STOCKTON, Calif. — This story was originally published by CalMatters.
Stockton’s experiment in guaranteed income — which paid more than 100 residents $500 a month with no strings attached — likely improved the recipients’ financial stability and health, but those effects were much less pronounced during the pandemic, researchers found.
The study of the two-year experiment that began in 2019 shows the promise and limitations of a guaranteed income, said Amy Castro, a study author and founding director of the Center for Guaranteed Income Research at the University of Pennsylvania.
The Stockton program is one of the few modern U.S. experiments in regular cash payments with complete, published results.
Castro and co-author Stacia West wrote that guaranteed income “under normative economic and health conditions, does calm income volatility and allay financial, emotional, and psychological distress.”
But during the pandemic, those results were inconclusive.
“We were able to say definitively that there are certain changes in terms of mental health and physical health and well-being that are directly attributed to the cash,” Castro told CalMatters on Tuesday. “Year 2 (2020) showed us some of those limits, where $500 a month is not a panacea for all social ills.”
The Stockton pilot program kicked off a flurry of advocacy for unconditional cash programs across the country. The pandemic — and along with infusions of federal aid to local governments — pushed officials and private organizations to start their own experiments giving people direct cash to alleviate poverty and financial instability.
Nowhere did the pilot programs take off more than in California. Earlier this year, CalMatters counted more than 40 programs that have launched or are preparing to launch this year, giving cash to more than 12,000 residents total.
Program complications
Many of the programs target immigrants or families raising children. Seven programs the state is funding will focus on low-income, expectant mothers or foster youth aging out of state care.
In a state where the cost of living drives a top-of-the-nation poverty rate, and a large share of workers who are disqualified from traditional social services due to their immigration statuses, California officials have already taken interest in direct cash programs. They’ve expanded tax credits for low-income families and loosened stringent federal work requirements for cash welfare recipients.
Unconditional cash proposals have detractors. Critics say the programs could discourage work and are too expensive. And some skeptical labor leaders say employers should be paying higher wages if their workers can’t afford basic needs. Some proponents disagree about whether guaranteed income should replace current safety-net programs or be an addition to them.
Complicating the Stockton study was its relatively small sample size.
Researchers were initially tracking more than 100 recipients, but many of those receiving the cash and those in the control group couldn’t be reached for surveys and interviews during the pandemic. As a result, the researchers saw “trends of a positive trajectory” on many measures for recipients – such as an increased ability to pay for a $400 emergency – but results were not strong enough to be statistically significant.
By contrast, a recently-concluded pilot program in Los Angeles included more than 3,200 recipients. The Center for Guaranteed Income Research is also studying that experiment, but there are no published results yet.
An initial report on the first year of the Stockton experiment showed the group receiving payments had increased its rate of full-time employment, as some recipients used the money to complete internships or consolidate part-time shifts and gig work.
The final study did not find effects on recipients’ employment to be statistically significant.
Pandemic spending
Micheal Tubbs, Stockton’s former mayor, has founded an organization that launched several other guaranteed income programs; he also advises Gov. Gavin Newsom on poverty. He said the Stockton study shows the program did not drive down employment among recipients, even during the pandemic.
“People did not stop working,” he said. “And people spent money on things we all spend money on. People know how to spend money.”
Data the researchers collected from Stockton recipients’ debit cards shows that recipients on average spent more than a third of the funds on food. But during the first month of the pandemic, spending on food spiked to nearly half of the tracked funds.
Researchers noted that recipients also transferred about 40% of the funds off the debit cards, with some people explaining they worried about scams and feared the money would be taken away, or they chose to pay for things in cash.
Castro noted many program recipients reported using the money to buy food in bulk during the stay-at-home orders.
“Those are activities that you can’t do when you’re experiencing poverty or when your income is going up and down each month,” she said.
Less stress
Gregory Gauthier, a 34-year-old recipient in Stockton, said the money helped keep his family afloat through two unexpected losses in income during the pandemic — once while waiting for unemployment checks when his job furloughed him for three months and again when he was recovering from surgery for several weeks.
“It would have been really hard” without guaranteed income payments, he said, which “make everything smoother and less stressful.”
Gauthier grew up in Stockton, in a working-class family that he said didn’t have much money and moved a lot.
The pilot program randomly picked recipients from neighborhoods where the median household income was less than the city’s average — about $46,000 a year at the time. When Gauthier enrolled in the program in 2019, he was making $13 an hour at an auto dismantling business. He had four kids at the time; two lived with him, his mother and her husband.
Gauthier had been saving to buy a car, he said, and the payments helped get him there sooner. He also spent it on food, car parts and his children’s clothing, school supplies, and skateboards.
Since the payments ended two years ago, he has felt the loss, he said, but his family has gotten by on the pay bumps he has earned at his auto dismantling job.
Reflecting on the guaranteed income program, Gauthier said it allowed him to have enough to save for emergencies, and it prompted him to think about how to earn more in the future.
“With inflation I want to be above that, so I don’t have to worry,” he said.