By Marie Fazio
Every Wednesday morning for nearly a year, Dejah Grimes woke up to a $50 deposit in her account, money she was free to spend however she chose.
Most weeks she gave the card to her mom, who put it towards the water or electric bill. Occasionally she used it to go to the movies or the mall with her friends, or to pay for school expenses, including the recent purchase of a black polo shirt with the G. W. Carver school logo embroidered on the breast, a privilege reserved for seniors.
“It helped my family a lot,” Grimes said. “It really made life easier.”
Now, hundreds of other New Orleans teens are set to receive similar assistance as part of a groundbreaking study on the impact of providing young people with a “universal basic income,” or recurring cash payments with no strings attached.
After promising preliminary findings and a $1 million investment from the city of New Orleans, a guaranteed income program that began with 20 students at The Rooted School in 2020 will expand this fall to 1,600 high school seniors at schools across the city over the next three years. Deemed the “$50 Study,” the program gives students $50 per week and follows their academic and financial progress. It’s one of the first of its kind to study the impact of universal basic income on youth.
Researchers said that high schoolers over the past two years — 386 students from The Rooted School in New Orleans, The Rooted School Indianapolis and G. W. Carver High School — who received payments missed fewer days of school, showed more literacy growth and enjoyed more financial stability than their peers who did not receive money.
“It shows there is some sort of antidote to addressing some of the more entrenched issues that we continue to navigate in New Orleans,” said Jonathan Johnson, founder and CEO of Rooted School Foundation.
‘Promising’ preliminary findings
At the height of the pandemic in 2020, Johnson, then executive director of Rooted New Orleans, noticed an alarming spike in absenteeism among his students, many of whom had to take on extra shifts at work to help their families make ends meet.
Hoping to alleviate some of the financial stress on students, they launched a “micropilot” with 20 Rooted seniors, ten of whom received weekly payments. From 2022 to 2024, they expanded to a randomized control trial with 386 students over two cohorts.
According to preliminary data, which has not yet been peer reviewed, students who were given the funds attended an average of two more school days per semester and their reading test scores grew by nearly double that of the control group. Researchers also found students who received the money demonstrated better “financial capability,” a term used to refer to financial literacy and real-world application, and scored higher on tests measuring their financial well-being.
Stacia West, who co-founded the Center for Guaranteed Income Research at University of Pennsylvania and acts as lead researcher for the $50 study, said the program can provide young people with valuable lessons, including how to navigate — or avoid — risky financial instruments such as payday loans and credit cards.
“The fact that these kids are able to interact with these financial markets so early,” said West, who is also an associate professor at the University of Tennessee, “means they’re going to be better equipped when they get into their 20s to make better financial decisions.”
Students in phase one of the study, which took place from 2022 to 2023, only used about half of cash assistance. About 47% of the money remains in the students’ bank accounts, suggesting many are saving.
Of the money they did spend, about 50% went towards food and groceries, 30% to goods and services, 12% to transportation, 3% to healthcare and the rest to other expenses.
Results from the second phase of the study, which followed 28 students from Rooted Indianapolis, 47 students from Rooted New Orleans and 155 students from G. W. Carver — a Collegiate Academy-run high school — will be published in the spring.
Grimes, who participated in the second phase, said having the money helped her family with unexpected expenses, like food and travel purchases while out-of-town for her great-grandmother’s funeral. This summer, she used it to pay for Ubers back and forth to work as a camp counselor-in-training at Live Oak Camp.
“When I was stressed I was like, ‘I don’t really have to stress now,'” she said. “‘I can really do my best in school and get my good grades like I always do.’”
She also said she learned how to handle money, what to save for and what to spend.
Malik Williams, a junior at G. W. Carver, said he spent money on food and school supplies, including a pair of New Balance sneakers and a pair of headphones.
Big Picture
New Orleans used to have a guaranteed basic income program aimed at young people ages 18-24 that was part of a national initiative called Mayors for Guaranteed Income. An effort to expand the program in December was not funded by the city council.
Jeff Schwartz, Director of Economic Development at the City of New Orleans, said in a statement that the agency is “thrilled to be an investor” in the $50 study.
“This unique guaranteed income study enrolling public high school students will produce results that will inform policy and programming as we all work toward a more equitable and inclusive city,” Schwartz said. “This study meets students where they are and provides opportunities for economic mobility that will surely create lasting impacts for individuals and in the larger community.”
West said that the Rooted School’s study is the first to track the impact of guaranteed income on young people. The larger sample size for the expanded study – about half of New Orleans seniors will participate and about a quarter will receive funds – will allow them to collect better data about the academic impact of the money, such as GPA and attendance, she said.
“The sort of financial education that kids get in school is how to budget and maybe a little bit of how to balance your checkbook, but they’re never really given the opportunity to practice it,” West said. “I think this could be a new way to think about educating and socializing our children financially.”
![With a growing body of research that disabuses the notion that the guaranteed income encourages frivolous spending or laziness, West said she is more likely to be queried on how a guaranteed income program can be implemented. The money can provide a cushion for those who live on the finance edge and comes without the kind of regulations and limitations of more conventional public assistance like food stamps or housing vouchers, researchers say. What the guaranteed money buys in many cases was time, West said. “When you’re very low-income, that translates into time scarcity,” West said. “You’re spending all this time navigating these systems — child care, transportation. Guaranteed income unlocks some time for you.” Some used the time for job training that led to better work, researchers have found across the country, or to spend more time with children, leading to improved school performance. In Baltimore’s pilot, preliminary results showed participants’ labor force participation increased from 64% to 71%, though their unemployment rate remained more than twice that of average Baltimore residents. With many of the programs still fairly new, it remains to be seen how long their positive effects on recipients last, researchers said. Many of the pilot plans including Baltimore’s used federal pandemic relief funds that are expiring, leaving them without a readily available source of support. West said guaranteed income is “an imprecise tool” and can’t by itself fix the underlying causes of systemic poverty, such as the legacy of “racial redlining and neighborhood segregation” that Scott has pointed to in making his case for the program. “What is very clear is the history of redlining isn’t going to be solved by guaranteed income,” West said. Particularly in red states, there are those with “a potent ideological objection” to giving free money to the poor, said Matthew Reed, executive director of the Harkin Institute for Public Policy and Citizen Engagement in Iowa. This spring, the institute was about halfway through a two-year pilot program that gives $500 a month to 110 people in the Des Moines area when the Iowa Legislature banned the use of public funds in such programs. About half of the Iowa program’s $2.5 million costs come from public sources, including municipalities in its three-county area, so those funds are being spent first, saving private money for after the new law takes effect next year, Reed said. “It was certainly frustrating,” Reed said. Rather than waiting until the project’s conclusion to have “a more honest debate” about its merits, Reed said, legislators opted to say, “We don’t care what the results are. We don’t like it.” Legislators split largely on partisan lines. One Republican lawmaker called it “socialism on steroids,” while Democrats argued that local governments should be allowed to use their funds as they saw fit. Iowa State Sen. Scott Webster, a Republican, who shepherded the bill through his chamber, called guaranteed income “a terrible waste of taxpayer money.” He disputed research that supports the program’s benefits, saying it doesn’t adequately track how recipients spend the money on the debit card as well as other funds at their disposal. “Let’s say they use $500 [of program money] on groceries. What happened to the money they used to use for groceries. Where’d that go?” Webster said. Such sentiments reflect an unfair distrust and scrutiny of poor people, said Abigail Marquez, who oversaw the guaranteed income program in Los Angeles. The city’s pilot was the nation’s largest, a $38 million effort that served more than 3,000 residents. “Based on the results from the research, we learned that people were able to seek and obtain dignified work,” said Marquez, who manages the city’s Community Investment for Families Department. Another important outcome was the time freed up for recipients to spend with children and neighbors, and on their own health and well-being. “We saw that participants were able to leave a violent home environment because of the guaranteed income,” she said. The concept has found a friendly home in deeply blue California, which has multiple programs designed to help groups that include immigrants and those exiting foster care. Legislatures in other states have, like Iowa, blocked them, although two Democratic governors, in Arizona and Wisconsin, have vetoed the measures. The Texas Attorney General sued Harris County, which includes Houston, saying its guaranteed income program violated the state constitution’s ban against giving public money to an individual. The state’s Supreme Court has temporarily blocked the program, and county officials are considering adjustments to try getting around that. To turn guaranteed income pilots into more permanent parts of the social safety net will require funding, of course, but also political will, supporters said. “If it’s a public program, it needs political support,” Reed said. “To do it at a larger scale, it’s going to require public money and public buy-in.” The first mayor-led guaranteed income pilot similar to Baltimore’s launched in 2019 in Stockton, California. Other cities followed, and researchers have found across the board that recipients use the money in ways that make sense for their families, spending it on rent, utilities and food, said Suki Samra, who directed the Stockton program and now is executive director of the mayors’ group advocating for guaranteed income. Participants are consistently more likely to find long-term employment, she said, and to get some form of education when compared to a control group. “When you remove that constant drumbeat of anxiety, of worry, folks are able to take a step back, they’re able to dream,” Samra said. “They’re able to think about what their full potential is.” Although Baltimore stopped distributing benefits at the end of July, the study of its recipients continues. Researchers are expected to release next year a final study of the program, which will include data on recipients collected up to six months after the close of the program. Then what? Scott is among those who would like to see the concept implemented on a more comprehensive, national basis. When the city’s preliminary results were rolled out in June, Scott directly addressed federal lawmakers. “This should be a national thing,” he said in a news conference. “It can be and should be and it will be — I’m going to speak it into existence — part of the solution to end poverty for good in this country.” Samra said the mayors’ group believes an expansion of the child tax credit to include cash payments to parents would be a natural progression. “We’re seeing that as the most politically feasible tool,” she said. West said people have grown increasingly comfortable with the idea of a guaranteed income. Andrew Yang made it part of his run for the Democratic nomination for president in 2020. And during the coronavirus pandemic, the federal government sent stimulus money to more than 150 million households. “We all received a guaranteed income then,” she said. She envisions cities continuing to serve as “incubators of invention,” experimenting with how to build on guaranteed income pilots and work towards a goal that should be beyond politics. Baltimore, other cities try to answer: Can a handout ease the burden of poverty, and for how long?](https://basicincometoday.com/wp-content/uploads/2024/08/breanna-klemm-1nVBujxVJXU-unsplash-225x300.jpg)
