- The city of Stockton, California, is giving 125 residents monthly payments of $US500, no strings attached.
- The payments are part of a basic-income trial led by the city’s 29-year-old mayor, Michael Tubbs.
- Preliminary results show that most participants used the stipends to buy groceries and pay their bills.
- Tubbs told Business Insider the early data makes him more confident that a basic-income program would benefit his city and could even serve as a national solution to income inequality.
- Visit Business Insider’s homepage for more stories.
Mayor Michael Tubbs of Stockton, California, was just 28 years old when he launched a pilot program that gives free money to his city’s residents.
In February, the city began distributing $US500 monthly stipends to 125 residents who live at or below the median income line (about $US46,000 annually). The stipends are a test of basic income, a policy approach that would essentially pay people simply for being alive.
Tubbs told Business Insider that these preliminary findings gave him even more confidence that basic income would benefit his city – and could even serve as a national solution to income inequality.
‘It’s allowing people to breathe again’
Critics of basic income argue that cash stipends reduce the incentive for people to find jobs and may even encourage recipients to make frivolous purchases. But Tubbs said he wasn’t surprised by the results of the experiment thus far.
“I predicted they would spend money much like we spend money – on necessities first,” he said of the recipients.
On average, participants in the trial spent a plurality of their stipends (about 40%) on food and another 24% on sales and merchandise – like trips to Walmart or dollar stores. Another 11% went to paying their utilities, and about 9% went to buying gas and repairing their cars.
But some residents used the extra cash in ways that Tubbs hadn’t predicted. One man used his stipend to buy dentures so he could feel comfortable smiling in public. Another resident used the money to take time off work to care for her husband, who had recently suffered a stroke.
“I think of the story of Roy – a white, middle-class guy who went to UC Santa Barbara and owns a small business. The $US500 a month has allowed him to go visit his family in Nashville,” Tubbs said. “I think of a grandmother who was able to buy her grandkids a bag of chips and actual gifts for their birthday.”
Tubbs said these stories remind him that people know how to spend their own money wisely. He thinks that lesson could encourage other policymakers to consider basic-income programs, too.
“When I first announced we were doing this pilot almost two years ago now, people thought of it as scary or crazy. It has now become mainstream in a way. People are really debating its merit. So from that nature, I think we’re very successful,” he said. “It’s allowing people to breathe again.”
Tubbs is glad that most of the trial participants are women
Nearly 70% of the participants receiving a monthly stipend in Stockton are women. The researchers behind the program – a group that includes staff from the University of Tennessee-Knoxville and the University of Pennsylvania – attribute this to the fact that women are more likely to open a household’s mail than men, so they were the first to receive the city’s notice about a basic-income trial. The researchers also determined that women in Stockton are more likely to manage their household’s daily tasks, which include paying bills.
Tubbs said that’s the case for his own household.
“My wife is the conscientious one,” he said. “She organizes the mail and makes sure we sit down and go through it every week.”
Tubbs said he thinks having a majority of female recipients in the trial is a good thing. He pointed to research from the World Bank, which shows that investing in girls’ education can lead to increases in national income and gross domestic product.
“I’m actually very happy that 70% of the recipients are women because that gives me even more confidence that the entire family unit and the community will benefit,” Tubbs said.
Could Stockton serve as a test case for a national policy?
Stockton’s basic-income experiment is designed to last for 18 months, so there are still about eight to go. If the pilot is successful, Tubbs said, the city will consider expanding the program.
Basic income will also serve as a central plank of his reelection campaign in 2020.
“It just shows the community that their mayor is a fighter,” Tubbs said.
As Tubbs has been promoting the potential of basic income in Stockton, Democratic presidential candidate Andrew Yang has also been advocating for a national basic-income policy in the US. As part of his platform, Yang has promised to deliver payments of $US1,000 a month, or $US12,000 a year, to all US citizens over 18.
Tubbs said Stockton’s program could serve as an example of how universal basic income would work in the US. (Most other notable basic-income trials have launched in European countries like Finland and Spain.) That makes Tubbs’ work a good talking point for Yang.
“The timing of his ride is great because he’s not just running off something that’s theoretical,” Tubbs said. “Stockton actually grounds his talking points to something that’s real and tangible.”
But Tubbs said he’s opposed to “conditional” basic-income policies, like the one recently carried out in Finland, that use basic income as a replacement for the existing social safety net.
“I don’t think people should have to opt out of existing benefits to opt in” to basic income, Tubbs said.
Still, he acknowledged that a no-strings-attached basic income policy would be tough to implement nationally.
“National leadership – particularly in the White House and the party that controls the Senate – isn’t there yet,” he said. “It’s going to take a lot of difficult conversations to get there, but we have to.”
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