The first-year evaluation of a leading guaranteed income program shows the power of “dignity” spending.
The long-awaited results are out. Giving 125 people in Stockton, Calif., $500 a month no strings attached has all the hallmarks of smart policy. Full-time work increased dramatically, income volatility eased, family stress decreased, and parents had more time for their kids and the mental space to dream a bit more and aim toward higher goals.
And no one spent all the money on booze or cigarettes.
“We knew it would be good but not this good,” said lead researcher Amy Castro Baker, of the one-year results of this novel— and first in the nation—test of a guaranteed basic income.
Beyond the encouraging impacts on work and income volatility were other, equally important impacts, which proponents of a guaranteed income have long assumed would materialize. In a word, the money let people feel human.
We call it ‘dignity spending,’” said Castro Baker.
“We knew it would be good but not this good.”
Parents were able to buy their child a birthday cake and presents for the first time. A dad was able to buy his daughter a prom dress, she said.
“That’s just enormous for kids and for parents. For that dad, being able to buy the prom dress is about being a dad, and for that teenaged girl, being able to fit in with everyone else is huge,” said Castro Baker.
Or as one recipient put it, “I would still survive without this money, but it makes life bearable.”
The Stockton experiment creates an income floor
The Stockton experiment in providing a guaranteed basic income began under Mayor Michael Tubbs in 2019. Funded with private money from Chris Hughes, a former Facebook executive and the leader of the Economic Security Project, the pilot program was designed to test the growing interest in the importance of an income floor for families.
The $500 each month would be deposited on a debit card for the recipients to use as they saw fit.
The program recruited volunteers who lived in Stockton neighborhoods with a median income below $46,033, the city’s median. The $500 each month would be deposited on a debit card for the recipients to use as they saw fit. Importantly, they also were exempt from safety net rules that reduce benefits as incomes rise, a critical feature when a rise in income might mean no food stamps for the month or the loss of a child care subsidy.
Castro Baker and her team were charged with tracking the results. They divided the volunteers into two groups, one that received the $500 each month and another that didn’t so the researchers could compare the effects against a group of similar families.
They tracked the findings from February 2019 through February 2020 (pre-COVID).
First-year Results Show Big Improvements for Families
After one year, the team found that:
Full-time work nearly doubled and incomes stabilized: Among those receiving the extra income, the share working rose 42 percent vs only 5 percent among the control group.
The reason? In many cases, the individuals could cut back on a second part-time job to look for a full-time position, or they could complete an internship or training, and they had more mental bandwidth for setting goals.
They spent money on essentials: Seventy percent of the $400 each month went to groceries, retailers like Wal-mart and Target, and utilities. Auto upkeep and services rounded out the top five spending categories. Less than 1 percent went to tobacco and alcohol.
Two Big Surprises: More Time and More Agency
Tomas, a father of two young children in Stockton, was always on the go, racing here and there to get everything done. As he told the researchers, “I was worn out.” He felt angry all the time, “dark.” But the money has eased the stress.
“Now I get time with my kids,” he said. “I spend more time than I ever had. They appreciate it. I appreciate it. I get to read books with them, I get to find out how they’re doing in school, who their friends are. It’s helped me tremendously. My health, I feel better, I get a lot more rest. My wife sees me more. It’s good.”
One form of scarcity that doesn’t get talked about very much when we talk about poverty is time-scarcity.
One form of scarcity that doesn’t get talked about very much when we talk about poverty is time-scarcity. When it takes three bus transfers to run errands, and when two part-time jobs plus driving for Lyft leaves only 15 minutes between shifts, very little time is left in the day to pause, think, and regroup let alone be “present” for kids.
This chronic press for time wears on health. We know from research that chronic stress spikes cortisol, which if unending damages health. The release of the pressure valve that the money provides is a key reason, the researchers think, for the sharp drops they saw in conditions like anxiety and depression.
The mental health effects, Castro Baker said, “are frankly staggering.”
Unlike the control group, those receiving the money went from registering a mild mental health disorder like anxiety or mild depression to mental wellness a year later. Several stopped their medications altogether.
“The mental health effects are frankly staggering.”
The other big surprise was something more intangible—agency and choice.
As one mother put it, “poverty means lack of choice. You’re forced in ways you don’t want to be.”
“We tend to idolize the strong social networks of the poor,” Castro Baker said. Stories lift up examples of tight kin networks all pitching in and sharing, getting each other through the storm. But lift the rug and often those networks are not the ones the individuals would necessarily choose, if they had a choice.
“Having the financial freedom to choose whom you live with and where is powerful.”
Sometimes the relationship is a drain but there’s little choice. Other times the tradeoff is between a rock and a hard place. Jada in Stockton opted to live with her kids in a house with vermin and an absentee landlord than return to her family, which meant even more unpaid care work for her on top of difficult relationships.
Having the financial freedom to choose whom you live with and where is powerful, said Castro Baker.
“I have hope,” one participant told the researchers. “I’m not just a freeloader anymore. I don’t feel like a parasite anymore. I can help. And it’s amazing how much not feeling like a parasite helps your health.”
“I have hope. I’m not just a freeloader anymore. It’s amazing how much not feeling like a parasite helps your health.”
For women especially, the money gave them something they never had before—permission to take care of themselves. And not, said Castro Baker, just “me time” to recharge and be better able to care for their families, but just straight-up “selfish” care.
“They’re hearing the voice of their own need now,” Castro Baker said.
So Where to From Here?
The Stockton results point the way to a new form of safety net, one based on dignity not “shame and blame,” said Castro Baker. “It’s dehumanizing.”
A guaranteed income will become increasingly necessary as work changes. And thanks to the pandemic, the future of work arrived early. A report by McKinsey and Co. estimates that by 2030 up to 375 million workers worldwide will need to change occupations as the workforce automates. Recent analysis by the Bureau of Labor Statistics projects a sharp decline in low-wage jobs, when just a few years ago they were on track to grow.
As a nation, we tie most if not all benefits to work, from our health insurance, which employers provide, to benefits like food stamps or the Earned Income Tax Credit. When work disappears a guaranteed income will become more urgent than ever.
As the Stockton program has shown, a guaranteed income is one way to support families, improve their health and help their children succeed.