Los Angeles and Chicago are working on pilot programs that would give citizens free money every month following the successes of a privately funded initiative in Stockton, California.
In 2019, former Stockton Mayor Michael D. Tubbs created the Stockton Economic Empowerment Demonstration (SEED), the first universal basic income experiment in the United States. The program was simple, 125 Stockton residents who made below the city median income would receive $500 a month for 24 months with no strings attached.
The program was funded from private donations, and it cost $3 million. At the end of the experiment, the city leaders compared these receptionists to the rest of the population in Stockton, and the outcome was very clear. The experiment proved that universal basic income decreased income instability, encouraged recipients to find full-time jobs and improved participants' mental and overall well-being.
Los Angeles and Chicago
Los Angeles wants to build on Stockton's success by providing 3,200 low-income residents with $1,000 per month for one year, and the Chicago initiative will provide 5,000 residents with $500 a month for the same period of time.
Beneficiaries will be picked at random in Los Angeles, while Chicago is still working on details for its program. However, there is a huge difference between Stockton and Los Angeles/Chicago experiments, Stockton's mayor used private funds, but these two cities are investing money from their budgets.
This experiment will be very costly for these cities, Los Angeles will invest $38 million, and Chicago will commit $31 million. However, using public funds to help private residents is a new idea, and I can't wait to see how it will work.
These are small-scale trials, and no one knows if they can be scaled without disincentivizing work. If these free payments encourage people to stop working, the country's economy will suffer, and these programs will become too costly to be implemented. The evidence so far doesn't support these concerns. However, it hasn't been implemented on a large scale over a long period of time.
Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, cautioned against these programs, "If we instead choose to use our resources on people who don't need them, we won't be able to build on the progress we've made."
Shelly O'Donovanm, CEO of Authentic Influence Group, encourages everyone to read the fine prints, "The thing I love about any pilot program is that if done right, it gives you lots of information to make decisions. As someone who spent my earlier career in policy, though, I know the devil is in the details. You can have the best idea in the world, and if the policy isn't written well and the guidelines aren't clear, it can have unintended consequences. So I'll be interested to see how this all plays out."
Andrew Yang wants to give every American $1,000 per month
These are not new ideas. Former presidential candidate Andrew Yang wanted to give every American adult a universal basic income of $1,000/month, $12,000 a year. Yang's program was independent of one’s work status or any other factor. Yang believed that this free money would strengthen the U.S. economy without providing any evidence.
"Would enable all Americans to pay their bills, educate themselves, start businesses, be more creative, stay healthy, relocate for work, spend time with their children, take care of loved ones, and have a real stake in the future."
Andrew Yang believes most people struggle every day to make ends meet, and they have to choose between miserable jobs or homelessness. Free income would help end racial and economic disparities present in this country. He also believes that "Second only to housing subsidies, direct cash transfers and tax credits are the most critical components in helping families make ends meet."
According to NBC News, at least 40 other U.S. cities have considered or implemented similar experiments, including Pittsburgh; Denver; Minneapolis; Newark, New Jersey; San Francisco; New Orleans; and Compton.
Do you think that government should offer people a guaranteed basic income?