Stockton Extends its Universal Basic Income Pilot
by SARAH HOLDER
A pioneering universal basic income pilot in the low-income California city was scheduled to expire soon. But the coronavirus crisis made the case to extend it.
In the winter of 2018, researchers randomly selected residents of high-poverty neighborhoods to participate in the Stockton Economic Empowerment Demonstration (SEED). Designed to measure the effects of universal basic income (UBI), the project was funded by the Economic Security Project, a nonprofit that supports other guaranteed income experiments, and championed by Mayor Michael Tubbs, a Democrat.
Researchers published ongoing findings, which indicate UBI can help solve everyday emergencies. Recipients reported spending money on groceries, utility bills, credit card debt, dental work and a prom dress for their daughter. They were feeling less anxious and spending more time with their families.
The six-month extension comes thanks to a large donation from philanthropist Carol Tolan. “I hope the research and the stories of the impact of UBI over a full two years, both before and during this pandemic, will make it even more clear that UBI must be a national priority,” Tolan said in a statement.
Stockton, a city of 315,000 in California’s Central Valley, has struggled to recover from the last recession. As the U.S. unemployment rate is expected to climb to 20%, Tubbs says the city’s unemployment rate will match it in May. Pulling the modest floor out from under these already extremely low-income residents under the circumstances could have been disastrous, Tubbs told CityLab.
“Most people were in an economic crisis or an economic pandemic before Covid-19,” he said. The virus “further exacerbated unacceptable and undignified economic conditions for millions of Americans.”
Five hundred dollars isn’t enough to make up for a lost job, nor can it make going to work without adequate infection protections less frightening. It can, however, provide a sense of stability. “SEED has given me peace of mind,” said Virginia Medina, one of the recipients. “I don’t need much since the pandemic, but I have confidence that we’ll be OK. For now, I am focused on saving each month so I’m not at zero when this is over.”
In March, the pandemic introduced new stressors. Paradela fears catching coronavirus at her job and passing it on to her own children, who are 17 and 10 years old. In another city, her mother’s cancer advances. Her kids’ birthdays, in July and September, will probably go uncelebrated. Additional anxieties continue to emerge: Stockton, like so many other cities nationwide, has been experiencing several days of local protests over the killing of George Floyd. “It’s not really about the money — it’s about the world right now,” she said.
Still, supporting her family on one income is a balancing act. Every two weeks, Paradela makes about $1,200. Every month, her rent of $1,250 is due; in June, the bill is set to go up to $1,300.
“It’s not really about the money — it’s about the world right now.”
Like so many others, Paradela’s budget has been upended by the pandemic, as she has to spend more on food for her kids and household necessities like toilet paper. Data show that since the pandemic started, food spending by SEED recipients increased nearly 25% over the monthly average. In March, it accounted for 46.5% of spending the researchers were able to track using prepaid debit cards, 36% over the same month the previous year. Meanwhile, spending on merchandise like clothes and non-food goods dropped 20%.
“We live in a time of pandemics,” said Tubbs. “If it’s not a virus, it’s an earthquake; if it’s not an earthquake, it’s a tornado; if it’s not a tornado, it’s a flood. We have disruptive events happening all the time. I want to prove that basic income is an important tool to build a foundation for people to withstand these things.”
Tubbs has recently been speaking with mayors, state legislators and national policymakers — including House Speaker Nancy Pelosi, Senator Chuck Schumer, and the campaign of Democratic presidential candidate Joe Biden — about how to design cash assistance programs. “My advice to them is: you just have to do it,” he said.
Justine Zinkin, the CEO of Neighborhood Trust, says the one-time payment will inevitably have less of an impact than a longer-term cash assistance program, especially since it’s being administered in a time where some people are making nothing at all. This isn’t a test of UBI, she stresses: It’s UBI with the confounding variable of a collapsed economy.
“This is the right thing to do, but let’s also be clear about what those totals add up to as a percentage of somebody’s typical survival expenses,” she said. “Hopefully, people won’t believe that if someone is getting [$1,000] that they can feel like that person is quote-unquote ‘taken care of,’ or that the crisis is being mitigated in any meaningful way.”
The money is still a massive help for those who receive it. Ramona Ferreyra, a social entrepreneur, was nearing a breaking point when she learned she would be receiving the fund. “I was taking care of my grandmother, taking care of myself, trying to figure out how I’m going to pay for the company,” she said.
“I think a lot of people didn’t realize just how fragile their existence was until Covid,” she said. “In communities like mine in the South Bronx, this is the norm for us.”
With the $1,000, Ferreyra put $300 towards paying off her credit card, bought three months’ worth of food for her pets and made a donation to a nonprofit doing Covid-19 aid work in the Dominican Republic.
She wants to invest the remaining funds in her business, and has already paid for Google ads that have tripled traffic to the site. “I just could never get enough money together” to make that investment before, she said. “There’s never breathing room when you’re limited like this.”
Critics of a national universal basic income program argue that free cash will discourage people from working, or that the dividend will be used as an excuse for the tech industry to automate jobs once held by a low-wage labor force. But amid mounting financial distress, even the federal government offered no-strings-attached financial assistance to eligible taxpayers — albeit on a short-term basis. Proponents hope the momentum doesn’t wane before the crisis does.
“What is really important is to continue to keep alive a concern for all these families,” Zinkin said. “[We] need to be very vigilant around the most vulnerable, and not assume that any help today is going to be adequate for this level of devastation.”
