A California city paid residents $500 a month to tackle poverty; study shows it paid off

Your Money

STOCKTON, Calif. (NewsNation Now) — What would you do with an extra $500 every month? 

That question has been the focus of a yearlong study of dozens of residents in Stockton, California, through a pilot program called SEED — Stockton Economic Empowerment Demonstration.

Researchers gave 125 people who made less than $1,800 a month an extra $500 per month with no strings attached. 

Researchers said it paid off. 

“Many of you thought we were crazy,” said former Stockton Mayor Michael Tubbs.

They tracked prepaid debit cards for 125 participants.

Here’s what they found: Nearly 37% of that money went to food. Another third went to merchandise and utilities, followed by auto care and other services. 

Less than 1% of tracked purchases were for tobacco and alcohol. 

“It wasn’t just that they had this ability to sort of stabilize volatility in their own home; it had this sort of spillover effect where they were actually able to spread that money around their family networks and social networks in ways that really stabilized food insecurity for more than one household at the same time,” said Amy Castro Baker from the University of Pennsylvania.

Researchers said the takeaways were significant. 

Full-time employment went up from 28% at the start of the experiment, to 40% after the first year. 

“Guaranteed income did not make people stop working,” said Tubbs, who is also the founder of Mayors for a Guaranteed Income.

Recipients had a greater ability to pay for unexpected expenses, which proved crucial when the pandemic began. 

“Most American families — around 40% — don’t have cash on hand to cover a $400 emergency expense,” said Stacia West from the University of Tennessee.

After one year, more than half the group could cover that expense in the control group, compared to 25% at the start of the project. 

And then there’s the impact on health and well-being. 

“What we found is that recipient were less stressed and anxious overtime,” West said.

It was a big change in my life. I was very depressed I was very down and out. I was at rock bottom. SEED bring me back and gave me a chance and opportunity for better things. 

While some experts said more research is needed, Tubbs said it should be the starting point for new conversations. 

“I hope people take out of this that these outdated, antiquated racist tropes about why people are struggling, and why people are bored, are just put to bed,” he said.

Critics say universal income programs may give people the incentive not to work against current safety net programs. 

These income pilot programs are being implemented across the country — in cities like Oakland, San Francisco and Compton, California, St. Paul, Minnesota and Gary, Indiana. 

Researchers plan to keep following the Stockton group and release a new study next year. 

© 1998 - 2021 Nexstar Media Inc. | All Rights Reserved.

Trending on NewsNationNow.com