Demonstrating Economic Liberation: How Guaranteed Income Pilot Programs Point to New Solutions to Poverty

What’s an extra few hundred dollars per month? For a family living on the financial edge, it can mean not having to choose between being hungry or sitting in the dark, because money is too tight for both food and the power bill. It can mean not having to choose between losing your job or leaving your young child alone, when free childcare is unavailable.  Hundreds of families living below the poverty line have been spared from making these tough choices in the past few years with the help of guaranteed income pilot programs, in ways that may point to broader policy solutions.

Why people are talking about guaranteed basic income

Guaranteed basic income is a regular cash payment to an individual with no restrictions around how the money can be spent. In recent years, Americans directly experienced a kind of guaranteed income through the economic stimulus payments sent to households during the pandemic. Political candidates have recently campaigned on the idea of permanently instituting such payments, but it’s not a new idea. Economists, politicians, and leaders from Milton Friedman to Richard Nixon to Mark Zuckerberg have spoken in favor of the concept. Martin Luther King, Jr. wrote in 1967, “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

Guaranteed income is a promising way to address systemic racial and gender income inequalities. Image courtesy of the Georgia Resilience and Opportunity Fund.

Guaranteed income advocates cite a variety of reasons, from concerns about job loss due to automation to our ability as a nation to weather economic disruptions. Many view it as the most promising way to address systemic racial and gender income inequalities. Advocates come from different parts of the ideological spectrum, but one thing that they have in come is a shared understanding of the limitations of the current shape of assistance programs.

Federal and state governments have several programs that, in theory, provide for low-income people. In reality, these benefits are difficult to obtain, complex to administer, and highly inflexible. These programs include Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), child care vouchers, and Section 8 Housing Choice Vouchers. To attempt to meet their basic needs, families typically must layer benefits from different programs and different agencies, each with its own bureaucratic requirements. In addition, federal policy allows state governments considerable leeway in administering TANF and other programs. Accordingly, many states set unfeasible thresholds for families to qualify and keep benefit levels low, and as a result, only about 21 households of a hundred who live in poverty receive TANF.

TANF is the closest approximation to an income support program, intended to provide cash assistance on a limited basis to families with children. TANF and other benefit programs are rooted in a legacy of racist policies that assume people living in poverty, especially women of color, are undeserving of assistance and are unmotivated to improve their circumstances in the absence of punitive “incentives.” TANF, created as the work-compulsory replacement for traditional welfare in 1996, is particularly flawed.  It includes strict work requirements that can be hard for families, especially single-parent households, to fulfill. The resulting sanctions often lead to an abrupt loss of benefits and dissuade people from applying in the first place. Many fewer families receive TANF than actually need assistance, and the cash benefits are too small to lift families even up to the poverty line, let alone out of poverty. Many of those  who participate in the program and find employment do not end up financially better off, because of the “benefits cliff,” which reduces assistance when work is found.

A different way of doing things

By contrast, guaranteed basic income programs provide funds without conditions or restrictions. Families are trusted to spend the money in the way that best serves their needs. There are no minimum work requirements or mandatory drug tests. A 2019-2021 pilot in Stockton, California called SEED (Stockton Economic Empowerment Demonstration) distributed payments of $500 per month to 125 residents. Even though it is important to acknowledge that this level of payment would not itself lift an individual or household out of poverty if they had no other source of income, the results of that demonstration – reduced income volatility, increased financial stability, and increased full-time employment among recipients – are now influencing pilot programs in many other cities. As of 2022, more than 30 localities in the U.S. have launched pilot programs to provide guaranteed income for some of their residents and many more are in the planning stages. The Mayors for a Guaranteed Income network includes 82 mayors from 29 states.

Advocates on the national stage often call for Universal Basic Income (UBI), a structure in which all Americans, regardless of income status, receive regular payments. By contrast the guaranteed income pilots seen so far are typically tailored to specific groups. Most often, these are people earning below a certain percentage of area median income, or living in neighborhoods where average incomes fall below a certain threshold. Within that broad category, there is a wide variety of program designs. Many local pilots, including Stockton’s, distribute funds to randomly selected individuals. Others are tailored to families, such as Oakland, San Diego, and Chelsea, Mass. Some cater to mothers in particular, like in Magnolia Mother’s Trust in Jackson, Miss., designed with and for low income Black mothers; a program in Saint Paul, Minn. specifically focuses on residents with babies. A privately funded experiment in San Francisco, Miracle Money, focused on unhoused individuals. Other programs supported artists in San Francisco, justice-impacted people in Gainesville, Fla. and Durham, N.C., and Black fathers in Columbia, S.C.Richmond, Va. is centering working families in the gap, with incomes too high to qualify for benefits but still too low to comprise a living wage. Minneapolis recipients live in specific zip codes. Louisville and New Orleans are serving “opportunity youth” ranging in age from late teens to early twenties. The Chicago Resilient Communities pilot, the result of years of community organizing and grassroots leadership, will select recipients through an open application and lottery. The most ambitious attempt so far, it is designed to become a permanent program serving thousands of Chicagoans.

These local programs look different, but they share several basic elements in common.

• They are limited in time. Pilots last anywhere from several months to a few years, but 12-month pilots are typical.  
• They are not universal. Most programs benefit 100-200 recipients. Chicago’s trial will be the largest by far, selecting 5,000 individuals to receive monthly payments.
• They set a standard payment amount. Amounts range from a few hundred dollars to$1,000 per month, with $500 per month being the most common. Some cities are taking the opportunity to investigate different disbursement schemes. Newark, for example, will give $12,000 per person over two years to two groups; one group will receive $250 twice per month and the other will receive $3,000 twice per year.  Again, these amounts are limited by the private funding sources that pay for them at the pilot stage. 
• They measure impacts. Many of the local programs include a control group of non-recipients from similar socioeconomic contexts to truly capture the difference the payments make.

Proposals for a national guaranteed income

The guaranteed income concept is gaining momentum on the national level, even as pandemic stimulus checks have spurred conversation about the feasibility and value of such payments. The success of local pilots like Stockton’s is helping spur conversations about a national guaranteed income program. Researchers at The New School’s Institute on Race, Power and the Political Economy offered a proposal in 2021 for what a national guaranteed income program could look like. They propose an expansion of the Earned Income Tax Credit to include people whose incomes are too low to qualify for the current benefit – or who have no income at all. This would essentially function as a negative income tax that would provide refunds on a sliding scale to every adult making less than the national median income. Coupled with other benefits like an expanded child tax credit, this scheme could dramatically narrow the U.S.’s persistent racial income gap between white families and families of color.

Lawmakers are listening. Congresswomen Ilhan Omar (D-MN) and Bonnie Watson Coleman (D-NJ) introduced bills in 2021. In the Senate, Mitt Romney (R-UT) floated a plan to give per-child cash benefit to families and followed up with a proposed child tax credit distributed in quarterly payments. Such federal proposals often face an uphill climb against entrenched stigma around welfare as well as the problem of how to pay for the program without taking away from other benefits that help families, thus leaving them worse off.

The research: guaranteed income works

Despite critics’ fears that a no-strings-attached “handout” would encourage people to spend irresponsibly and avoid employment, research on the Stockton pilot shows that extra funds are typically spent on food, health care, paying down debt and household needs. Full-time employment among recipients actually increased, perhaps because people with a little extra cushion could spend more money looking for work, and when they got a job, were better able to successfully encounter challenges like a car breakdown. Advocates of guaranteed income point to positive effects not only on individual financial stability, but on health, economic stimulus, education, and crime and safety. As with Housing First policies that reduced overall homelessness dramatically over more restrictive – and expensive – program efforts, researchers are finding that unconditional assistance can be more effective for the individuals involved and a more efficient use of public sector dollars.

Tailoring assistance programs to certain populations, as the cities described above are doing, allows policymakers to incorporate racial and gender equity considerations in their planning, directing the resources to those who need them most. In keeping with a focus on equity, many of these programs, like Magnolia Mother’s Trust, incorporate input and leadership from residents in their design. A new effort in Atlanta is following this path. LISC Atlanta is supporting the design and launch of the Georgia Resilience and Opportunity (GRO) Fund's In Her Hands initiative, which will serve approximately 650 women providing over $20,000 to individuals over two years, currently one of the largest guaranteed income amounts. The idea for the fund arose from resident input in a series of workshops about the best way to alleviate poverty. Its leaders are committed to incorporating continuous resident involvement, community-based research, and cooperative design as they launch in August 2022. The GRO Fund will focus on racial and gender justice, serving Black women in Atlanta’s Old Fourth Ward, the birthplace of Martin Luther King, Jr. It will provide women with, in his words, the solution to poverty: A guaranteed income.

Read our feature on the GRO Fund.