By Thomas F. Harrison
See original post here.
CAMBRIDGE, Mass. (CN) — A massive social experiment is quietly taking place in some 200 American cities — what happens if you give poor people hundreds of dollars a month with no strings attached?
These cities are running pilot programs that typically give randomly selected people $500 a month for a year or two to spend as they please. They collect data on the broad policy initiative, which could replace the current complex patchwork of social welfare programs with a much simpler “guaranteed basic income.”
Researchers at the University of Pennsylvania and elsewhere are analyzing a wealth of evidence from the experiments. When the results are published in the coming year, it will add to a growing national debate over what the social safety net should look like, said Sean Kline, director of the Basic Income Lab at Stanford University.
One city — Cambridge, Massachusetts — found initial results so positive that it has rolled out the program on a large scale. All families with children in the city whose income is less than 250% of the federal poverty level can now get unrestricted monthly payments of $500 for 18 months.
Conservative economist Milton Friedman originally popularized the idea of a guaranteed basic income in the 1960s and President Richard Nixon proposed it in 1969, although it died in Congress. More recently the idea has been championed by a group of Republican senators including Mitt Romney, as well as Democrats such as entrepreneur Andrew Yang, who made it the centerpiece of his 2020 presidential campaign.
While Yang championed a “universal” basic income, virtually all the experiments so far have been limited to low-income people.
“We approach it as a tool to eradicate poverty,” said Sukhi Samra, executive director of a nonprofit called Mayors for a Guaranteed Income.
Friedman’s goal was to replace the complex state and federal safety net that now includes Temporary Assistance for Needy Families; the Supplemental Nutrition Assistance Program; Women, Infants and Children; Section 8; and numerous other programs that are expensive to administer, hard to navigate and come with complex work requirements and limits on how the money can be spent.
Friedman believed his idea was compatible with conservative values because it let people decide how to spend their own money and eliminated the “welfare trap” that disincentivized people from looking for work if it meant giving up benefits.
Before, “whenever I found a part-time job, I was kicked off food stamps and cash aid,” said Tomas Vargas, who grew up on welfare and participated in one of the first basic-income pilot programs in Stockton, California.
Traditional benefit programs made it hard to escape the cycle of poverty, he said in an interview, but the unrestricted cash helped him improve his situation. “Before, I was scared to take off time to look for a new job because I’d miss hours and I was living paycheck to paycheck. But now I could afford to put applications out there.” As a result, he landed a much better job as a full-time warehouse manager.
In Shreveport, Louisiana, a pilot-program participant named Jessica said that previously “my days consisted of calling different organizations to try to receive assistance to support me and my children,” whereas the unrestricted cash gave her the breathing room to apply for jobs instead.
About two-thirds of the pilot programs use control groups to measure their success. In Stockton, “recipients were twice as likely to find full-time employment as the control group,” said Samra. “People can take a chance on themselves, and do internships or take time off to interview for a better job.”
The Stockton experiment “produced positive outcomes on income volatility, anxiety and depression, the ability to plan, and labor participation,” Kline said.
Most of the control groups simply compare people who got additional cash versus those who didn’t, rather than people who got unrestricted cash versus people who got the same amount of money through traditional social programs. But anecdotal evidence suggests that the unrestricted nature of the income allows people to better respond to their unique situations.
Murray Wilson, who participated in a pilot program in Gainesville, Florida, said in an interview that he used some of the money to buy a mobility scooter that wasn’t covered by any government program.
“Unconditional cash allows recipients to use the money in whatever way is most attuned to their needs,” Kline said.
“A common criticism is that people will spend the money on drugs and alcohol,” added Samra, “but the data show that that’s not the case. They spend it on retail items at Walmart, groceries, clothes and transportation.”
Cambridge is telling its struggling citizens, “We trust you to figure out how to best use this money,” said Elizabeth Pierre, a spokesperson for the mayor’s office.
Vargas used some of the money to take his children on his family’s first-ever camping trip. “It’s a beautiful thing to be able to be present in my kids’ life,” he said, adding that he has been able to volunteer at school and that his children have acquired a new sense of direction and hope. “My daughter wants to become a Marine,” he noted proudly.
Wilson has been taking care of his elderly mother, who is no longer able to stand or walk — another thing for which current benefit programs wouldn’t compensate him.
“There are many ways of contributing to society that don’t amount to participation in the labor market, including caring for children and elderly family members, as well as volunteering in the community,” said Anna Marion, a doctoral student studying the issue with professor Douglas MacKay at the University of North Carolina.
In New York, new mother Lisa Chin said the money was a godsend because she had to stop working and wasn’t eligible for maternity leave. She used it for diapers, a stroller and transportation for her daughter’s frequent medical appointments due to delivery complications.
“Spending time with family leads to stronger family ties and helps to break the intergenerational cycle of poverty,” said Aaron Strauss, who runs a Los Angeles program that provides cash grants to parents.
The basic-income idea got a boost in 2021 when the child tax credit was greatly expanded as a Covid-19 relief measure. For that year, families could collect the credit even if they didn’t owe any taxes, with the option of receiving half the amount in advance monthly payments. The one-year change reduced child poverty by 25% and could have reduced it by 40% if everyone eligible had claimed it, a study at Columbia University found.
Seeing the results, some 11 states enacted their own child tax credit after the pandemic, Marion said.
The figure of $500 a month is common in the pilot programs, although in some larger and more expensive cities the figure can reach $1,000. In Stockton, Samra explained, “we did focus groups and $500 was what mothers said was enough that you could feel the difference.”
Most pilots run for a year, although some run for two or three. The program in Hudson, New York, is running for five years to see what happens over a long stretch of time.
Most of the pilot programs focus on poor people generally, but some are aimed at more specific groups. Columbia, South Carolina, is trying to help fathers; New York City has a program for pregnant women and new mothers. A program in San Francisco is designed to benefit artists, while Gainesville and Durham, North Carolina, want to help people getting out of prison reintegrate into the community.
In Gainesville, about 90% of the recipients had less than $50 to their name at the beginning, said director Kevin Scott, who noted that roughly a quarter of all probation violations happen simply because probationers can’t afford fines, court fees or expenses for urinalysis or an ankle monitor — so many people end up back behind bars because of poverty, rather than misbehavior.
The Gainesville program pays released offenders $7,600 a year, or about a quarter of the cost of keeping them locked up.
Wilson said he was able to pay off his court costs and start a new life. He was initially skeptical that the program was real. “I’m a criminal; I don’t deserve nobody giving me no free money,” he recounted. But when he learned that he had been selected, “I knew that I was never going to steal again. It was God’s way of showing me that he’ll help me, if I just realize how important it is to get my life together.”
Very few of the pilot programs are funded by local taxpayers. Mayors for a Guaranteed Income received $18 million for grants from a group affiliated with Jack Dorsey, the former CEO of Twitter, now X. Cambridge raised $5 million for its pilot from private donations, including from Harvard and MIT. The rollout will cost $22 million, all of which will come from the city’s Covid relief funds.
Beyond that, “it’s important to acknowledge that the sustainability of programs like this relies on funding from state or federal sources,” said Pierre, the mayor’s spokesperson. “By demonstrating the effectiveness of these initiatives, we can advocate for the continued expansion of our program and similar programs across the country.”
But when the private donations and relief funds run out, it’s unclear if voters will be willing to foot the bill for an idea that appeals to progressives on the left and libertarians on the right, but might strike many in the middle as giving away something for nothing.
That’s especially true if the free money comes on top of current benefit programs. It seems more likely that a successful proposal would eliminate or reduce the current patchwork safety net to fund the unrestricted cash grants, as Friedman advocated and Romney proposed.
“The existing safety net is fantastically onerous,” Kline complained. “It puts up tremendous barriers; you have to get certified and and then recertified and small administrative problems can kick you out. Plus there’s a ‘time tax,’ and many people decide it’s not worth their time.”
“It’s an intrusive and dehumanizing process,” said Samra.
On the other hand, the current system “helps tens of millions of people a day, so tearing it all down is neither feasible or desirable,” Kline said, adding that programs would still need to be in place for people with disabilities and other groups that need specialized support beyond a basic income.
There are other arguments against giving away money with no strings attached, such as the idea that it is unfair to people who work and pay taxes. Under the Trump administration, the USDA acknowledged that its own research questioned the effectiveness of a work requirement for food assistance but supported it anyway on fairness grounds, Marion said.
She added that allowing the money to be used for anything could also make poor people targets for scammers and predatory lenders.
But the advantage of unrestricted cash, besides being easier to administer, is that it gives poor people dignity, said Strauss. “Part of our goal is to change the way that people talk about poverty,” he emphasized. “There’s a misperception that people who are poor deserve it, but it’s really due to being born into certain circumstances.”
Some people today view addiction as a moral failure, while others see it as a disease. Soon, voters may be asked to decide whether poverty should be seen as the result of a character defect — meaning any help needs to be carefully parceled out to keep people on the straight and narrow — or as a treatable condition caused by social environments, meaning the chief goal should be giving people enough resources to help themselves.
It’s an age-old question.
Samra summed up the case for the basic-income approach this way: “Poverty is a policy failure, not a personal one.”
