By Bailey Schulz
Millions of Americans struggle to afford basics like food and rent. A new study spearheaded by the CEO of ChatGPT’s parent company shows regular, unconditional cash payments could help.
A three-year study from OpenResearch, a nonprofit research organization backed by OpenAI CEO Sam Altman, examined the effects of a no-strings-attached $1,000-a-month cash transfer on recipients’ health, employment and spending. It’s the latest and largest study of its kind to show how unconditional cash could help lower-income families meet basic needs like food and housing.
“We’re all finding the same results,” said Stacia West, co-founder and director of the University of Pennsylvania’s Center for Guaranteed Income Research. “You give people cash, and they make great decisions for themselves and their family in a way that you know can promote upward economic mobility.”
What are the effects of guaranteed basic income?
OpenResearch’s study kicked off in 2020 with 3,000 lower-income participants recruited through Illinois and Texas nonprofits. One thousand participants received $1,000 a month in cash to spend however they’d like, and a 2,000-person control group received $50 a month.
Overall, researchers said, their findings suggest cash “provides flexibility.”
Study: Over two-thirds of Americans are stressed by everyday expenses – these are the most frustrating ones
“The data we collected highlights the complexity of people’s lives and needs,” reads a statement from OpenResearch shared with USA TODAY. “Cash provides the flexibility to meet those diverse needs, and it is responsive when needs shift based on a person’s circumstances.”
According to the study:
- Recipients increased their spending by $310 a month on average, primarily using the money for essentials like food, housing and transportation.
- The money was also used as financial support for others, with recipients spending an average of $22 more a month on things like gifts to friends and family, loans, donations to charity and alimony payments.
- Recipients worked 1.3 hours less a week on average compared with the control group and reported more leisure time but remained engaged in the workforce.
- Recipients were 26% more likely to visit a hospital in the last year of the study and 10% more likely to get dental care and visit an emergency room. They also reported a decrease in problematic alcohol and some types of illicit drug use.
- Recipients were 4.4 percentage points more likely to move neighborhoods. OpenResearch plans to look into how the cash transfers affected housing stability and neighborhood quality in future analyses.
- Recipients ‒ especially Black and female recipients ‒ were more likely to report having an idea for a business. Recipients also reported a greater likelihood of starting a business within the next five years.
But OpenResearch’s findings also indicate cash isn’t the solution for everything.
- There were no significant effects on physical health, self-reported access to health care or behaviors like exercise or sleep.
- The study found notable improvements in stress, mental distress and food security – but only during the first year of the study. Those effects faded by the second year. An OpenResearch spokesperson said macroeconomic factors ‒ like inflation and the loss of pandemic-era aid ‒ may have eroded the initial improvements, but researchers will continue to analyze the data.
Sevly Snguon, co-founder and co-chair of the Guaranteed Income Health Consortium at the Johns Hopkins Bloomberg School of Public Health, said various research shows guaranteed income is just one piece of the puzzle.
“There’s still a need for additional resources for people who are parents. They might need more childcare, more support there. Affordable housing, health care,” they said. “But guaranteed income helps with people during those key transition periods.”
OpenResearch plans to publish additional findings in the coming months on the cash transfers’ impact on housing outcomes, political attitudes and the recipients’ children.
The push for guaranteed basic income
There are different visions for basic income, with some pushing for payments targeting certain demographics while others have called for a broader universal basic income that would transfer money to every American adult.
How it’s going: Guaranteed basic income pilot programs are growing around the country
In a 2016 blog post, OpenAI CEO Sam Altman said the idea of a basic income study had “intrigued” him, and he wanted to study the concept in anticipation of technology eliminating jobs.
“I think that, combined with innovation driving down the cost of having a great life, by doing something like this we could eventually make real progress towards eliminating poverty,” Altman’s post read.
Other big names in Silicon Valley – including former Twitter CEO Jack Dorsey and Tesla CEO Elon Musk – have advocated for guaranteed basic income over the years, and dozens of pilot programs have launched across the country as researchers work to figure out when and how these programs are most effective.
Research so far shows basic income can help lower-income families afford the basics. One 2020 study from Columbia University’s Center on Poverty and Social Policy found $250 a month for adults and children can reduce poverty by 40%. Another 2020 report from the Stanford Basic Income Lab said overall evidence “consistently demonstrates that unconditional cash in low- and middle-income countries leads to a measurable decrease in poverty.”
But the concept has received pushback.
More than half of U.S. adults opposed a universal basic income of about $1,000 a month for adults when surveyed by Pew Research Center in 2020, and the greatest opposition was among white adults. A number of states, including Iowa and South Dakota, have passed bills that prohibit counties or cities from providing guaranteed income programs as skeptics argued that the money would discourage people from working.
Basic income studies have shown mixed results on its influence on employment, according to Sara Kimberlin, executive director and senior research scholar at the Stanford Center on Poverty and Inequality. Sometimes recipients have higher employment rates than the control group. Other studies show a decrease in employment, although Kimberlin notes that can be for positive reasons, like cutting back work hours to take care of children and other family members.
“There really isn’t anywhere in the United States where someone can live on just $1,000 a month,” Kimberlin said. “So of course people are working, and they have income from other sources, and they have needs that go beyond what can be covered with $1,000 a month.”
![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)
