basic income pilot in a California city

Beginning in 2019, a demonstration of basic income will begin in Stockton, a city of about 300,000 residents, in California’s Central Valley. One hundred households will be selected randomly from neighbourhoods where the median household income is at or below the city median of $46,033 a year. One person, 18 years of age or older, in each selected household will receive $500 a month for 18 months. It is not clear how the recipient within each household will be selected. Benefits will be unconditional, meaning that there are no work requirements and no restrictions on how the money is spent. This makes the experiment more universal than most of this type. The benefits will be funded entirely from private donations, so there is little chance that payments will continue beyond the 18-month period.

An additional hundred households will be randomly selected to serve a control group, even though the project is supposedly not designed to test the effects of basic income. This is clear from its name: Stockton Economic Empowerment Demonstration (SEED). Its more modest intent is to gather stories of the effect of unrestricted cash payments on the lives of people. The selection process is biased slightly towards the poor, by eliminating neighbourhoods with higher than average household income. Moreover, Stockton itself is poor relative to the rest of the state, with a median household income less than 75% of average household income in California. The county’s unemployment rate is about 7.5%, nearly double that of 4.3% for the state of California.

More gravely, this basic income pilot suffers from small sample size and from the fact that benefits ($6,000 a year) are small relative to incomes. While it is true that benefits will not be affected by earned income, means-tested government benefits will very likely be reduced on receipt of an unconditional basic income grant. Moreover, some recipients may self-select out of the programme, since loss of means-tested benefits might exceeed benefits of a basic income. (See the discussion in the last paragraph of the excerpt below.)

Past articles in Basic Income News have stressed that many existing so-called “basic income” experiments are constrained in ways that call into question their resemblance to a universal and unconditional basic income. In many cases, for example, participants have been selected only from pools of individuals with low incomes (Ontario, Y Combinator), who are unemployed (Finland), or who are currently receiving other welfare or social assistance benefits (The Netherlands, Barcelona). In some cases, moreover, the cash payments are reduced with earned income (e.g. Ontario, The Netherlands).

The design of the Stockton pilot is notable in that there is no requirement that individual participants be low-income, unemployed, or receiving government assistance. As mentioned above, participants must reside in neighborhood with an average income at or below the city median; however, participants themselves needn’t have an income below this level (e.g., in principle, invitations to participate could be sent to affluent investors who has [sic] purchased homes in low-income Stockton neighborhoods with the hope of later turning a profit).

Additionally, the $500 payments will not be clawed back with additional earned income. That said, however, other benefits might. SEED is currently working with government benefits agencies to determine how the unconditional cash grants will impact recipients’ eligibility for means-tested benefits. Under current US policy, such a $500 per month of “reasonably anticipated income” would generally need to be reported as household income. However, [Mayor Michael] Tubbs hopes to secure waivers for participants to prevent or mitigate potential loss of benefits during the trial. SEED states that it will provide potential recipients with detailed information about the effect of participation on public benefits, as well as providing opportunities to consult with benefits eligibility counselors prior to consenting to join the project.

Kate McFarland, “New Details Revealed in Planned Basic Income Demonstration”, Basic Income News, 23 August 2018.

STOCKTON, CA, US: New Details Revealed in Planned Basic Income Demonstration

A 13-page discussion paper on the Stockton Economic Empowerment Demonstration (SEED) can be accessed here.

 

 

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