Fighting poverty with cash

School of Social Policy & Practice (SP2)assistant professor Amy Castro Baker set out to answer this question: What would happen to a person in or near poverty who received no-strings-attached guaranteed payments every month? And the answer, at least from one pilot program, was even more promising than she imagined when she and her research partner Stacia West, a professor at the University of Tennessee, Knoxville, were selected to coordinate and evaluate the Stockton Economic Empowerment Demonstration (SEED), the nation’s first mayor-led guaranteed income demonstration.

Amy Castro.
School of Social Policy & Practice assistant professor Amy Castro. (Image: Courtesy of SP2)

Launched in February 2019 by Michael Tubbs, then the mayor of Stockton, California, SEED gave 125 Stockton residents, selected randomly from neighborhoods at or below the city’s median household income, $500 per month for 24 straight months (unconditionally and with no work requirements). Preliminary findings were released this past March from the first year of the experiment (pre-COVID, from February 2019 to February 2020). They showed, among other things, that recipients of the cash experienced reduced income volatility, showed improved mental health, and, perhaps more surprisingly, were likelier to find full-time employment. (Post-COVID data will be released next year.)

Castro explains the pushback that she encounters regarding universal basic income. “That is the biggest pushback we get: If you give people money, no strings attached, they’re going to stop working. We never thought that would happen because that’s absurd. Who can live on $500 a month anywhere, let alone California? But what we did see was that the $500 created a new kind of cognitive capacity where people could take risks in the economy that they couldn’t take before, because they had a cushion and their wellbeing was in a healthier space.”

While people have indeed argued over the years that government money is a disincentive to work, others have insisted that living in poverty is more of an impediment than it is a motivator—an idea that the SEED data would seem to support. Per the findings, the $500 monthly payments “removed material barriers to full-time employment and created capacity for goal setting and risk taking, once basic needs like food and utilities were covered.” In February 2019, 28% of the SEED recipients had full-time employment; one year later, that number jumped up to 40%. In contrast, the control group (Stockton residents who participated in the study but did not receive monthly payments) saw only a five percentage point increase in full-time employment over the same one-year period.

The data also ran counter to a longstanding assumption among critics that people will spend any government money that’s not integrated into a specific social welfare program on drugs or other vices. In Stockton, people spent their SEED cash on basic needs—less than 1% was spent on alcohol or tobacco. “The thing about guaranteed income is that it pushes back at a lot of things that make people very uncomfortable,” says Erin Coltrera, SEED’s research and program officer. “It requires trusting people. And especially in this country, there’s not a lot of trust of folks who experience poverty.”

And that’s where Castro Baker believes the hate comes from. “I’m white but the pushback I hear a lot—both from trolls and commentary—is really rooted in anti-Blackness,” the Penn professor says. “We spent many years in the U.S. attaching shame and blame to the safety net.” But buoyed by the promising Stockton data, and now spearheading a new center at Penn that will analyze similar pilot programs in other U.S. cities, she plans to continue to drive the conversation forward. “What’s been most surprising about the pushback is that when it comes, it’s very ugly,” she says. “But the support far outweighs the pushback.”

Currently about 40 mayors, from American cities both big and small, have joined a new group called Mayors for a Guaranteed Income (MGI), founded last June by Tubbs and the Economic Security Project, which together with SP2 in October established the Center for Guaranteed Income Research. Castro Baker and West will colead the Penn center, which has the stated goal to “consolidate the key learnings from the pilots taking place in MGI member cities, to address knowledge gaps in the contemporary understanding of guaranteed income’s impact for Americans, and to allow the organization to layer data with anecdotal evidence in federal advocacy.”

This story is by Dave Zeitlin. Read more at The Pennsylvania Gazette.