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Here's what a Sam Altman-backed basic income experiment found

By Megan Cerullo

Edited By Anne Marie Lee

Updated on: July 23, 2024 / 10:33 AM EDT / CBS News

A recent study on basic income, backed by OpenAI founder Sam Altman, shows that giving low-income people guaranteed paydays with no strings attached can lead to their working slightly less, affording them more leisure time.

The study, which is one of the largest and most comprehensive of its kind, examined the impact of guaranteed income on recipients' health, spending, employment, ability to relocate and other facets of their lives.

Altman first announced his desire to fund the study in a 2016 blog post on startup accelerator Y Combinator's site.

Some of the questions he set out to answer about how people behave when they're given free cash included, "Do people sit around and play video games, or do they create new things? Are people happy and fulfilled?" according to the post. Altman, whose OpenAI is behind generative text tool ChatGPT, which threatens to take away some jobs, said in the blog post that he thinks technology's elimination of "traditional jobs" could make universal basic income necessary in the future.

How much cash did participants get?

For OpenResearch's Unconditional Cash Study , 3,000 participants in Illinois and Texas received $1,000 monthly for three years beginning in 2020. The cash transfers represented a 40% boost in recipients' incomes. The cash recipients were within 300% of the federal poverty level, with average incomes of less than $29,000. A control group of 2,000 participants received $50 a month for their contributions.

Basic income recipients spent more money, the study found, with their extra dollars going toward essentials like rent, transportation and food.

Researchers also studied the free money's effect on how much recipients worked, and in what types of jobs. They found that recipients of the cash transfers worked 1.3 to 1.4 hours less each week compared with the control group. Instead of working during those hours, recipients used them for leisure time.

"We observed moderate decreases in labor supply," Eva Vivalt, assistant professor of economics at the University of Toronto and one of the study's principal investigators, told CBS MoneyWatch. "From an economist's point of view, it's a moderate effect."

More autonomy, better health

Vivalt doesn't view the dip in hours spent working as a negative outcome of the experiment, either. On the contrary, according to Vivalt. "People are doing more stuff, and if the results say people value having more leisure time — that this is what increases their well-being — that's positive."

In other words, the cash transfers gave recipients more autonomy over how they spent their time, according to Vivalt.

"It gives people the choice to make their own decisions about what they want to do. In that sense, it necessarily improves their well-being," she said.

Researchers expected that participants would ultimately earn higher wages by taking on better-paid work, but that scenario didn't pan out. "They thought that if you can search longer for work because you have more of a cushion, you can afford to wait for better jobs, or maybe you quit bad jobs," Vivalt said. "But we don't find any effects on the quality of employment whatsoever."

Uptick in hospitalizations

At a time when even Americans with insurance say they have trouble staying healthy because they struggle to afford care , the study results show that basic-income recipients actually increased their spending on health care services.

Cash transfer recipients experienced a 26% increase in the number of hospitalizations in the last year, compared with the average control recipient. The average recipient also experienced a 10% increase in the probability of having visited an emergency department in the last year.

Researchers say they will continue to study outcomes of the experiment, as other cities across the U.S. conduct their own tests of the concept.

Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.

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Here’s What Happens When You Give People Free Money

An OpenAIBacked Nonprofit Gave 1000 a Month to Poor People. Heres What They Did With It

OpenAI CEO Sam Altman’s decade-in-the-making effort to understand how handing out free money affects recipients and the broader economy delivered its first big results Monday. OpenResearch found that when it gave some of the poorest Americans $1,000 a month for three years with no strings attached, they put much of the money toward basic needs such as food, housing, and transportation. But what amounted to $36,000 wasn’t enough to significantly improve their physical well-being or long-term financial health, researchers concluded.

The initial results from what OpenResearch, an Altman-funded research lab , describes as the most comprehensive study on “unconditional cash” show that while the grants had their benefits and weren’t spent on items such as drugs and alcohol, they were hardly a panacea for treating some of the biggest concerns about income inequality and the prospect of AI and other automation technologies taking jobs .

Some progressive organizations in the US and elsewhere have advocated for fighting poverty through forms of unconditional cash such as universal basic income . Conservative groups have largely panned the projects as handouts for undeserving people who refuse to work. In two papers published on Monday and a third coming next month, OpenResearch staff and its university collaborators offer data that could help fuel the full spectrum of views.

OpenResearch, which has also drawn funding from organizations like OpenAI and the US government, handed out the unconditional $1,000 transfers from November 2020 to October 2023. The cash provided a 40 percent income boost to a diverse group of 1,000 people ages 21 to 40 who started out in households earning about $30,000 annually across 10 counties apiece in Illinois and Texas. As a control group, 2,000 people with similar characteristics received $50 a month. Participants answered surveys, shared credit reports, and took blood tests.

The perceived benefits for those who received $1,000 monthly varied across facets of life. Their biggest jump in spending involved giving an average of $22 more per month to others, such as helping out relatives in need or gifts to friends. People started seeking out more health care such as dental braces, and started better stocking their refrigerators and pantries.

Some began considering or pursuing startups. By year three of the payments, “Black recipients were 9 percentage points more likely to report starting or helping to start a business than control participants, and women were 5 percentage points more likely,” according to one of the studies.

Workers Say They Were Tricked and Threatened as Part of Elon Musk’s Get-Out-the-Vote Effort

Participants also moved out on their own, especially those who started out at the lowest incomes, and enjoyed themselves more. The forthcoming paper, of which OpenResearch shared a draft version with WIRED, estimates that roughly 81 cents of each dollar transferred went to higher spending on items such as housing, 22 cents went to leisure, and negative 3 cents went to increased borrowing as recipients took on more car loans and mortgages.

The increased debt brought down participants’ net worth over the three years. Combined with little change in credit access, bankruptcies, and foreclosures, researchers concluded that “the transfer did not improve participant’s long-run financial position.” People did put more money into savings and initially felt better about their financial situation. But they also slightly cut back on work and let the free cash fill in the gap. For every $1 received from OpenResearch, participants’ earnings excluding the free money dropped by at least 12 cents and total household income fell by at least 21 cents.

“Cash offers flexibility and may increase agency to make employment decisions that align with recipients’ individual circumstances, goals, and values,” the researchers wrote. They may be “taking more time to find a job, taking a lower paying position that they find more meaningful, or simply taking a break.”

What critics of assistance programs fear, though, is that instead of investing in the future, people eventually give up on working completely and become ever more reliant on support. OpenResearch found “the total amount of work withdrawn from the market” was “fairly substantial” in its experiment.

Adding the fact that researchers found “no effect” from the cash on several measures of physical health and welfare, and critics may have plenty to snarl at. But the studies’ authors say it’s important not to forget that participants showed with their spending what they valued most. “Policymakers should take into account the fact that recipients have demonstrated—by their own choices—that time away from work is something they prize highly,” authors wrote. If anything OpenResearch has proved true the adage: Money can buy time.

California Program Giving $500 No-Strings-Attached Stipends Pays Off, Study Finds

Rachel Treisman

Stockton, Calif., resident Susie Garza displays the debit card on which she received a monthly stipend as part of a pilot universal basic income program. The program began in 2019, when this photo was taken. Rich Pedroncelli/AP hide caption

A high-profile universal basic income experiment in Stockton, Calif., which gave randomly selected residents $500 per month for two years with no strings attached, measurably improved participants' job prospects, financial stability and overall well-being, according to a newly released study of the program's first year.

Michael Tubbs, at the time the mayor of Stockton, Calif., speaks during a 2019 interview. A universal basic income program run by a nonprofit founded by Tubbs gave $500 a month to 125 people who lived in census tracts at or below the city's median household income. Rich Pedroncelli/AP hide caption

The Stockton Economic Empowerment Demonstration, or SEED , was founded in February 2019 by then-Mayor Michael Tubbs and funded by donors, including the Economic Security Project .

It gave 125 people living in neighborhoods at or below Stockton's median household income the unconditional monthly stipend. A study of the period from February 2019 to February 2020, conducted by a team of independent researchers, determined that full-time employment rose among those who received the guaranteed income and that their financial, physical and emotional health improved.

Mayor Of Stockton, Calif., Discusses Universal Basic Income Program Results

"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."

The idea of universal basic income was featured prominently in the 2020 campaign of Democratic presidential candidate Andrew Yang and has gained further traction during the coronavirus pandemic. Supporters say that for people living in poverty, a guaranteed income can alleviate stress and provide the financial security needed to find good jobs and avoid debt.

Critics worry it could eliminate the incentive to work, as well as endanger certain existing safety net programs.

Tubbs countered this criticism in a 2018 interview with NPR's All Things Considered , saying research and trials from the previous three decades did not indicate that $500 a month would discourage people from working. He argued that more financial stability would "make people work better and smarter and harder," as well as make it possible to spend time with their families and participate in their communities. In a subsequent interview this January, he told NPR that the money had decidedly not quashed people's work ethic.

The guaranteed income (GI) results from Stockton are in: 1. Employment & Productivity ⬆️ 2. Well Being ⬆️ and stress ⬇️ 3. It allowed people to pay off debt 4. The money was spent on necessities and not drugs. We need a guaranteed income policy. @stocktondemo @mayorsforagi pic.twitter.com/utB60duQN6 — Michael Tubbs (@MichaelDTubbs) March 3, 2021

"It did not change us into a different country, but it actually allowed folks to have a floor to persist during times especially like these ones," he said.

Among the key findings outlined in a 25-page white paper are that the unconditional cash reduced the month-to-month income fluctuations that households face, increased recipients' full-time employment by 12 percentage points and decreased their measurable feelings of anxiety and depression, compared with their control-group counterparts.

Planet Money

The debate over money for everybody.

The study also found that by alleviating financial hardship, the guaranteed income created "new opportunities for self-determination, choice, goal-setting, and risk-taking." It furthered recipients' ability to cover unexpected expenses, which researchers noted was particularly important given the onset of the pandemic.

Individuals spent most of the money on basic needs, including food, merchandise, utilities and auto costs, with less than 1% going toward alcohol and/or tobacco.

"Before SEED came along, I was paying a lot of bills and didn't know how I was gonna eat," a participant named Laura said in a testimonial . "It's like being able to breathe."

The study also noted that positive effects of the $500 sum rippled outward in ways that "alleviated financial strain across fragile networks and generated more time for relationships." For instance, stabilizing food security for members of one household also alleviated any strain on those they ordinarily relied upon for food.

The Coronavirus Crisis

In pandemic downturn, canada's drive for guaranteed basic income picks up speed.

The stipends helped recipients stretch resources to cover needs like caring for aging or ill family members, school or sports supplies and transportation to and from doctor's appointments that they might otherwise have skipped — strategies, the researchers noted, that were more commonly utilized by women, who typically bear the brunt of most unpaid care work. Under less financial strain, they wrote, many women were able to attend to their own needs in ways they had not in years.

"Mona bought diapers for her grandchildren and an adequate amount of feminine hygiene products for the first time in months. Like many, she ordinarily bypassed meeting her basic hygiene for her grandkids," the paper reads. "Bunny purchased new shoes for herself while paying someone to mow her grass rather than having to do it under a blazing Central Valley sun with health limitations."

We are shocked that people who make as much, less than, or more than us spend money on necessities? Want a stable schedule? To spend time with their kids? The Stockton findings are surprising only if you’ve internalized that individual choices matter more than policy ones. https://t.co/5z1kxUHsi5 — Michael Tubbs (@MichaelDTubbs) March 3, 2021

While the study's findings were cheered by those involved , as well as many mayors , on Wednesday, some experts said more research is needed.

Matt Zwolinski, director of the Center for Ethics, Economics and Public Policy at the University of San Diego, told The Associated Press that while the findings are "really good news for supporters of a basic income guarantee," the study is limited because it lasted only two years, adding that people are unlikely to drop out of the labor force if they know the extra money is temporary.

Several participants shared their stories publicly on SEED's website, highlighting the ways in which the monthly stipend made their lives easier and more fulfilling.

A married father of three who works in construction was able to repair his broken vehicle without needing to save up, making it possible for him to get to his job out of town. A mother of six and grandmother of six has put much of the money toward her teenage sons — football camp, new shoes, money for food — as well as rent and bills.

One recipient , mourning the death of his daughter, said the money gave him time to take opportunities for himself and be around more for his family, noting that "a lot of people have noticed a positive change." During the program, he wrote that even after the program's end, "it'll still get better because they opened my eyes to it."

Research spanning the full two years of the project will be available in 2022. In the meantime, similar initiatives are cropping up in cities across the United States.

Tubbs, prior to losing his bid for reelection last year, founded a group called Mayors for a Guaranteed Income . The coalition now includes 40 mayors advocating for direct, recurring cash payments in cities from Seattle to San Antonio to Pittsburgh.

A number of pilot programs are already in the works in places like Durham, N.C. , New Orleans and Gary, Ind., where officials announced one such initiative just last week.

Tubbs told NPR in January that he believes the time is right for the idea of universal basic income — of which Martin Luther King Jr. was an early proponent in the 1960s — to finally take hold.

"We are literally at ground zero with sort of the racial reckoning we're having but also with the economic impacts of COVID-19," he said. "When I think if we can get a guaranteed income, an income floor, at this time, we also have to have a conversation about the moral awakening our country needs because, again, as Dr. King said, poverty robs us of the richness of a society where everyone's given the opportunity to realize their full potential."

Universal Basic Income
Michael Tubbs

Inside the Nation’s Largest Guaranteed Income Experiment

O ne evening in early June, Leo and his family were able to enjoy a treat they hadn’t experienced in months: a sit-down meal at a restaurant.

At a fried chicken chain in a Compton, California strip mall, they splurged on a few plates of fried rice, each costing under $13.99. The money Leo, 39, makes as a mechanic never seems to satisfy the deluge of bills that pile up on his kitchen counter each month, so the modest meal felt like a luxury. “It made me very happy,” Leo says in Spanish through an interpreter.

The family was only able to afford the meal because Leo is part of a groundbreaking guaranteed income experiment in his city called the Compton Pledge. In regular installments between late 2020 and the end of 2022, Leo and 799 other individuals are receiving up to $7,200 annually to spend however they like. Leo, an undocumented immigrant from Guatemala who TIME has agreed to refer to by a pseudonym to protect his identity, receives quarterly payments of $900.

The organization running Compton Pledge , called the Fund for Guaranteed Income, is building the technological infrastructure necessary to distribute cash payments on a broad scale and has partnered with an independent research group to study the extent to which a minimum income floor can lift families like Leo’s out of poverty. The pilot, which distributes money derived from private donors, is not just about giving people the ability to buy small indulgences. It’s testing whether giving poor families a financial cushion can have a demonstrable impact on their physical and psychological health, job prospects and communities. And perhaps the biggest question of all: Can these cash infusions transcend their status as a small research project in progressive Los Angeles and someday work as a nationwide program funded by taxpayers?

Leo, a member of the Compton Pledge guaranteed income program, with his daughter, left, and wife at their home in Compton, Calif., on July 28, 2021.

The theory is gaining momentum in the U.S. Six years ago, there were no programs distributing and studying the effects of providing swaths of Americans no-strings-attached cash, according to Stanford’s Basic Income Lab, an academic hub tracking such programs. But now, pilot programs are taking place in roughly 20 cities around the country, from St. Paul, Minnesota to Paterson, New Jersey, with Compton’s exercise serving as the nation’s largest city-based experiment in terms of number of people served. Most of the programs are philanthropically funded—including Compton’s—and distribute different amounts of money to targeted populations, from Black pregnant women to former foster children to single parents. These laboratories for wealth redistribution all have one thing in common: they give some of society’s poorest and most marginalized people cold-hard cash, and then let them spend it however they want.

There is limited polling on support for nationwide guaranteed income programs, but 45% of Americans supported giving every adult citizen—regardless of employment or income—$1,000 per month, through a subtype of guaranteed income called Universal Basic Income (UBI), according to an August 2020 survey from Pew Research Center. Andrew Yang, who popularized the idea of UBI during his long-shot 2020 presidential campaign, wants the proposed benefit to replace most existing government welfare programs. Most other proponents of a guaranteed income in the U.S., however, resist being lumped in with his plan , believing instead that the cash benefit should supplement other forms of government assistance and target individuals who need it most.

If any form of a national guaranteed income were to advance beyond a talking point, it would mark a striking shift in how Americans view the role of government in society. Less restricted forms of cash assistance largely ended in the 1990s with President Bill Clinton’s welfare reform, as both Republicans and Democrats argued government benefits were disincentivizing work. The country’s social safety net in recent years has offered more limited relief through a patchwork of difficult-to-navigate programs, like food stamps and Section 8 housing vouchers, which often have stringent rules and leave many poor families ineligible. But after a year and a half of the pandemic, three rounds of stimulus checks and a newly expanded child tax credit , proponents of cash-based programs feel the tide turning. “This is an inevitable future,” argues Nika Soon-Shiong, the executive director of the Fund for Guaranteed Income.

Leo says being selected to participate in Compton Pledge was a “miracle” from God.

Many of the country’s most significant social reform movements have been provoked by national crises, from the Great Depression’s birth of the New Deal to the 2008 financial crisis paving the way for the Affordable Care Act. Even if guaranteed income never catches on, economists and public officials may glean lessons about giving poor families financial breathing room from 2020’s pandemic relief packages and Joe Biden’s $3.5 trillion budget proposal , which includes a permanent expansion of the child tax credit and a paid family leave program for new parents. By one measure, U.S. poverty fell in 2020, largely thanks to federal aid aimed at helping people weather the worst financial crisis in decades, the Census Bureau reported in September.

But the window to enact major change closes quickly. Republican lawmakers have raised concerns that Biden’s $1.9 trillion stimulus package is feeding inflationary pressure and inciting labor shortages. It remains unclear whether Democrats will have enough support in Congress to make the assistance efforts they passed this year last beyond 2021. And despite the proliferation of guaranteed income pilots, cementing them beyond experiments funded through charity is proving tremendously politically challenging amid fears that such policies keep low-income Americans on the government dole.

That’s not how Leo sees it. While he used few bucks from Compton Pledge for a fried rice dinner, the rest of it went to more pressing causes: a $250 car diagnostic tool enabling him to take on more mechanic jobs, a college textbook for his 23-year-old stepdaughter Lesley, a few hundred dollars sent to his ailing mother in Guatemala, and payments towards a $3,000 payday loan that has accrued nearly $1,000 in interest fees in less than two years. The extra financial padding hasn’t kept him from needing to work, even through severe pain caused by his gout flare-ups. Leo, who does not have health insurance due to his immigration status, now also faces the daunting prospect of paying down a $10,612.80 hospital bill after a recent emergency room visit for chest pains that a physician linked to stress.

That stress has been building for a long time. Earlier this year, the mounting anxiety brought Leo to a Catholic church in downtown Los Angeles where he begged for a reprieve. “I asked the Virgin Mary for some sort of miracle,” he says from the covered patio outside his home that doubles as his stepson’s bedroom. Asked whether being selected to receive money from Compton Pledge was that miracle he was searching for, Leo replies with a grin: “Cien por ciento.” He feels 100% certain that it was.

Nika Soon-Shiong, the executive director of the Fund for Guaranteed Income, a nonprofit that oversees Compton Pledge, at TK location in TK, Calif., on July 30.

‘There were no cockroaches’

Soon-Shiong, a doctoral candidate at the University of Oxford, initially planned to launch the Fund for Guaranteed income after completing her thesis on cash transfer systems in India. But the pandemic made her realize people much closer to home needed help—and fast.

“It really felt like there were not enough people thinking about the solution,” Soon-Shiong, the daughter of billionaire business tycoon and Los Angeles Times owner Patrick Soon-Shiong, tells TIME from her spacious West Hollywood apartment. “But a lot of people talking about the problem.”

She approached Aja Brown, who was finishing her second and final term as Compton’s Mayor, to create a program to bring monetary help to the struggling city, where 29% of inhabitants are Black and 68% are Hispanic or Latino. As Compton’s unemployment rate eclipsed 20% and thousands of residents fell ill with the virus—including many undocumented ones like Leo who lack health insurance—Brown and Soon-Shiong felt compelled to create an inclusive guaranteed income initiative. Unlike some forms of federal assistance, Compton Pledge would be open to undocumented immigrants and formerly incarcerated individuals. And rather than make marginalized people who are wary of giving strangers their home addresses and financial information apply for the program, Brown and Soon-Shiong used an advisory council to help them randomly select the Compton residents, including those the city government might not have records of. Starting in August 2020, Compton Pledge raised $9.2 million from donors including Amazon Studios and the California Wellness Foundation to go directly to the eventual recipients of Compton Pledge.

Compton certainly isn’t the only American city with inadequate resources, but its health and economic deficits are compounded by the absence of well-paying jobs and a high proportion of undocumented immigrants who lack health insurance. “The combination of all that leads to what we have here, which is an epidemic of poorly treated chronic disease,” says Dr. Elaine Batchlor, the CEO of MLK Community Healthcare, a hospital and healthcare system in South Los Angeles. An estimated 40% of adults in the 100,000-person city are considered obese, 12% of the adult population has diabetes, and residents are significantly more likely to die due to lung cancer, cardiovascular disease and chronic obstructive pulmonary disease compared to the surrounding county’s residents, according to data compiled by the LA County Department of Public Health.

Three out of the four Compton Pledge families TIME interviewed over the first six months they received checks expressed that they are battling some sort of chronic illness. In addition to Leo’s gout, his wife Brenda is diabetic, and their daughter Lesley is an asthmatic. Tiffany Hosley, a 40-year-old former paraeducator for Compton Unified School District, has been unable to work since she had a serious heart attack last October, and her insurance denied coverage for her $988 heart medication. Christine S., a 44-year-old transportation worker who asked TIME not to use her last name because she feared the money she gets from Compton Pledge could cost her other government benefits, also has a daughter with asthma. (Compton Pledge does not expect the funds to impact recipients’ eligibility for existing government support, but has set up a fund to reimburse participants in case they do. It has not had to use those reserves yet.)

Compton's health and economic deficits are compounded by the absence of well-paying jobs and a high proportion of undocumented immigrants who lack health insurance.

The Fund for Guaranteed Income hopes these families can use the cash support to offset some of their medical expenses, and that the funds will also improve the recipients’ physical and mental health. Compton Pledge had promised in early press releases that Jain Family Institute, the independent research group it contracted to measure the success of the pilot, would be publishing data on the impact of the program at regular intervals, but it has not yet done so. Initial findings from a separate guaranteed income pilot in Stockton, California show promise, however. In March, the pilot reported that the recipients of its $500 per-month stipend showed statistically significant improvements in their mental health versus the control group, moving from likely having a mild mental health disorder to likely being mentally well. One year into the two-year pilot, Stockton recipients had spent 37% of their allotments on food, 22% on home goods and personal clothing items, and 11% on utilities. They spent less than 1% on alcohol and tobacco.

Beyond covering their own needs, some of the Compton recipients have committed to using the funds to pay it forward. That’s part of what the program’s organizers hope to demonstrate: that redistributing wealth through direct payments could improve access to education, housing and nutrition; reduce the racial wealth gap; and stimulate economic activity—which in turn can lift up a whole community.

Already, at least two members of the Compton Pledge have used some of their funding to start their own nonprofits. Georgia Horton endured molestation as a child, and after fleeing home with nothing but “five pieces of burnt bologna” she stole off the stove, she was arrested in the late 1980s for a murder she says she didn’t commit. During her 25-year prison stint, she became an evangelist preacher for her fellow inmates, and when she was paroled in 2017, she took that work to the greater Los Angeles area until the pandemic shuttered gathering spaces. The Compton Pledge funds posted to her account at just the right time: Horton was able to put her first $400 monthly allotment towards the tools she needed to preach the gospel virtually—namely, a new HP laptop and a ring light. With subsequent checks, she paid registration and notarization fees to launch a nonprofit, Georgia Horton Ministries, which will lead trauma-informed prison workshops and support other formerly incarcerated people.

Christine S. puts some of the $1,800 she receives quarterly towards feeding homeless individuals in Compton’s historic Lueders Park, inspired by her own past experiences with homelessness. She wants to purchase a mobile shower so homeless people don’t have to use garden hoses like she did. But the money she receives from the experiment has also helped her take her daughter Alex on a vacation to San Diego, where the toddler got to swim in a pool for the first time. “We didn’t have to get a super cheap hotel,” Christine says. “There were no cockroaches.” Without the Compton Pledge money, she says, “I wouldn’t have had the financial ability to do much.”

Georgia Horton, center, has used some of her Compton Pledge funds for supplies she needs to preach the gospel virtually during the pandemic.

‘She was getting more money staying home’

A UBI providing every American adult $12,000 per year would cost the U.S. government more than $3.1 trillion per year — a sum equal to roughly 90% of all the money the federal government collected in revenue last year.

Guaranteed income advocates say wealth taxes, such as those advocated by Democratic Sens. Elizabeth Warren and Bernie Sanders, could make the math work—at least for a program that helps very low-income people. And they argue that while it takes money to invest in a larger social safety net, it’s more expensive in the long run not to. Providing health care for uninsured people cost the country roughly $42.4 billion per year between 2015 and 2017, according to an estimate from the nonpartisan Kaiser Family Foundation . People who can’t pay rent or other bills are likely to need other services the government will end up paying for, like housing assistance. Poverty is also strongly linked to incarceration, which costs taxpayers at least $80 billion per year.

But conservative economists don’t believe throwing more money at the problem is a solution, especially when the national debt is already $28 trillion. “We’ve been completely irresponsible since the 21st century arrived,” says Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the center-right American Action Forum. Holtz-Eakin is also worried about free cash feeding inflationary pressure. He says increases in the consumer price index in the last year can at least partially be attributed to the pandemic-era stimulus spending: “There’s no doubt in my mind that the American Rescue Plan and those checks that went out along with the other subsidies fueled the inflation we’ve seen,” he says.

There are political risks, too. Stockton Mayor Michael Tubbs, whose small city jumpstarted the recent boom of guaranteed income experiments in 2017, lost reelection to a Republican challenger by 13 points in the Democratic stronghold in 2020 after launching his pilot. Conservative criticism has only intensified as direct cash payments become more mainstream. And if Republicans and moderate Democrats are reluctant to give U.S. citizens free cash, many are sure to express even more opposition to giving this kind of government assistance to undocumented immigrants like Leo: Donald Trump was elected President in 2016 vowing to crack down on illegal immigration, and has falsely claimed undocumented immigrants drain public benefits .

Nearly half a dozen small business in Compton expressed resentment toward cash programs that lack work requirements. The manager of a local insurance shop said he has been unable to fill an entry-level opening for six months.

During the height of the pandemic, Trump and many congressional Republicans supported stimulus checks to help Americans make it through the country’s economic collapse. By this spring, Democrats agreed to smaller checks and limited unemployment benefits when members of their own caucus, like Sen. Joe Manchin of West Virginia, demanded the relief be targeted toward those with lower incomes. And once Biden’s stimulus package passed, Republicans pushed back against the pandemic unemployment insurance, expanded child tax credit and other assistance measures. When California approved the nation’s first state-funded guaranteed income project in July, which will dispense $35 million in monthly cash payments to pregnant women and youth who have recently aged out of foster care, Republican Assemblyman Vince Fong of Bakersfield abstained from voting for similar reasons. The cash would “undermine incentives to work and increase dependence on government,” he told the Associated Press.

Some experts say these critiques don’t hold up to reality. “There’s little to no evidence” that the federally passed income support programs are leading to work shortages, says Mark Zandi, chief economist at Moody’s Analytics. Despite 26 states voluntarily ending supplemental unemployment insurance early, there was little difference in their employment numbers and workforce participation rate in July.

But if guaranteed income pilot programs explore how free money helps recipients, they’re also testing the ripple effects on the broader community, and some small businesses in Compton aren’t on board. Nearly half a dozen Compton businesses—including a taco truck, insurance shop, and a Chinese restaurant—told TIME that increased government benefits and cash programs were making it difficult for them to hire workers. “That sign has been out here for six months,” Roland Barsoum, the manager of a local auto insurance outlet, says of a ‘help wanted’ placard in his window. He hired two people to fill the clerical position, but neither lasted more than a few weeks. “One of them stayed for about a month,” he says, “but she was getting more money staying home.”

“Re-entering society was financially very hard,” Horton says of her life post-prison. That’s why she is using Compton Pledge funds to launch a nonprofit that helps other incarcerated and formerly incarcerated people.

‘Breathing room’

For all the political pushback, guaranteed income programs are proliferating in the U.S. At least 40 new guaranteed income projects have started or been announced in the last six years.

Many of these new programs are trying to help populations with a specific need or historically marginalized communities. In Cambridge, Mass., for example, the guaranteed income pilot consists of single-caretaker households and is giving more than 100 families $500 per month for 18 months. St. Paul, Minnesota is helping up to 150 families whose finances were negatively impacted by COVID-19 with $500 monthly payments for 18 months. Oakland, Calif. is focusing on non-white residents and offering $500 monthly for 18 months to 600 families earning below the area median income. A group in San Francisco is partnering with the city’s Department of Health to give pregnant Black and Pacific Islander women $1,000 a month for the duration of their pregnancies and at least six months of the child’s life. And in Jackson, Mississippi, the Magnolia Mother’s Trust, now in its third cycle, is giving 100 Black mothers $1,000 for 12 months.

Support from wealthy tech moguls has spurred some of that growth. Twitter founder Jack Dorsey has repeatedly given to guaranteed income projects through his #startsmall initiative, including donations of $15 million to the Open Research Lab (formerly Y Combinator’s UBI project) and $18 million to Mayors for a Guaranteed Income, a group founded by former Stockton Mayor Tubbs that is funding many of the cash experiments. In March, New York University used $3.5 million from Dorsey to launch the Cash Transfer Lab, a center that will study the effect of such policies.

The focus on Black women in several of the programs is not a coincidence. “The data shows that Black women, Black mothers specifically, have been left out of opportunities for not only wealth creation, but opportunities for income in a way that the rest of this country has been allowed to succeed,” says Aisha Nyandoro, the chief executive officer of Springboard To Opportunities, the organization behind Magnolia Mother’s Trust. Black families have the second-highest poverty rate in the U.S. after only Native Americans, with 21.2% living below the poverty line, and 27% of Black families with single mothers living in poverty, according to U.S. Census Bureau data.

Proponents say that for guaranteed income programs to most effectively target these populations, they must break the stigma of accepting help that many poor Americans have internalized. In San Francisco, prospective participants said they feared being viewed as “welfare queens,” according to program organizers, and some mothers in Jackson described how important their independence is to their identity.

The promise of some relief from crushing financial stress can outweigh those concerns. “There always comes a time where you’re going to need help,” says Danel Paige, 28, a member of the Jackson program. Throughout the pandemic, she has been working as a Head Start teacher, attending graduate school and taking care of her two children, ages 8 and 3, while their father’s military job keeps him stationed several states away. The money from Magnolia Mother’s Trust has helped her keep up with her electric bill and her car payment, and she’s hoping she can save enough to move to a safer neighborhood after losing a loved one to gun violence earlier this year. “I’m trying to lead a different life for myself,” she says. “This money is a huge part of that decision.”

That Paige is getting closer—but not yet able—to leave her neighborhood isn’t shocking to the guaranteed income advocates who designed these free cash projects. The money was never intended to be a panacea. “It’s not going to solve all of the systemic challenges that this country has,” says Nyandoro.

Poverty persists, as do its root causes. But for the lucky 800 in Compton, the unconditional money is a breath of fresh air in a smog-laden city. “Having a guaranteed income and a poverty floor enables people to have breathing room to make better decisions for their families,” former mayor Brown says, “to be able to spend time to maybe be able to actually go on an interview, to be able to plan a few years in advance instead of having to live paycheck to paycheck.”

Such is the reality for Leo, at least until his quarterly checks stop coming. An extra $3,600 per year won’t pay off his payday loans, get him health insurance, or allow his family to rent a home that wasn’t converted from a former car garage. But the money has loosened the financial noose fastened around their necks. Like an old family mantra promises, they can finally breathe a little easier: “Dios aprieta pero no ahoga,” recites Leo’s daughter Lesley. In English: God squeezes but doesn’t choke.

-With reporting by Mariah Espada and Nik Popli/Washington and Leslie Dickstein/New York.

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Copy URL https://www.pbs.org/newshour/economy/employment-rose-among-those-in-free-money-experiment-study-shows

Employment rose among those in free money experiment, study shows

SACRAMENTO, Calif. (AP) — After getting $500 per month for two years without rules on how to spend it, 125 people in California paid off debt, got full-time jobs and had “statistically significant improvements” in emotional health, according to a study released Wednesday.

The program was the nation’s highest-profile experiment in decades of universal basic income, an idea that was revived as a major part of Andrew Yang’s 2020 campaign for president.

The idea is to bring people out of poverty with a guaranteed monthly income. Supporters say it gives people needed financial security to find good jobs and avoid debt. But critics have argued free money would eliminate the incentive to work, creating a society dependent on the state.

The Stockton Economic Empowerment Demonstration sought to test those claims. Run by a nonprofit founded by former Stockton Mayor Michael Tubbs, the program included people who lived in census tracts at or below the city’s median household income of $46,033.

The program did not use tax dollars, but was financed by private donations, including a nonprofit led by Facebook co-founder Chris Hughes.

WATCH: Outbreak reignites idea of universal basic income

A pair of independent researchers at the University of Tennessee and the University of Pennsylvania reviewed data from the first year of the study, which did not overlap with the pandemic. A second study looking at year two is scheduled to be released next year.

When the program started in February 2019, 28% of the people slated to get the free money had full-time jobs. One year later, 40% of those people had full-time jobs. A control group of people who did not get the money saw a 5 percentage point increase in full-time employment over that same time period, from 32% to 37%.

“These numbers were incredible. I hardly believed them myself,” said Stacia West, a researcher at the University of Tennessee who analyzed the data along with Amy Castro Baker at the University of Pennsylvania.

The researchers said that the extra $500 per month was enough for people with part-time jobs to take time off so they could interview for full-time jobs that offered better pay. They also said the money could have helped people who weren’t working at all find jobs by allowing them to pay for transportation to interviews.

After a year of getting the money, 62% of the people were paying off debt compared to 52% before the study. Researchers also said most people moved from being likely to have mild mental health disorders to “likely mental wellness.”

People got the money once a month on a debit card, which let researchers track how most of the people spent it. The biggest category each month was food, followed by sales and merchandise, which included purchases at places like Walmart and Target, which also sell groceries. The next highest categories were utilities, auto and services. Less than 1% of the money went to tobacco and alcohol.

Universal basic income has been a popular idea among California’s tech titans as they grapple with how to handle the inevitable job losses that will come with breakthroughs in automation and artificial intelligence. They found an ideal place to test the idea in Stockton, about 75 miles (120 kilometers) northeast of Silicon Valley and once known as the foreclosure capital of the U.S. at the height of the Great Recession a decade ago.

Tubbs, who at the time was Stockton’s first Black mayor, was eager to try it.

Not everyone was on board with the idea. Aside from conservatives who dislike big government programs, opposition also comes from labor unions that worry about what other types of social safety net programs would have to be sacrificed to pay for a guaranteed income. It could cost nearly $3 trillion a year to provide a guaranteed income to everyone.

“What these experiments don’t tell us is what the impact would be as a result of the tradeoffs that are necessary to implement UBI on a massive scale,” said Steve Smith, communications director for the California Labor Federation.

Tubbs’ goal, he said, is “to summon the political will to act on what the data and the research tells us.” But he lost perhaps his biggest platform in November when he was defeated for reelection by Republican Kevin Lincoln.

Still, guaranteed income programs seem to be gaining momentum across the country. More than 40 mayors have joined Mayors for a Guaranteed Income, with many planning projects of their own. A proposal in the California Legislature would offer $1,000 per month for three years to people who age out of the state’s foster care system. And in Congress, Republican U.S. Sen. Mitt Romney of Utah has proposed expanding the child tax credit to send most parents at least $250 per month.

Tubbs said that’s a big difference from when he first announced this guaranteed income program four years ago.

“How the pendulum has swung,” he said.

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A city made the case for universal basic income. Dozens are following suit

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Future Perfect

Everywhere basic income has been tried, in one map

Which countries have experimented with basic income — and what were the results?

by Sigal Samuel

A Kenyan woman standing outside under a flowering tree.

The idea of a basic income was, for decades, something of a policy fantasy. But the last few years have seen it become less outlandish, to the point where we now have many limited basic income programs up and running around the world — perhaps a dry run for a broader embrace of the policy in the coming years.

The general idea — that the government should give every citizen a regular infusion of free money with no strings attached — has been around since the 16th century. But it’s recently experienced a remarkable resurgence: Advocates ranging from tech billionaire Mark Zuckerberg to libertarian economist Milton Friedman to former Democratic presidential candidate Andrew Yang have endorsed it.

The Covid-19 pandemic has given the idea fresh momentum. With the crisis generating so much financial loss and uncertainty, and with federal stimulus packages failing to meet the needs of millions, advocates are arguing that citizens desperately need some sort of guaranteed income.

And around the world, countries are running pilot programs to test it.

Andrew Yang campaigning in Manchester, New Hampshire, on February 8, 2020. Yang touted a universal basic income during his presidential campaign.

With a few exceptions — Kenya , where a big experiment in universal basic income (UBI) is underway; Iran , which has a nationwide unconditional cash transfer program; and Alaska , which gives an annual dividend to everyone in the state — basic income programs are offering money to small groups of a few hundred or a few thousand people, not an entire polity. In other words, they offer a basic income, but not a universal basic income.

These small-scale trials are necessary because governments want to have a good sense of what the effects will be before they start shelling out many billions or trillions of dollars. Proponents of basic income argue it’s the best way to end poverty: Just give everyone money! Some also say it’ll help society cope with a coming era of automation-induced joblessness. And the evidence so far suggests that getting a basic income tends to boost happiness , health , school attendance , and trust in social institutions , while reducing crime .

But critics worry that it will disincentivize work, cheating economies out of productivity and cheating individuals out of the sense of meaning that work can bring. Plus, they say, it’s just plain unaffordable for the government to pay every citizen enough to live on regardless of whether they work. The evidence so far does not support these critiques, as you’ll see.

Below are all the places that are trying or have tried some version of basic income. You’ll find that only unconditional cash transfers are included here. Some 130 countries, from Mexico to Italy to Uganda , have instituted conditional cash transfers, which may require recipients to send their kids to school or go for health checkups. Although these programs have proven beneficial in some cases, they’re not the subject of this piece.

Note that most of the basic income projects here are funded by governments, but a few are funded by private donors. Scroll down for details on how each place gave out or is giving out free money — and what behavioral effects it seems to have on the recipients.

United States

The US has tried a few basic income experiments, but most have been short-lived small-scale trials.

Alaska is an exception. Since 1982, the state has given each citizen an annual check just for being alive, effectively wiping out extreme poverty. The money — which can range from around $2,000 per person when oil prices are high to $1,000 in cheaper gas years — comes from the Alaska Permanent Fund, a state-owned investment fund financed by oil revenues.

Economists investigated whether the payment was leading people to work less and found that “the dividend had no effect on employment” overall. (It has, apparently, had an effect on fertility , encouraging families to have more kids. It’s also had some unexpected effects on the state’s politics .)

Katherine Hayes demonstrates urging Alaska lawmakers to fund a full oil wealth fund check, known locally as the PFD or Permanent Fund Dividend, on July 8, 2019, in Wasilla, Alaska.

Another long-running program is the Eastern Band of Cherokee Indians Casino Dividend in North Carolina . Since 1997, revenue from a casino on tribal land has been given to every tribal member, no strings attached. Each person gets on average somewhere between $4,000 and $6,000 per year. Economists found that it doesn’t make them work less. It does lead to improved education and mental health, and decreased addiction and crime.

Between 1968 and 1974, the US experimented with giving cash to around 7,500 people in New Jersey , Pennsylvania , Iowa , North Carolina , Seattle , Denver , and Gary, Indiana . The money proved beneficial to recipients but did modestly reduce the hours they worked; Dylan Matthews has explained for Vox why we shouldn’t make too much of that slight reduction.

In 2019, Andrew Yang tried out a sensationalistic yet effective method of promoting basic income: giving it out himself. First, he promised to give $1,000 per month, for 12 months, to someone who retweets and follows him on Twitter. Then, on the presidential debate stage, he announced that he’d give away $1,000 per month to 10 randomly selected families. We don’t know exactly what effects the cash may have had on the recipients, because the giveaways weren’t formal research studies, but they’re worth mentioning because they drew a lot of attention to the concept of a basic income.

What about current projects? Stockton, California , is in the midst of an 18-month experiment: It’s giving $500 per month to 125 people. The money comes from individual and foundation philanthropy, with the initial $1 million in funding coming from the Economic Security Project . The first batch of data shows the recipients are mostly spending the money on food, clothes, and utility bills. Y Combinator, which previously ran a small trial in Oakland, California , is now planning to start a new trial elsewhere in the US.

Between 1974 and 1979, Canada ran a randomized controlled trial in the province of Manitoba , choosing one farming town, Dauphin, as a “saturation site” where every family was eligible to participate in a basic income experiment. The basic income seemed to benefit residents’ physical and mental health — there was a decline in doctor visits and an 8.5 percent reduction in the rate of hospitalization — and high school graduation rates improved, too. Nevertheless, the project, known as “Mincome” and funded jointly by the provincial and federal governments, was canceled after four years when a more conservative party came into power.

Four decades later, another Canadian province, Ontario , was willing to try again. In 2017, the Liberal government launched a basic income pilot project in three cities: Hamilton, Lindsay, and Thunder Bay. It was supposed to help 4,000 low-income people and last for three years.

Jodi Dean with her daughter Madison in Hamilton, Ontario, on November 21, 2017. Dean, a Canadian mother of three, received her first basic income check one month prior. She said the extra money gave her family “the breathing room to not have to stress to put food on the table.”

But then a new Progressive Conservative government came into power, led by Ontario Premier Doug Ford. In 2018, they canceled the project after hearing from staff that it disincentivized participants from finding work. However, the pilot had only been active a short time, not long enough to gather the data required to support that claim. A handful of participants have since filed a class action lawsuit against the government.

Brazil has been experimenting with cash transfers to poor families since the 1990s, and it now runs the massive Bolsa Familia program, which gives millions of people cash transfers. This isn’t a UBI since the transfers are conditional — recipients are expected to keep their children in school and visit health clinics. But the massive program has formed the backdrop for Brazilian experiments in unconditional cash transfers.

From 2008 to 2014, a Brazilian nonprofit called the ReCivitas Institute administered a basic income — funded by private donors — in the village of Quatinga Velho . One hundred residents received 30 reais (about $8) per month.

This year, around 52,000 people in the Brazilian city of Maricá are receiving a basic income under a new program called the Renda Basica de Cidadania (Citizens’ Basic Income). Each will receive 130 reais per month (around $35), which is expected to lift many above the poverty line. Because the money is coming out of the city budget, mostly from oil royalties, this program has the potential to stick around for a long time; it currently has no end date.

In 2017, the Finnish government decided to see what would happen if it chose 2,000 unemployed citizens at random and gave them a check of 560 euros ($635) every month for two years. Participants were assured they’d keep receiving the money if they got a job. As it turned out, the income didn’t help them get jobs, but it did make them feel happier and less stressed . The recipients also reported that they felt more trust toward other people and social institutions — from political parties to the police to the courts — than they did before getting a basic income. Finland ended the trial in 2018.

In 2014, the nonprofit Mein Grundeinkommen (My Basic Income) used crowdfunding to set up a basic income raffle. By the end of 2019, it had awarded almost 500 basic incomes to people all over the world who’d submitted their names. Each got about $1,100 per month for a year. According to Fast Company , 80 percent of recipients said the income made them less anxious, more than half said it enabled them to continue their education, and 35 percent said they now feel more motivated at work.

In 2019, the nonprofit Sanktionsfrei kicked off another basic income project funded entirely by private donors. For three years, 250 randomly chosen people in Germany will receive unconditional transfers of up to $466 per month , while 250 others act as a control group.

Against the backdrop of the Covid-19 pandemic, Germany started a new basic income experiment in August : 120 Germans are receiving 1,200 euros ($1,430) every month for three years. They’ll fill out questionnaires about how the cash benefit is affecting their emotional well-being, home life, and work life. Their responses will then be compared with the responses of a control group of 1,380 people who are not receiving a basic income. The German Institute for Economic Research is conducting the study, and it’s funded by 140,000 private donations collected by Mein Grundeinkommen.

In 2017, Spain’s “B-MINCOME” experiment started offering a minimum guaranteed income to 1,000 households randomly selected from some of Barcelona ’s poorest districts. Under the two-year randomized controlled trial, households could receive up to 1,675 euros ($1,968) per month. There was also a control group of 383 households.

The experiment split up the households into four “modalities” of participation: conditional (you get the cash, but you have to participate in certain social programs), unconditional (you get the cash with no strings attached), limited (if you earn extra income through work, that reduces the amount of cash you get), and non-limited (extra income does not reduce the amount of cash).

Preliminary results showed that the effects varied a bit depending on the different modalities. But across the board, the basic income boosted life satisfaction and mental health while making participants neither more likely nor less likely to find employment.

With the arrival of Covid-19, the Spanish government launched a website in June offering payments of up to 1,015 euros ($1,145) to the poorest families in the country — some 850,000 households . The government isn’t running this initiative as a research study per se (there’s no control group), but it will continue to monitor the results and says it aims to keep the initiative going even after the pandemic-induced recession ends.

The Netherlands

In 2017, Utrecht and a few surrounding cities kicked off a basic income experiment with 250 recipients as part of a randomized controlled trial. Some recipients got the money (around $1,050 per month) unconditionally, while others had to do volunteer work. The researchers’ aim is to figure out which way of delivering the financial assistance works best.

In 2011, Iran rolled out a nationwide unconditional cash transfer program to compensate for the phase-out of subsidies on bread, water, electricity, heating, and fuel. The government gave out sizable monthly payments to each family: 29 percent of the median household income on average.

The program was later dialed back as some Iranians came to believe it was disincentivizing people to work. Yet economists found that “the program did not affect labor supply in any appreciable way.” The program is still running, and it’s the only such program in the world to run nationwide.

The largest and longest UBI experiment in the world is taking place in Kenya, where the charity GiveDirectly is making payments to more than 20,000 people spread out across 245 rural villages. As part of this randomized controlled trial, which started in 2016 , recipients receive roughly 75 cents per adult per day, delivered monthly for 12 years.

Some preliminary results will be available soon. In the meantime, we’ve already seen that in another GiveDirectly program in Kenya, cash transfers have stimulated the economy and benefited not only the recipients themselves but also people in nearby villages .

Samson, 72, at his home in the Bondo region of Kenya, on October 3, 2018. Samson receives $22 a month from the American NGO GiveDirectly.

Between 2008 and 2009, all residents below the age of 60 living in the Otjivero-Omitara region of Namibia received a basic income: 100 Namibian dollars ($6.75) per person per month, no strings attached, regardless of their socioeconomic status. Funding came from private donors in Namibia and around the world.

As a result, child malnutrition dropped and school enrollment rates went up, while poverty-related crime (like theft) fell, according to reports from BIEN and the Center for Public Impact . However, a lack of alignment with the national government meant that the pilot project was never rolled out nationwide.

Between 2011 and 2012, a pilot project in the state of Madhya Pradesh gave a basic income to some 6,000 Indians. The project, coordinated by the Self-Employed Women’s Association and funded by Unicef, included two studies.

In the first study, every man, woman, and child in eight villages received a monthly payment: 200 rupees ($2.80) for adults and 100 rupees for each child (paid to the guardian). After one year, the payments increased to 300 and 150 rupees, respectively. Meanwhile, 12 similar villages received no basic income, acting as a control group.

In the second study, one tribal village received an income of 300 rupees per adult and 150 rupees per child for the entire trial. Another tribal village acted as a control.

The results : Receiving a basic income led to improved sanitation, nutrition, and school attendance.

An Indian family walk by a barber shop in Orchha, Madhya Pradesh, India, on February 1, 2012.

In 2011, following years of budget surpluses and under pressure to help poor and elderly people, Hong Kong tried out a program called Scheme $6,000. All adults with a valid Hong Kong permanent identity card — some 6 million people — were eligible to receive a one-time giveaway of HK$6,000 ($772) each. The public had a host of complaints about the program — for example, that administrative costs were eating up too much of the money that could go to citizens — and it only lasted one year. However, it was briefly revived in 2018 thanks to another budget surplus and round of pressure to help the needy.

Macao , an autonomous region on the south coast of China, has been experimenting with basic income since 2008, when it began giving small but unconditional transfers to all residents — around 700,000 people — as part of a Wealth Partaking Scheme . Each year, local residents get around 9,000 patacas ($1,128) and nonpermanent residents get around 5,400 patacas ($672). Unfortunately, critics say these sums are too paltry to make a real dent in poverty .

Japanese billionaire Yusaku Maezawa announced in a January 1 tweet that he would give away 1 billion Japanese yen — about $9 million — to 1,000 random Twitter followers. His stated goal was to test the premise of a basic income. “It’s a serious social experiment,” he said .

Since the money was distributed in April, each recipient has had to fill out follow-up surveys asking what impact the cash has had on their lives. The initial survey results show that recipients of the cash benefit are now 3.9 times more interested in launching a new business. Recipients saw a decrease in divorce rates, from 1.5 percent to 0.6 percent. And more than 70 percent of recipients said they experienced a significant increase in happiness.

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More than 12,000 Californians are getting cash from guaranteed income experiments

Bridging gaps

Many California pilot programs, including the state-funded ones, allow the recipient to continue receiving their other safety-net benefits while getting the guaranteed income.

Critics say such unrestricted payouts discourage work and that California can’t afford to expand its social safety net this way.

The pilots created new cash benefits “and simply tacked it onto the existing welfare system, and that’s not reforming the system,” said Michael Tanner, a senior fellow at the libertarian Cato Institute. He said he supports replacing existing programs with unrestricted cash.

“I’m not sure the answer should be spending any more than we already are,” he said.

Also among the skeptics: Lorena Gonzalez Fletcher, leader of the California Labor Federation, who argues that relying on cash programs to supplement family incomes lets employers off the hook for paying low wages.

“When it comes to social programs, they should be targeted towards people who can’t work,” she said. “If you work 40 hours a week, or 50 or 60 hours a week, you should not live in poverty, and you should not be able to qualify for social service programs.”

“I’m not sure the answer should be spending any more than we already are.” Michael Tanner, senior fellow at the libertarian Cato Institute

Meanwhile managers of the pilots say they’re making a case for the government to make safety net programs less rigid.

“I hope people learn that you can trust people with money,” said Michael Tubbs, the former Stockton mayor who launched the city’s guaranteed income program in 2019. “Money may not solve every single issue, but every single issue is more solvable when folks have their basics taken care of.”

That was the case for Stephanie Drzymkowski. The 41-year-old Los Angeles single mother used to drive 60 miles each way to a staffing agency job in Orange County. Her 1996 Bronco frequently gave out on the freeway.

“I already knew I was on the verge of losing that job at any time,” she said.

After she was laid off in 2021, she made UberEats deliveries on a bike to pay rent on the single room she shares with her 9-year-old daughter.

Then Los Angeles picked her as one of 3,204 randomly selected families with children living below the poverty line for its guaranteed income pilot. The program ran for a year in 2022.

She put the first $1,000 monthly check toward a down payment on a car. That got her to a new job — that she made it to on time, she said. She made car payments for the rest of the program and put the rest in savings, hoping to one day get her and her daughter their own apartment.

“I think it is really important over the next couple of years … that there be almost a pool of questions that we all agree on.” Dawnté Early, CEO of United Way of the California Capitol Region

A report on Stockton’s program released in 2021 found that one year in, those who received the guaranteed income were nearly twice as likely as a control group to be able to pay for an unexpected expense with cash. They also reported improved mental health and — a surprise to some — they increased their rate of employment.

At the start of the program, 28% of the group was employed full-time. A year into the experiment, 40% was. A control group’s full-time employment increased from 32% to 37%.

Some recipients used the money to train for better, higher-paying jobs, or they consolidated gig work into full employment, the report said.

The next report, on Stockton’s second year, is expected to be released sometime this year. Meanwhile, Tubbs advises Newsom on poverty and inequality , and he founded Mayors for a Guaranteed Income, which helped launch several other guaranteed income pilots in California and is pushing for a federal policy.

Measures of success?

Some program managers hesitate to point to a single outcome as their program’s measure of success. One primary goal, they said, is to give low-income families more decision-making power.

“The whole basis of guaranteed income is believing that people are best positioned to address their needs,” said Celeste Rodriguez, associate director of the Community Investment for Families Department, which oversees the Los Angeles city pilot. “Any opportunity to support families in meeting their basic needs, that’s a piece of success for us.”

Dawnté Early, CEO of United Way of the California Capitol Region, oversees a two-year, philanthropically-funded program in Sacramento that wraps up this June. A second iteration, which the city and Sacramento County will fund, will include an evaluation by a Sacramento State University researcher.

Early said she wants the state to one day run a guaranteed income program, but the variety of pilot programs operating now will have to provide answers to some overall questions — such as are the payments best suited for immediate needs or for long-term financial stability, and how many months does it typically take to gain stability?

“How are you actually measuring (the program) ‘working?’” she said. “I think it is really important over the next couple of years … that there be almost a pool of questions that we all agree on.”

Others say there isn’t much research yet on what happens to participants several years after a pilot program ends. Proponents acknowledge that if the government is going to expand a program, they’ll need more data on how the payments affect employment.

In Marin County, preliminary results suggest that building a longer-term financial safety net from the programs is more challenging than meeting immediate needs.

The Marin Community Foundation this year will wrap up a two-year pilot program of giving $1,000 a month to 125 low-income mothers of color.

More than 90% of recipients have so far reported using at least some of the money on basic needs, and 7% have said they’ve been able to save some of it, said Barbara Clifton Zarate, the foundation’s director of economic opportunity.

About half of participants don’t have any savings, she said.

more on guaranteed income

With a guaranteed income, you can buy precious time with your family, say California parents

Los Angeles and Oakland parents who received monthly cash without restrictions from new pilot programs said it did more than help them pay bills. What they gained, they said, was priceless — more time with their children.

Jeanne Kuang Capitol Reporter

Jeanne Kuang is an accountability reporter who covers labor, politics and California’s state government. Previously, she wrote about homelessness and economic inequality as part of CalMatters’ California... More by Jeanne Kuang

A side view of a man on a bike next to homeless tents lined up along a sidewalk underneath a highway in Sacramento.

IMAGES

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VIDEO

Basic Income: The Free Money Experiments
Take the Money... and Run?
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Free Money Experiment #1
Sam Altman's Bold Free Money Experiment Explained

COMMENTS

Here's what a Sam Altman-backed basic income experiment found
A recent study on basic income, backed by OpenAI founder Sam Altman, shows that giving low-income people guaranteed paydays with no strings attached can lead to their working slightly less,...
Here’s What Happens When You Give People Free Money - WIRED
OpenAI CEO Sam Altman’s decade-in-the-making effort to understand how handing out free money affects recipients and the broader economy delivered its first big results Monday. OpenResearch...
Stockton's Universal Basic Income Experiment Increased ... - NPR
A high-profile universal basic income experiment in Stockton, Calif., which gave randomly selected residents $500 per month for two years with no strings attached, measurably improved...
Inside Compton, California's Universal Income Experiment | TIME
When California approved the nation’s first state-funded guaranteed income project in July, which will dispense $35 million in monthly cash payments to pregnant women and youth who have recently...
OpenAI Founder Sam Altman Gave Thousands Of People Free Money ...
F or the past eight years, an experimental project financed by OpenAI’s billionaire cofounder and CEO Sam Altman has been quietly testing a utopian idea: What if everyone in the world were given...
Employment rose among those in free money experiment, study ...
SACRAMENTO, Calif. (AP) — After getting $500 per month for two years without rules on how to spend it, 125 people in California paid off debt, got full-time jobs and had “statistically...
Stockton, California, gave people a basic income. It boosted ...
When a California city gave people a guaranteed income, they worked more — not less. Stockton’s experiment shows what $500 per month in “free money” can do for employment, mental health ...
Stockton’s basic income trial: results show how people spend ...
The city is eight months into an 18-month experiment with basic income, the idea that the government should give citizens a regular infusion of unconditional free cash. And it just released...
Everywhere basic income has been tried, in one map - Vox
With a few exceptions — Kenya, where a big experiment in universal basic income (UBI) is underway; Iran, which has a nationwide unconditional cash transfer program; and Alaska, which gives an...
12,000 Californians get cash from income experiments - CalMatters
Four years after Stockton conducted a nationally watched experiment, giving 125 households $500 a month with no strings attached, dozens of programs throughout California are testing the idea of a guaranteed income.