Democrat Andrew Yang’s universal income idea is being tested in Stockton

Michael Tubbs remembers watching his mother strain to make ends meet in his childhood home in Stockton.

“At the end of the month, it took magic to make everything pencil out,” he said. “I never saw my mom get a manicure or pedicure growing up. I never saw her take a vacation.”

Now Tubbs, the city’s 29-year-old mayor, is championing a monthly cash aid program that he says could be a game-changer for families like his.

“There are people in Stockton who are working very hard, who are still struggling,” he said. “That idea of increasing opportunity and breaking cycles of poverty is probably the crux of all the work we’re doing.”

Stockton is one of two U.S. cities experimenting with universal basic income, the idea of giving all Americans a fixed, no-strings-attached stipend. Proponents say it’s a step toward economic equality, but critics worry a handout will enable bad behavior.

The universal income concept has been bubbling up in national politics, with Democratic presidential candidate Andrew Yang promising $1,000 a month to every American regardless of income level and Sen. Kamala Harris of California pushing for roughly $6,000 a year in refundable tax credits to lower-income Americans.

But experts say the costs of implementing basic income on a large scale would be astronomical.

A recent report from UC Berkeley estimated giving every American a $1,000 a month would cost roughly $3 trillion per year, or 75% of total current federal spending. Even eliminating Medicaid, Social Security Income and other staples of the current safety net system wouldn’t even out that deficit, said economist and report author Jesse Rothstein.

Although the monthly stipend would give individuals more control over how they receive and spend aid, it wouldn’t be robust enough to cover basic expenses, Rothstein said.

“What that would amount to is really dramatically reducing the standard of living of the elderly and disabled in order to finance a transfer to prime-age, healthy people,” he said. “There’s no way that an elderly person is going to be able to buy decent health insurance on the private market with that $1,000 dollar a month UBI [Universal Basic Income] and still be able to have any money left over for anything else.”

But many supporters say basic income should be an addition to the current safety net, not a replacement for it. There’s also the question of whether a cash giveaway dissuades people from working. Some see it as a hand up for the working poor, while others say it’s a cushion for those who choose not to work.

“Everybody’s talking about a program with the same name, but they have different ideas about what it would look like,” Rothstein said.

Following the money

The Stockton program isn’t quite universal—only 125 people were selected to receive the $500 monthly allowance for 18 months.

Last fall the Stockton Economic Empowerment Demonstration, a collaboration tasked with running the pilot, sent 4,200 mailers to randomly selected households in neighborhoods where the city’s median income is at or below $46,033. Program organizers randomly selected the participants from the 478 residents who completed a survey. Another 200 people were randomly chosen to participate in the research without receiving a monthly stipend. That control group is receiving gift cards in exchange for sharing information about their lives and financial well-being.

Project researchers just released the first cache of data showing how recipients spent their money in the first five months of the program, which began in February.

Roughly 40% of purchases on the prepaid debit cards went to food, 24% went to home goods and clothing and 11% paid for utilities, according to the report. The group did not track the 40% of funds that were transferred to savings, checking or cash.

Tubbs said the data proves that Stockton residents are using the money to better themselves and their families.

“For so long, people have looked at Stockton for examples of what things are bad,” he said. “But this is one of a couple of examples where people are looking at Stockton for solutions.”

Most of the project’s $3 million budget comes from a private foundation called the Economic Security Project, launched three years ago with help from Facebook co-founder Chris Hughes. The foundation selected Stockton, a city once labeled America’s foreclosure capital, as a guinea pig because of its diverse racial and economic profile, said project co-founder Natalie Foster.

“It really looks like America,” she said. “It’s a city that’s reinventing itself, that’s pulling out of that bankruptcy, and leaning into its pluralistic community to build what’s next.”

Breathing room

In Stockton, the $500 allowance is giving Jovan Bravo a little breathing room. He usually works 68 hours a week—including regular Saturday shifts—to support his family. Since the stipend started coming in, he’s been able to work a little less without stressing about paying the bills. That means more time with his wife and his three kids, ages 13, 9 and 4.

He says he’s also been able to cover some extracurriculars for them, such as basketball camp and gymnastics class. He worries that without activities to keep them busy, they could be exposed to crime when they get older. Bravo, 31, was arrested on drug and weapon charges in his early 20s but said he’s determined to put his kids on a better path.

“I always hold my kids to a higher standard than what I was held to,” he said. “I want them to be like their mother, go to college, get their master’s, get a good paying job and not have to work as many hours as me. I don’t want them to be the hardworking blue-collar individual.”

Of the Stockton participants receiving the stipend, 43% are employed full or part time, according to the report, and 20% are disabled, 11% are caregivers and another 11% are looking for work.

Females make up 70% of the participants. The racial breakdown shows 47% of the participants are white, 37% are Hispanic, Latino or Spanish origin and 28% are black. The average median monthly income for recipients, without the stipend, is $1,800.

Rothstein says pilots like the one in Stockton aren’t the most accurate tool for predicting the potential effects of basic income on the labor market, because people won’t make major life changes when the income bump is temporary.

“They just can’t be transformative at this scale, you’d have to scale them up by many orders of magnitude to have the kinds of impacts we’re talking about, and nobody has figured out how to pay for that,” he said.

Rothstein and the SEED researchers found, unsurprisingly, that people receiving a regular stipend were happier, and less stressed. They spend more time with their families and pay more attention to their health when they’re not constantly preoccupied with finances.

Bravo is accustomed to planning every expenditure months in advance, from setting aside money for birthday gifts to saving for family vacations. He says he’s still a careful calculator, but the extra money has allowed him to take a break.

“It’s made me a lot happier,” he said. “It’s hard working so many long days back to back, six days a week. I enjoy not having to work Saturdays, get to rest, get a full two days off of work. It’s a big relief.”

And Mayor Tubbs believes reducing the hardships of individuals and families will ultimately improve the city on the whole. He’s planning major downtown beautification projects and pushing job and education opportunities for low-income residents.

“When folks have their bills paid, they’re more likely to volunteer, they’re more likely to be able to vote, they’re more likely to attend city council meetings,” he said. “They’re more likely to have a positive feeling about themselves and their neighborhood.”

Chicago is currently designing its own experiment around Stockton’s pilot. A city task force in February proposed giving 1,000 qualified residents $1,000 a month for 18 months. The money would come from private donations.