Here’s What Happened When People Got $500 a Month With No Strings Attached
Written by SOURCE on March 4, 2021
The guaranteed income program in Stockton, California, has been deemed a success.
It was just two years ago when the city launched the Stockton Economic Empowerment Demonstration, an initiative that aimed to prove the effectiveness of a universal basic income. According to the Associated Press, 125 residents were selected to receive a guaranteed monthly payment of $500 for two years with absolutely no strings attached. However, those who were eligible for the program could not earn more than the city’s median household income of $46,033.
So, what were the results? According to a newly published report, participants in the experiment saw an overall improvement in their standard of living. The employment rate among the group reportedly rose while levels of depression and anxiety decreased. The report was based on first-year data that was reviewed by independent researchers at the University of Tennessee and the University of Pennsylvania. The AP reports a second study focused on the second year will be released in 2022.
Andrew Yang helped popularize the idea of a universal basic income during his 2020 presidential bid. The New York City mayoral candidate proposed guaranteed monthly payments for all Americans as a way to help alleviate financial stress and pull citizens out of poverty. Critics have argued that such payments could have a negative effect on society, as it may demotivate people to work; however, the recent report on the SEED program suggests guaranteed income has the opposite effect.
At the beginning of the initiative, 28 percent of the participants had full-time jobs; that number rose to 40 percent of those people at the end of the first year. The AP notes that a control group of people who didn’t receive the $500 monthly payments saw a 5 percentage increase in full-time employment during the same period.
Tomas Vargas said the guaranteed payments allowed him to cut back on his part-time gig and dedicate more time to landing a higher-paying full-time job, which he did. He told the AP that he was depressed at the beginning of 2019, but is now in a much better mental space.
“Every day I get to wake up and enjoy my kids,” he said. “My wife, we enjoy time together. We didn’t have that before.”
It’s also worth noting that the $500 payments were placed on debit cards, which made it easier to track the ways the money was spent. Researchers found that less than 1 percent of the money was used to purchase alcohol and tobacco.
The SEED program was the brain child of Stockton’s former mayor Michael Tubbs, who set out to prove that UBI is effective in reducing income inequality and improving overall human health.
“The last year has shown us that far too many people were living on the financial edge, and were pushed over it by COVID-19,” Tubbs said in a statement. “SEED gave people the dignity to make their own choices, the ability to live up to their potential and improved economic stability going into the turmoil of the pandemic.”
