Local Guaranteed Income Experiments

The thoughts expressed in this Guest Opinion are those of the writer and do not necessarily reflect the views of S&P Global.

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American household economic security has been eroding in the past couple decades. In 2018, 34% of Americans were considered economically insecure (incomes below 200% of federal poverty level) compared to 30% in 2000—with a disproportionate burden hitting Black and Latinx populations.ⁱ The COVID-19 pandemic has only exacerbated the economic insecurity, as well as the U.S. wealth gap—with the most financially vulnerable Americans facing furloughs, layoffs, or reduced hours while still being responsible for mortgage payments or rent, feeding their families, health care bills, and so forth. As of April 2021, U.S. census and Department of Labor data indicated that 1 in 9 households with children lacked sufficient food in the most recent week and more than 1 in 7 renters had outstanding rent payments (1 in 5 when considering households with children)ⁱⁱ. Again, these economic and living challenges have disproportionately affected Black, Latinx, Indigenous, and immigrant individuals and families.

Sparked by Rev. Dr. Martin Luther King’s idea for a guaranteed income as a means of eliminating poverty and by the city he was serving, Mayor Michael Tubbs established a guaranteed income pilot in Stockton, California in February 2019—the Stockton Economic Empowerment Demonstration (SEED). Mayor Tubbs’ SEED initiative randomly selected 125 residents who were residents of neighborhoods with average annual income below $46,000 (Stockton’s median annual income) to receive $500 per month for two years. These payments were unconditional—no work requirements, no conditions of use—just guaranteed income to “provide dignity and agency that everyone deserves.” ⁱⁱⁱ

Two years later, analysis comparing SEED participants to a control group showed improvements across various outcomes. Those who received the monthly payments not only experienced less income volatility, but also experienced the ability to self-determine financial goals and employment choice. For example, SEED participants had the ability to engage in opportunities to strengthen their employment options without the pressures of working several jobs—they could pursue training, coursework, certification, or internships that in turn improved job prospects. With this, the guaranteed income facilitated full-time employment: “the share of participants with a full-time job rose 12 percentage points, versus five percentage points in the control group.” [Lowrey]. Moreover, some SEED participants were able to use the funds to secure housing or avoid homelessness. Just as importantly, those recipients in SEED showed improved health outcomes—lower levels of depression and anxiety and increased wellbeing.^iv

In June 2020, Tubbs founded Mayors for a Guaranteed Income (MGI) to create a network of mayors who together advocate for and launch initiatives for guaranteed income. Cities in the process of launching pilots span the U.S.: Baltimore, MD; Richmond, VA; Gary, IN; Paterson, NJ; Compton, CA; Oakland, CA; St. Paul, MN; Cambridge, MA; and Chelsea, MA. Over 40 Mayors are currently in this network, including Cambridge, MA Mayor Sumbul Siddiqui.

Mayor Siddiqui grew up in Cambridge and has first-hand perspective on the evolving affordability crisis and racial and class gap in the city, which has only been accelerated by COVID-19. Mayor Siddiqui shares, “You think of Cambridge as Harvard and MIT, but that’s not the whole picture. There are two Cambridges. I grew up here in a low-income family and in affordable housing, so I know there’s both sides.” According to a research report by the Cambridge Community Foundation, 20 percent of the city’s population earns an average of just $13,000 per year, and of the families with children in this quintile, nearly 70 percent are headed by a single caregiver.^v According to federal guidelines, a family of three with an annual income of $21,960 is considered below the poverty line. With the pandemic, Mayor Siddiqui saw how quick assistance in the form of cash from the Mayor’s Disaster Relief Fund helped Cambridge’s most vulnerable and hard-hit families. Recognizing the critical impact of cash transfers, which acted as “financial vaccines” for these residents, Mayor Siddiqui joined MGI to explore options for Cambridge.

In April 2021, Siddiqui announced the launch in August of an 18-month pilot of guaranteed income (in the form of $500 per month) to 120 households that have a single caretaker. The pilot, Cambridge Recurring Income for Success and Empowerment (Cambridge RISE) is funded by a cross-sector coalition of donors, including Mayors for Guaranteed Income which gave the largest of gifts at $500,000). “We are grateful for the support and generosity from individual, philanthropic foundations, businesses, and university partners. Their financial contributions make the launch of Cambridge RISE possible,” shares Mayor Siddiqui.

Siddiqui credits early transparency and organization in creating quick buy-in. “This was a grassroots effort. My team set up early funder information sessions to answer questions and picked up the phone to ask potential donors, What do you think about this?” Just as important as funder buy-in was partnering with the organizations providing social services to those likely to be included in the pilot: affordable housing, early childcare, transportation, to name a few. The coordination of all the interacting services and support systems was key to making a pilot logistically feasible. “You need to work with as many people as possible to coordinate every detail and cover every base to make the pilot possible and impactful.”

Siddiqui also notes the critical lessons and support from the network and infrastructure of MGI. Not only did MGI provide $500,000 in seed funding for pilot, but more importantly MGI advised and co-designed a plan to get the pilot off the ground in a way that fit the unique city circumstances of Cambridge. “We learned so much from the pilots in Stockton, California and Jackson, Mississippi—it really helped us plan.” Understanding the power of success stories, Mayor Siddiqui has positioned Cambridge RISE to be included in an innovative body of research headed by the University of Pennsylvania School of Social Policy & Practice and the Center for Guaranteed Income Research. The learning agenda includes other cities throughout the U.S. also launching guaranteed income pilots and the potential impact of data showing successful outcomes could include building bipartisan momentum for guaranteed basic income and designing more effective policies moving forward. Mayor Siddiqui’s hope is that both the pilots and data will speak for themselves: “Other communities will see that cash is powerful, effective, and easy.”

When considering advice for policy makers and individuals alike who want to spark change, she emphasizes the need for creative thinking. As she explains, “The role of policy makers and community leaders is to think outside the box.” Moreover, it is important to deeply understand who it is you are trying to help. “You have to put yourself in the shoes of a single caretaker who needs this support and would be applying. Anticipate every question that they might ask like, Is my housing going to be affected? My childcare benefits?” Finally, Siddiqui emphasizes the power of learning from others—be it community leaders and city officials with different skillsets or leaders from other cities or networks like MGI. She notes, “With this type of work, time is of the essence here. There is no need to reinvent the wheel—you can and should learn from others.”

i https://www.policylink.org/sites/default/files/100m_Portrait_2pgr_11-21-18.pdf
ii https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-recessions-effects-on-food-housing-and
iii https://www.stocktondemonstration.org/#about
iv https://www.stocktondemonstration.org/#about
v https://cambridgecf.org/ei-report/