In the winter of 2018, the city of Stockton, California chose 125 residents to receive a basic income of $500 a month. The experiment is part of the Stockton Economic Empowerment Demonstration (SEED) program designed to measure the effects of universal basic income (UBI). We shared an article earlier this week about Spain’s successful UBI program. Here is why Stockton is planning to continue theirs beyond the 18-month benchmark.
Researchers primarily report that UBI funds are mostly used for emergency expenses. Residents who participated in the program in Stockton spent the money on groceries, utility bills, credit card debt, dental work, and a prom dress for their daughter. They also responded that they felt less anxious and spent more free time with their families. The experiment has been so successful that in his State of the City address on May 28, Stockton Mayor Michael Tubbs announced the project will be extended until January 2021.
The exacerbation of economic insecurities due to COVID-19, combined with the area’s slow recovery from the last recession, spurred the extension of the program. The funds were made possible thanks to a large donation from philanthropist Carol Tonan.
While $500 cannot make up for a lost job, it can bridge the gap for families struggling to make ends meet or facing unexpected expenses. During the pandemic, these expenses are on the rise. Data shows that since the pandemic started, food spending by SEED recipients increased by nearly 25 percent over the monthly average. Lorrine Paradela, a single mom who works with autistic kids, says the SEED money allowed her to buy a new car when hers broke down and helps her support her elderly mother who is fighting cancer.
Mayor Tubbs is not only advocating for UBI programs in his city, but he’s also working with mayors, state legislators, and national policymakers, including House Speaker Nancy Pelosi and Senator Chuck Schumer, to design larger-scale cash assistance programs. And the idea is gaining momentum. Presidential candidate Andrew Yang is supporting a UBI initiative in New York. A thousand local residents are receiving a $1,000 grant from Yang’s organization, Humanity Forward.
COVID-19 has exacerbated financial fragility for many people, but for low-income citizens, this was the norm even before the pandemic. Critics of UBI argue it will incentivize people to stop working, but research has shown that recipients actually use the money to help lift themselves out of poverty and empower themselves economically. Ramona Ferreyra, a recipient of one of the Humanity Forward grants, is using the money to invest in her business and make it more viable.
Hopefully, the success of basic income programs in areas of California such as Santa Clara and Stockton as well as abroad in Spain will propel them forward on a state and national level as a solution for improving equality and poverty eradication.