Guaranteed Income: Bad Idea? Or Has Its Time Come?

By Richard Dahl on April 12, 2021 | Last updated on April 12, 2022

This post was updated on April 12, 2022.

To many Americans, the idea of free handouts is … well, un-American.

But might that sentiment be changing?

Around the country, a variety of programs have emerged to provide monthly payments – no requirements, no strings attached – to low-income people. A nonprofit group in San Diego became the latest city to join the growing list on April 6, when it announced plans for a project to provide $500 monthly payments to qualified recipients later this year.

As you may recall, the idea of a “universal basic income," or UBI, first emerged in any significant way in the early stages of the 2020 presidential race. Democratic presidential candidate Andrew Yang (now a mayoral candidate in New York) promoted the idea of giving every American adult a $1,000-per-month “freedom benefit" to use in any way they wish. Not surprisingly, both Yang and his centerpiece idea were mostly ignored.

But that was before the COVID-19 pandemic and billions of dollars in direct payments to Americans in the form of stimulus checks.

Polls have shown overwhelming support from Democrats and Republicans alike for the direct payments. In February, a Quinnipiac poll found that 78% of respondents supported the most recent round of $1,400 stimulus checks. In March, a Monmouth University poll also revealed strong majority support for the payments.

Mayors Take Action

In April 2020, Americans began to receive the first round of relief checks and payments, most of them for $1,200. Two months later, a group of mayors joined forces to push for a guaranteed income. One of the 10 mayors, Michael D. Tubbs (now a former mayor) of Stockton, California, pioneered the idea in early 2019 in his city with an experimental project. Using money provided by donors, the Stockton Economic Empowerment Demonstration (SEED), sent monthly $500 payments to 125 recipients for 24 months, no strings attached.

At the conclusion of the two-year program in February, a team of researchers released a report that amounted to a rave review. Its primary findings: only a small percentage of the money was used for nonessentials, and the grants did not appear to deter work.

Supporters of guaranteed payments contend that they do not breed shiftlessness, as opponents contend. Supporters also say these programs are far cheaper to manage than welfare programs.

Still, the Stockton numbers are small. And opponents say there's sufficient evidence that they don't work. A recent two-year guaranteed-income pilot project in Finland produced less than convincing results. And conservative organizations like the Heritage Foundation argue that a similar device, the “negative income tax," was tried between 1968 and 1980 and the results were poor — it failed to encourage recipients to be more productive.

However, there are also programs that have worked well in other countries. In Kenya, the charity GiveDirectly is making direct payments to 20,000 people in 245 rural villages, and the results are, by most accounts, positive.

Stanford University's Basic Income Lab last year released a comprehensive report looking at a broad range of guaranteed-income programs in the world and concluded that they have generally helped to reduce poverty and not deterred work. However, the report also concluded that there is not enough evidence from local projects to predict how a truly national UBI would work.

Numbers Are Growing

We're a long way off from a program like the national one Yang envisions, funded by taxes and spending cuts.

But the numbers of these small programs continue to grow. The initial 10-member Mayors For a Guaranteed Income Group has expanded to 41. The group is pushing for Congress to provide more direct payments to people until the pandemic ends and is also providing funds from private donations (Twitter CEO Jack Dorsey contributed $15 million) to help cities to launch their own projects.

About a dozen cities are doing so or are planning to do so this year. Typically, they establish income and other criteria and pick recipients by lottery. In Richmond, Virginia, 55 working families who no longer qualify for assistance but fail to make a living wage are receiving $500 a month for 24 months. In St. Paul, Minnesota, the People's Prosperity Pilot is providing monthly $500 payments for 18 months to needy residents with babies.

In addition, the city council in Palm Springs, California, approved $200,000 in start-up funding for two organizations to develop a guaranteed-income program for the city’s transgender and nonbinary residents. The city identified this group for the program because studies show that they experience high poverty rates.

The organizations plan to apply for a piece of the $35 million the state earmarked for guaranteed-income pilot programs.

Critics say that paying people to do nothing is a terrible idea – that's what public assistance is for.

But supporters say that with the huge wealth gap in the country and the takeover of more and more jobs by automation and artificial intelligence, universal basic income is inevitable.

Maybe universal basic income's time has not arrived, and maybe it never will. But maybe these city programs are providing a glimpse of what could be coming.

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