for these kinds of programmes but also cities, who most directly deal with the populations that they serve every day. So, it’s an interesting dynamic having cities pilot these programmes.”

High hurdles

Tubbs is no longer Mayor of Stockton, with a fierce misinformation campaign from a local blog widely cited as a major reason he was not re-elected.  His political career is not finished, though – he was recently named as California governor Gavin Newsom’s Special Advisor for Economic Mobility and Opportunity. And while the SEED may be over, its impact can already be seen as more cities take up the baton.

The MGI coalition argues that GI programmes could be paid for in future through mechanisms such as a sovereign wealth fund, like the Alaska Permanent Fund, or through higher tax rates on the wealthiest earners.

Despite societal shifts, persuading some that this would be justified will still be no mean feat.

Funding is not the only question mark. In a December 2020 City Journal article, Charles Blain, President of Urban Reform and the Urban Reform Institute, wrote that: “While its costs alone are prohibitive, the guaranteed basic income’s core problem is its flawed premise. Rather than encouraging economic mobility through work or educational attainment, guaranteed-income programmes require recipients to stay under an income ceiling in order to stay eligible for funding.

“Instead of handing out free money, cities should focus on improving economic opportunity for those at the bottom of the economic ladder. Mobility, not cash, is the only reliable guarantee for a better life.”

The extension and restructuring of Child Tax Credit under President Biden’s newly passed US$1.9 trillion American Rescue Plan has been likened to a form of guaranteed income for families with children. Most elements of the stimulus package are temporary, though, and once the extreme economic uncertainties of the pandemic restabilise, significant political hurdles to GI will remain.

That’s why data from the pilots will be critical to potentially winning minds as well as hearts, or at least fuelling a more evidence-based debate.

As Mayor Woodards put it: “Data tells a story that you cannot deny.”

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My City, My Life

Valérie Plante, Mayor of Montréal

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