Universal Basic Income and Guaranteed Income are the two most prominent terms that usually come up when discussing direct cash assistance pilot programs, which assess whether monthly payments to participants will help reduce their poverty and even prevent homelessness.
The idea of Guaranteed Income is not new and has appeared throughout history. American economist Milton Friedman advocated for a basic income in the 1940s. Then in the 1960s, several measures that included creating a guaranteed income program to alleviate poverty made it to Congress but did not pass.
In his last book published in 1967, Dr. Martin Luther King, Jr. wrote, “I’m now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”
His words are posted prominently on the Mayor’s for a Guaranteed Income Website (mayorsforagi.org) as a reminder of how long folks have been advocating for these efforts.
Mayors for a Guaranteed Income was founded in 2020 by Michael D. Tubbs, former Mayor of Stockton, Calif., and it includes nearly 150 mayors who are committed to advancing a federal guaranteed income. The goal of Mayors for a Guaranteed Income is to serve as a research and resource hub for municipal pilot programs.
Tubbs’ Stockton Economic Empowerment Demonstration (SEED) program claims to be the first Guaranteed Income demonstration program led by a Mayor in the nation in recent history and was launched in 2019. It provided $500 per month for two years to 125 randomly selected residents. The cash was unconditional and did not include any work requirements.
Researchers who studied the outcome of SEED observed “trends of a positive trajectory,” but the relatively small sample combined with the fact that cash recipients and those in the control group were hard to reach during the height of the pandemic, did not lead to results that were statistically significant.
Meanwhile, guaranteed income programs have been implemented in dozens of cities across the nation, and Minnesota may become the first state to take a basic income pilot statewide, as the Minneapolis Star Tribune reported last month.
The Standford Basic Income Lab published a white paper in 2020 that explored the different names used to describe Universal Basic Income plans.
To sum it up:
- Universal Basic Income provides the same cash amount to all individuals within its program. The funding is usually distributed monthly and has no strings attached.
- Guaranteed Income is for a targeted population, for individuals or households, whose income is less than a certain threshold. The income amount paid to recipients varies. It makes up the difference that the individual/household lacks to reach that predetermined threshold. There are also no strings attached to this monthly allowance.
- Negative Income Tax is another targeted approach that focuses on households whose incomes are less than the defined income cutoff when they file taxes. This benefit is given annually and varies based on income and income cutoff.
- Earned Income Tax Credit requires households to work in a formal employment setting. It targets residents whose earned income from formal labor is less than the defined income cutoff when filing taxes. It is also provided annually, and the amount varies based on income and income cutoff.
Basic Income Pilots and/or Guaranteed Income also seem to be gaining traction in some cities and counties when it comes to preventing and reducing homelessness. As homelessness is increasing nationwide, local governments are desperate to curb the inflow of new people into homelessness and reduce recidivism rates.
Denver was among the first cities to implement a basic income program for people experiencing homelessness. The Denver Basic Income Project offers unconditional cash transfers for 12 months and is studied by the University of Denver’s Center for Housing and Homelessness Research. Three groups of participants will receive different amounts during the project:
- Participants of Group A receive 12 monthly cash transfers of $1,000;
- Participants of Group B receive a one-time cash transfer of $6,500 at the time of enrollment, and $500 per month for the remaining 11 months; and
- Participants of Group C are considered the comparison group and will receive 12 monthly payments of $50.
According to an article printed in December 2023 in the Colorado Community Media, enrollment for the program took about four months from November 2022 to February 2023. Participants were recruited through local homeless service agencies. The eligibility criteria included that basic income recipients must be 18 years of age or older, experience homelessness, and not have severe or unaddressed mental illness or substance disorder. The project so far has served about 800 people, way more than the project founders initially anticipated. But funders like The Colorado Trust, The Colorado Health Foundation, and The Denver Foundation backed it. In total, the Denver Basic Income Project has raised about $6 million.
A six-month report released in October found that participants reported spending their cash on things like housing, transportation, and obtaining jobs. The findings show an increase in housing placements, a decrease in people sleeping on the streets, and an increase in full-time employment.
A final report will be available in June 2024.
I have spoken with local politicians who are interested in exploring the idea of a Basic Income Pilot program here in Nashville. But so far, Memphis is the only Tennessee city that has signed on to the Mayors for a Guaranteed Income network.
Memphis Mayor Paul Young is quoted on their website as saying, “Economic stability means high-quality, well-paying jobs, support for entrepreneurship and small business, and helping close the gap for people who are working hard yet struggling to get by. For many low-income families, a small amount of money can unlock a world of potential.”
Critics of these types of programs, however, are concerned that handing out cash without strings attached could lead to a reduction in employment among low-income Americans, which they claim would weaken families and increase poverty.
Leslie Ford, an adjunct fellow of the conservative American Enterprise Institute, released a report in March 2024, which states that “from the evidence currently available, if guaranteed income is nationally implemented, it could harm lower-income Americans by disincentivizing work.” She continues that in the long run, “This would likely have negative consequences for the citizens the programs seek to help because employment, not merely transfer payments, is key to overcoming poverty and exiting dependency.”
Mayors for a Guaranteed Income actually agree that while handing out cash is immediate, it is not a silver bullet. “We need meaningful, systemic change to our economy — and cash is just one part of that,” their website states. In addition, they claim that giving money without strings attached is powerful for three reasons:
- It reaches recipients quickly.
- It allows for flexibility as the needs of households are not identical (some need to pay rent, others need money for childcare, a laptop to allow for improved child education, to cover a medical emergency expense, auto repair, etc.).
- It fills gaps in social safety net programs.
There is not much evidence yet that unconditional cash assistance results in a huge decrease in people willing to work.
University of Pennsylvania’s Center for Guaranteed Income Research recently published its findings for the Recurring Income for Success (RISE) program in Cambridge, Mass. It showed that the recipients of cash benefits reported higher full-time employment on average compared to the control group. RISE offered $500 per month to 130 single caregivers from September 2021 to February 2023. To be eligible, participants had to have an income below 80 percent of the area’s median income.
Other findings in the evaluation of RISE showed that compared to the control group, cash recipients increased their income and income stability, achieved the ability to cover emergency expenses, and put money in savings. In addition, their housing cost burden and food insecurity was reduced. But the impact on mental and physical health outcomes was mixed. Researchers concluded that this suggests that Guaranteed Income alone is likely not enough to support the well-being of some caregivers.
While most Guaranteed and Basic Income projects are focused on families with children, a few, like the one in Denver, try to reduce homelessness.
A 2024 issue brief called Basic Income Grants to Reduce Homelessness in Los Angeles by four leading homelessness academics in the country argue that the potential of cash payments to people experiencing homelessness could contribute to reducing outdoor homelessness. They point to a 2022 Urban Institute Survey of Guaranteed Income projects, which compared these programs to the distribution of benefits through the usual bureaucratic ways. They cited the following benefits:
- Cash subsidies provide more flexible housing support at a lower cost. The current dominant model entails considerable overhead to pay for government employees and contractors to manage relationships between landlords and people in need.
- They afford more choice and dignity by allowing unhoused or housing insecure people to be treated like any other prospective tenant or lodger.
- They avoid voucher discrimination by landlords, some of which is motivated by the not irrational reluctance to deal with government bureaucracies to receive payment.
- These subsidies can be provided to people excluded from other government funded voucher programs, including immigrants and formerly incarcerated people.
The way I read their paper, the authors, including Dr. Sam Tsemberis, who has recently held a workshop with Nashville service providers on the Housing First philosophy, critique the homelessness systems that focus solely on implementing approaches that result in slowing down the housing process for people who are less vulnerable. Or said in another way, cash assistance could help provide options for people who are able to find housing on their own if they had a little bit of economic support in doing so.
I would like to point to a new study that Vanderbilt University’s Research News announced in April. Per that announcement, the study will “test whether unconditional direct cash payments and peer support to families who are homeless will help reduce the length of shelter stays and improve other aspects of their lives.”
“This study was essentially designed by lived-expertise consultants, a team of mothers who had stayed in New York City shelters with their young children. When we asked them what would help families leave a shelter most rapidly and promote family well-being, the consultants said cash and peer support,” Dr. Marybeth Shinn, a nationally renowned researcher and a professor at Vanderbilt University, was quoted in the announcement.
Foundations often do not like to participate in or are even prohibited to fund Basic Income Pilots or Guaranteed Income programs due to the lack of fairness as to who receives the cash payments. Therefore, government funding mechanisms become important to implement viable programs. At the same time, whenever government is involved, bureaucracy may stall swift implementation.
The federal stimulus grants implemented during the height of the COVID-19 pandemic also showed that it can be done and that the result of cash payments would help reduce poverty. Yet, those subsidies are ending. That is where national advocacy groups like Mayors for a Guaranteed Income become crucial to push for widespread implementation of programs that would supplement existing social welfare systems to alleviate poverty.