Guaranteed Income: Can no-strings-attached payments help solve poverty in the Bay Area?

A new report finds monthly payments of $500 to $2,000 could help thousands of South Bay households gain financial stability

Guaranteed Income: Can no-strings-attached payments help solve poverty in the Bay Area?
Guaranteed Income: Can no-strings-attached payments help solve poverty in the Bay Area?

By Ethan Varian

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More than a quarter of Santa Clara County families struggle to afford their basic needs. To lift thousands of them out of poverty, a new study recommends guaranteed monthly payments — with no strings attached.

Payments of $500 to $2,000 would help as many as 45,000 low-income South Bay households gain financial stability, according to the report from Joint Venture Silicon Valley, a business and labor consortium.

“Even a very small monthly granted basic income payment can make a huge difference in the lives of a certain segment of Silicon Valley’s population,” said Rachel Massaro, vice president and director of research at the think tank.

Across the Bay Area, local governments and organizations have in recent years started or announced at least 20 “guaranteed income” pilot programs in hopes of alleviating the region’s staggering wealth disparity. That includes a Santa Clara County effort in 2020 that gave $1,000 monthly payments to 72 young adults leaving foster care.

Oakland began providing $500 monthly to 300 families in 2020 and later doubled the program to 600 families. South San Francisco also started sending $500 in monthly assistance to 150 low-income families. Alameda and Mountain View recently approved similar programs.

On Friday, Gov. Gavin Newsom announced the start of two new guaranteed income pilot programs. One will give $1,200 a month to 150 young adults in San Francisco who have left foster care. In Ventura County, the same number of former foster youth will receive $1,000 a month. The program will last for a year and a half.

Advocates for unconditional cash payments say providing low-income residents with money to use as they see fit provides true financial independence, empowering them to avoid debt and find better jobs.

For Fritz Figone, who lives with his wife and 1-year-old daughter in San Jose, a guaranteed monthly payment would help cover his family’s health insurance premium, which recently doubled to $800 a month.

Figone, 28, makes around $50,000 a year as a restaurant manager and lives with extended family to save on housing expenses. But even another $1,000 a month likely wouldn’t be enough to get a place of their own in the Bay Area, where the typical rent for a two-bedroom apartment tops $3,400 a month.

The family is planning a move to Tennessee, where the cost of living is far less expensive. “There’s no way on a single income that I can afford to live anywhere here,” he said.

To comfortably afford Santa Clara County, a family of three with an infant needs to make at least $115,599 a year, with more than two-thirds of that amount going towards housing, child care and taxes, according to the report. But a monthly $1,000 payment would lower that needed income to $99,809, in large part by diminishing the family’s tax burden. (The report assumes the payments would not be taxed at the state level.)

The study found around 129,400 households in the county struggle to afford their basic needs.

Critics of the programs, however, argue such efforts erode the incentive to work and question where the government would get the money. Others worry large-scale guaranteed income efforts might end up siphoning resources from other safety net programs such as Medicare or Social Security.

At the local level, an analysis of a guaranteed income program in the Central Valley’s Stockton, which gave more than 100 residents $500 a month between 2019 and 2021, found that recipients’ financial situation and health likely improved, though the economic fallout of the pandemic made it challenging to draw definitive conclusions.

Joint Venture’s Massaro, meanwhile, contends the programs should be pursued as immediate, but temporary, solutions to poverty as policymakers seek bigger-picture fixes, such as boosting affordable housing and reducing childcare costs.

“In a well-designed, well-functioning society, all people who can work and do work should earn a living wage,” she said.

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