As many here know, two years ago the city of Sockton, Cal. launched the first comprehensive experiment in the use of universal basic income (UBI). For 125 individuals in lower-income parts of the City, using contributed funds, the city provided $500/month. As noted in the Atlantic,
The recipients were allowed to spend the money however they saw fit, and they were not obligated to complete any drug tests, interviews, means or asset tests, or work requirements.
As the Atlantic notes, these types of cash transfers are used all over the world, in rich and poor countries—but not in the United States.
The U.S. spends less of its GDP on what are known as “family benefits” than any other country in the Organization for Economic Cooperation and Development, save Turkey.
Most adults without children have no program to help them keep gas in the car and a roof over their head, no matter how poor they are. Most families with kids don’t have one either. In the United States, poverty is used as a cudgel to get people to work. We got rid of welfare for poor families’ and poor individuals’ own good, the argument goes. Give people money, and they stop working. They become dependent on welfare. They never sort out the problems in their life. The best route out of poverty is a hand up, not a handout.
Stockton has now proved this false.
There are a number of reasons to try this type of experiment, including concerns that accelerating technological change could eat into availability of jobs in some some important, concentrated sectors of the economy, including self-driving cars and trucks, and accelerating use of robotic solutions in activities such as mega-warehouses. Resistance to these types of transfers have been powerful on the mainstream political right, led by suggestions that the would lead to laziness, unwillingness to seek employment, and a host of related potential behavioral disasters. Indeed, one can strongly make the case that at least a significant portion of Republicans’ unanimous resistance to the $1.9 trillion Covid Relief Package follows this same logic: give lots of people lots of help to avpoid economic dsiaster, and they will become dependent upon that help. Of course, there has always seemed to be an awful lot wrong with that thinking, but the fact that Republican support for Covid Relief is hovering at zero suggests just how strong that thinking can be.
Now, as the Atlantic also notes, a thorough study of the Stockton Experiment by a pair of researchers suggests that the outcomes from the use of UBI are almost unambiguously positive:
The researchers Stacia Martin-West of the University of Tennessee and Amy Castro Baker of the University of Pennsylvania collected and analyzed data from individuals who received $500 a month and from individuals who did not. Some of their findings are obvious. The cash transfer reduced income volatility, for one: Households getting the cash saw their month-to-month earnings fluctuate 46 percent, versus the control group’s 68 percent. The families receiving the $500 a month tended to spend the money on essentials, including food, home goods, utilities, and gas. (Less than 1 percent went to cigarettes and alcohol.) The cash also doubled the households’ capacity to pay unexpected bills, and allowed recipient families to pay down their debts. Individuals getting the cash were also better able to help their families and friends, providing financial stability to the broader community…
The researchers also found that the guaranteed income did not dissuade participants from working—adding to a large body of evidence showing that cash benefits do not dramatically shrink the labor force and in some cases help people work by giving them the stability they need to find and take a new job. In the Stockton study, the share of participants with a full-time job rose 12 percentage points, versus five percentage points in the control group. In an interview, Martin-West and Castro Baker suggested that the money created capacity for goal setting, risk taking, and personal investment.
More work, less destitution, more family stability, less strained social networks, less stress, fewer incidences of homelessness, fewer skipped meals: This is what welfare could give the country.
And it just might. America’s welfare politics have shifted radically of late, in part because of the economic pressures felt by Millennials, the first generation in recent U.S. history likely to end up poorer than their parents.
And, of course, availability of such payments provides impressive benefits for educational outcomes—payment for childcare, payment for broadband computer access, improved nuitrition, parents not needing to work 2-3 jobs inckuding the time when kids are doing homework. All in all, the politics surrounding these kinds of payments appear to be moving sharply leftward. And of course, seeing a meticulously controlled experiment that compares UBI recipients with non-recipients in the same environment can proivide impressive data. In terms of the Covid Relief package, it provides additional, important nonsense that the ongoing Republcain resistance to support for the working poor is simply so much nonsense. Imo, Democrats ought to be shoving these results up the noses of Republicans who believe thagt welfarfe begins and ends at home and for corporate donors.
As McKinsey has described, the biggest pror experiment in UBI was in Finland, ending in haghlyt positive result as well on a larger population (2000):
The final results from Finland’s experiment are now in, and the findings are intriguing: the basic income in Finland led to a small increase in employment, significantly boosted multiple measures of the recipients’ well-being, and reinforced positive individual and societal feedback loops.
Clearly, these are dazzling findings for progressives in numerous ways.
–They suggest strongly that keeping families and individuals from becoming destitute—and protecting them from disasters through direct payments– helps society, as well as the recipients.
–It heps us prepare thinking and plannning for rapid employment changes casued by technological change, climate change, and future global and national disasters.
–It gives progressives wonderful tools to use against the Republicans’ “lazy welfare cheat” view of recipients of federal support.
–Costs associated with making such payments ultimately end up being lower than initially estimated, as keeping families and individuals out of poverty actually boosts economic activity, economic growth, and economic futures for their children.
Of course, Andrew Yang, who support UBI, is now running for NYC mayor, so we may hear some more about this. In any event, Democrats and progressives ough to be putting this new arrow of evidence in their quivers.