Madison is giving 155 residents a guaranteed basic income. Is it working?

By: Dean Mosiman | Wisconsin State Journal

Mai Kaw Xiong struggles to make ends meet.

With a limited ability to work due to a hit-and-run accident and a 1-year-old daughter to care for, Xiong is dependent on her boyfriend’s modest income.

Since September, however, Madison’s $930,000 guaranteed income pilot program has helped Xiong and 154 other households gain some financial stability.

Called the Madison Forward Fund, the initiative gives each participating household $500 a month for a year, with no strings attached or work requirements.

“It can really help low-income people,” said Xiong, the daughter of parents who immigrated from Laos in the mid-1980s, with Xiong moving from Milwaukee to Madison five years ago. “Without this, we would be suffering. We would not have enough income to make expenses.”

The Madison Forward Fund is part of a larger organization, Mayors for a Guaranteed Income, that is advocating for a national initiative. A guaranteed income is meant to supplement, not replace, the existing social safety net — a tool supporting gender and racial equity and a path from poverty.

The local pilot program, which made its first payments to recipients in September, is being funded by the private sector, institutions and philanthropy. The 155 recipients were chosen from about 3,000 eligible applicant households with incomes at or below 200% of the federal poverty level, or $46,060 for a family of three, with children younger than 18 living in the home.

The households each get a debit card with an account so the card can be swiped or used at an ATM, or the funds transferred to another bank account. Recipients can spend the $500 in monthly income on anything, but preliminary data from the local program and experience elsewhere shows the money usually goes to basics such as food, transportation, utilities and rent.

Meanwhile, another 200 households that applied but are not receiving cash payments are completing surveys on financial and physical health, financial stability, anxiety and stress levels, participation in the workforce and overall well-being, and are being compensated $30 for each of three surveys completed.

The idea is to determine the impact of guaranteed income locally and compared with other cities across the nation.

The plan is not to use local taxpayer money to one day fund a more-permanent program but to collect evidence in support of action at the federal level.

“Many Madison families just need a little boost to reach financial security,” Mayor Satya Rhodes-Conway said. “Programs like the Madison Forward Fund are an investment in our residents, providing the resources they need to get ahead. The stories we are hearing from MFF recipients make it clear that just a small bump in monthly income helps them pay off debt, access job training or support their children’s education.”

Financial stability

After the pilot program was announced in mid-June, the city received about 3,000 applications from eligible families in Madison, said Blake Roberts Crall, program manager for the Madison Forward Fund. From that pool of applicants, 155 households were randomly selected to get the payments and 200 others selected to participate in the survey program. Anyone who applied and was eligible had an equal chance of being selected, she said.

The selection process was managed by partners at the Center for Guaranteed Income Research at the University of Pennsylvania, she said.

The city is now getting its first look at initial results.

In Madison, the average recipient is 36 years old, is living in a household of four with two children, and is making a median annual income of $14,378, a just-released interim report covering September through November says.

The racial breakdown of recipients is: 48.6% African American, 23.9% other/mixed, 22.6% White, and 4.9% Asian, the interim report says. The ethnic breakdown is 17.8% Hispanic, and 82.1% non-Hispanic, it says.

Xiong, 33, has a boyfriend and a 1-year-old, Vera. They live in a studio apartment with a monthly rent of $600. She has a bachelor’s degree in media design from Alverno College in Milwaukee, but around the time of her graduation in 2012, she was struck by a hit-and-run driver. The accident left her with chronic physical and mental trauma.

Unable to pursue a career in media design, Xiong got a massage therapy certificate in 2018. But she struggled, especially during the COVID-19 pandemic, and temporarily left her job in December 2021 to have her baby. Her finances have long hovered around “low poverty,” she said.

Making matters worse, “financial crisis is my biggest trauma trigger,” she said.

The Madison Forward Fund’s $500 monthly payment has been invaluable, she said. The program enables her boyfriend to primarily cover rent and utilities while she takes time to care for her daughter.

The extra money, she said, mostly covers food, cellphone service and expenses for the baby not covered by the federal Special Supplemental Nutrition Program for Women, Infants, and Children, or WIC. They hope to qualify for a low-income apartment.

Covering costs

The money has helped others in similar ways.

In the first three months, “the largest share of funds were spent on retail sales and services, which includes large and small chain stores, wholesale and discount clubs, maintenance and repair services, and superstores, like Target and Walmart, where participants can purchase food, school supplies, medical products,” the interim report says.

Overall, recipients spent 32% of the payments on retail sales and services; 27% on food and groceries; 20% on transit; 9.5% on housing and utilities; 4.4% on travel, leisure and entertainment; 3% on financial transactions; 2.4% on health and medical costs; 1.5% on miscellaneous items; and 0.3% on educational expenses, the report says.

“The stories we are hearing from recipients are really powerful,” Roberts Crall said. “Even after just six months of payments, recipients are already talking about the doors that have opened for them because they have more financial stability. Families have a chance to move out of crisis and now have opportunities to start on new paths toward resiliency.”

Occasionally, Roberts Crall said, she contacts those who haven’t used much of their funds to ensure they’re not having problems with their debit card or accounts and is told they are saving the money. One person told of saving for a down payment for a car. Another anticipated medical needs for a child and was saving to cover medical bills.

Some critics say guaranteed income programs are unearned handouts, but there’s far more to it, Roberts Crall and others said.

“There are many examples of people who are simply left out of this traditional definition of ‘work,’ and therefore are seen as undeserving of support,” she said. “We have to stop attaching dignity to work and instead attach it to our personhood. For example, people who are caregiving, watching kids, taking care of sick or elderly family, or doing domestic labor and not being paid — are we saying that they don’t have value because they don’t receive a paycheck?”

“Another stereotype is that if you give people money, they will stop working,” she said. “The data have shown that is not what actually happens. Results from the Stockton (California) program show us that recipients actually found full-time employment at more than twice the rate of nonrecipients, proving that it actually improves employment prospects.”

Shiva Bidar, chair of the 11-member Madison Guaranteed Income Pilot Program Advisory Task Force, said many studies show such programs help lift people out of the financial and mental stress of living in poverty and can be a catalyst to helping out them of poverty.

The pilot program will distribute 12 months of payments and then will continue to collect survey data from participants for another six months, Roberts Crall said.

Growing movement

If anything, the guaranteed income movement is gaining momentum.

In December 2020, Rhodes-Conway announced that Madison would get up to $500,000 from the $15 million then-Twitter CEO Jack Dorsey gave Mayors for a Guaranteed Income, a group founded in 2020 by Michael Tubbs, the former mayor of Stockton, and the nonprofit Economic Security Project.

Then local donors gave another $430,000 to the Madison Forward Fund, pushing the total amount available for the pilot program to about $930,000. UW-Madison’s Institute for Research on Poverty is partnering with the Center for Guaranteed Income Research at the University of Pennsylvania to gather survey data throughout the program.

So far, about 100 mayors have joined the Mayors for a Guaranteed Income network and 50 to 60 cities are running pilot programs, Roberts Crall said.

Some of the largest programs, she said, include Chicago’s, with 5,000 recipients getting $500 a month. Some pilots are extending payments for longer periods or issuing larger amounts. Los Angeles County has 1,000 recipients, providing $1,000 a month for 36 months. Minneapolis is issuing $500 a month for 24 months.

Recently, Dane County Executive Joe Parisi signed on as a founding member of a new coalition, Counties for a Guaranteed Income.

The Madison Forward Fund estimates there are about 27,000 households in the city that meet the eligibility criteria for the pilot program, Roberts Crall said. But local governments and municipalities generally don’t have the financial means to sustainably run significant antipoverty programs at scale, she said.

“We need significant investment from the federal government if we are to seriously address poverty in the United States,” Roberts Crall said. “The expanded (federal) Child Tax Credit that was issued during the pandemic was a great example of unrestricted, cash payments to families, and I would like to see that expansion made permanent.”

“Seeing the research results will help us understand impacts and best next steps,” Bidar said. “Certainly, in the meantime, we need to explore ways we could possibly continue and expand the pilot.”

“I really hope it continues,” Xiong said, stressing that many can use the help.

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