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Eighty households in the city of Sacramento are poised to start receiving $500 a month, no strings attached, as part of an expansion of an existing local guaranteed basic income program. Since June 2021, United Way has been giving 100 low-income residents in the county $300 a month through June 2023 as part of the Direct Investment Program in Sacramento, also known as DIPS. The Sacramento City Council is expected to approve the $750,000 contract with the local nonprofit to expand the program at its Tuesday meeting, financed with federal COVID-19 relief money.
The basic income program, the first of its kind in Sacramento, is a kind of experiment aimed at exploring alternatives to traditional social safety net programs.
With crushing gas prices and soaring inflation hitting the wallets of low-income families hardest, advocates of guaranteed income programs argue unconditional direct payments are a more effective way to lift families out of financial instability. The cash payments are similar to the stimulus checks millions of Americans received from the federal government during the coronavirus pandemic. As part of the city-sponsored expansion, United Way will hire Sacramento State to research and evaluate the program, and to publicize its findings on the financial and social outcomes among participants.
In a statement, Mayor Darrell Steinberg said that basic income programs are “not just about giving people money. Similar programs have found that the financial stability provided by basic income helped people find full time employment, funded groceries or auto repair, and reduced their overall stress,” Steinberg stated.
“I am excited that Sacramento and United Way are partnering to pilot a basic income program and I hope we can do more in the future.” For families who’ve been a part of the program since last summer, the $300 monthly cash payments have been transformative.
Fienishia Wash, a single mother and recipient who lives in south Sacramento, previously told The Sacramento Bee she’s been able to boost her credit score by paying off old bills. She’s also saving money each month for the first time in her life. “I see a start to a better path, a stronger foundation,” Wash previously told The Bee.
Of the 100 participants already in the program, 86% said they could not pay an unexpected $400 expense out of pocket, compared to about 36% of people nationwide, according to project lead Cameron Collins. Finding financial stability by the end of the program is a goal for about 64% of participants, Collins previously told The Bee.
In addition, 18% want a more stable work situation, and 8% want to obtain a degree or credential. The city expects to see multiple economic benefits stemming from the direct payments, according to a staff report — an increased rate of participants working one stable full-time job, an increased ability to meet self-defined personal finance goals, and double the percentage of participants able to pay a sudden expense.
Those results would be in line with other similar U.S. guaranteed income programs, such as the Stockton Economic Empowerment Demonstration, which gave 125 households $500 a month starting in 2019.
Researchers found that in the first year of the program, recipients were employed at a higher rate, were happier, were healthier, and were more able to weather sudden expenses compared to non-recipients in the control group.
The city and United Way have yet to select the 80 households that will participate in the expanded program, or determine a start date for distributing payments. The contract with United Way would be effective July 1, and organizers would start outreach immediately, according to city spokeswoman Jennifer Singer. During the first round of DIPS, United Way opened an online portal for low-income families to apply to the program, and reached out to community groups such as La Familia and the Black Child Legacy Campaign to cast a wide net.
The expanded program is limited to low- and moderate-income households living in the city of Sacramento — an single adult must earn below $28,205, a two-adult household must earn below $43,201, and a single adult with three children must earn below $79,500 to be eligible.
