These mayors want to fight Covid-19 and the recession with one big idea: A guaranteed income

Mayors of Atlanta, Los Angeles, Stockton, and other cities want a federal cash program to support their residents in need.

Dylan Matthews

Jul 21, 2020, 10:00am EDT

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These mayors want to fight Covid-19 and the recession with one big idea: A guaranteed income

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An impressively expansive coalition of mayors across the United States has united for a surprising goal: implementing a federal guaranteed income.

Mayors for a Guaranteed Income, announced in a Time opinion piece last month, is the brainchild of Michael Tubbs, the 29-year-old chief executive of Stockton, California, a city of more than 300,000 about 90 minutes east of San Francisco.

Tubbs first encountered the idea of a guaranteed income as a Stanford undergrad when studying Martin Luther King Jr.’s advocacy of the policy. A guaranteed income is an umbrella term for any policy meant to ensure that all citizens have a baseline level of money every year, guaranteed through government checks. For the last three years, Tubbs has been overseeing a pilot program offering 130 low-income Stockton residents $500 a month, no strings attached, to test one model of how this could work.

That effort, the Stockton Economic Empowerment Demonstration (SEED), began distributing money in early 2019, and while there is no formal research published on it yet, they have so far seen promising results. The money isn’t “wasted” by recipients, as skeptics of a guaranteed income have argued, but is spent on necessities, with food being by far the biggest purchase category.

Tubbs has become a major evangelist for the idea. He told Vox that, after presenting the idea to the US Conference of Mayors in 2018, he was “surprised by how enthusiastic people were.” Then, after the Covid-19 pandemic set in, he found “mayors were hungry for something that met this moment: focusing on root causes, and in line with the spirit of FDR with the New Deal, or JFK and the New Frontier.”

So far, the 17 mayors who have joined Tubbs include prominent names like Los Angeles’s Eric Garcetti, Atlanta’s Keisha Lance Bottoms, Seattle’s Jenny Durkan, Oakland’s Libby Schaaf, Newark, New Jersey’s Ras Baraka, and Jackson, Mississippi’s Chokwe Antar Lumumba. All are Democrats (as are most large-city mayors), but Tubbs says the group will become bipartisan “soon.”

The effort has also drawn attention from Silicon Valley philanthropy — Twitter and Square CEO Jack Dorsey donated $3 million to the group as a launch gift.

The group’s purpose is both to advocate for guaranteed income as an idea and to support pilot programs of the idea in the cities of member mayors. Those pilots take up the bulk of the group’s budget and could provide valuable new evidence on the effects of cash transfers as well as build public awareness of the idea.

Schaaf of Oakland says she’s already talking with a “major national funder” about launching a pilot in her city. “What excites me about universal income is that … it will intersect with victims of structural racism,” Schaaf told Vox.

Her city has in the past offered one-time cash assistance to help with homelessness, she says, and while that’s been life-changing for some recipients, it’s not enough. “Limiting cash assistance to one-time has a disparate impact on people of color because racial discrimination is not one-time,” Schaaf said. She’s attracted to guaranteed income and universal basic income because of the policy’s regularity and because it leaves choices to the recipients, not the government. “Government cannot know each and every family’s unique circumstances. It’s disrespectful and inefficient for us to try to,” Schaaf said. “I call it ‘tweezer government.’”

Mayors for a Guaranteed Income’s emergence is the latest evidence to date that universal cash assistance is becoming a mainstream political proposal, not least due to the widespread economic deprivation caused by Covid-19. And Tubbs is clear that the ultimate goal is less the implementation of such policies in the cities they run and more to force guaranteed income onto the agenda of the federal government.

Guaranteed income vs. basic income

The terminology in the name “Mayors for a Guaranteed Income” is important.

“Guaranteed income” isn’t quite the same as another concept that has caught on in recent years: “universal basic income” (UBI), the idea that tech leaders and 2020 presidential contender Andrew Yang have popularized. UBI typically involves proposals that offer enough money for a basic subsistence living (like $1,000 per month, as in Yang’s plan) to every American (or at least every adult American), regardless of their other income.

Guaranteed income encompasses ideas like UBI but can also be meant to include more limited proposals that provide cash to a large number of people but not everyone, or providing enough to escape poverty without other income. Such a program might not be “universal”: The cash assistance might target only the poorest people in the US, and it might phase out with for those with higher income.

It might also not be “basic”: It could fall short of offering enough money to live on without other income sources. Rep. Rashida Tlaib’s (D-MI) BOOST Act, one plan touted by the group, would offer poor adults up to $250 per month or $3,000 a year: not enough to live on but still a useful supplement. At times, Mayors for a Guaranteed Income appears to be sweeping existing, much more restrictive programs under this rubric, such as by praising Sen. Kamala Harris’s (D-CA) LIFT Act, which is essentially a large expansion of the Earned Income Tax Credit and similarly tied to work. People who can’t or don’t work would get nothing from that plan.

This Big Tent vision of advocating for cash assistance suggests a shift in rationales for the policy. UBI came into public consciousness as a perceived solution to the problem of automation: Technology was getting too good, it was going to put people out of jobs, and we need UBI to help the “losers” of this process survive. (That rationale helps explain the early support the idea found in Silicon Valley.) The problem was that automation does not appear, in reality, to be destroying that many jobs and, if anything, productivity growth is too low. Moreover, this techno-futurist vision of UBI made the “basic” part of the policy look essential: To replace a middle-class job eliminated by automation, the policy would need to offer truly massive benefits.

Mayors for a Guaranteed Income does not have much to say about automation at all. While Dorsey is providing crucial early funding, the more important donor influence here comes from the Economic Security Project (ESP), which offered seed funding for the Stockton experiment three years ago. ESP was founded in 2016 by Facebook co-founder Chris Hughes (who contributed some of his own fortune) and veteran activists Dorian Warren and Natalie Foster. Despite Hughes’s Silicon Valley background, ESP has always been more focused on fighting poverty and income volatility than in providing an answer to automation.

Chris Hughes wants another chance

The Time op-ed announcing the Mayors group was similarly focused on alleviating economic insecurity rather than addressing automation. “As leaders of our respective cities, we see firsthand how poverty and economic insecurity afflict our neighborhoods and families,” the mayors wrote. “Nearly 40% of Americans cannot afford a $400 emergency, and rising income inequality is compounded by a growing racial wealth gap.” The former stat isn’t exactly accurate, but it’s a sign of the group’s desire to frame the scope of the problem as broader than the roughly 12.8 percent of Americans living in poverty.

“What’s distracting about early UBI conversations is that they were about automation and losing jobs,” Jonathan Morduch, an economist at NYU who’s helped design a basic income pilot for one Mayors for a Guaranteed Income member city — Newark, New Jersey — told me. “The newer conversations, and what [Newark Mayor] Ras Baraka and others are really focused on, is helping families, most of whom are working, have more stability and income to do the things we all need to do.”

Tubbs says the mayors’ group sensed increased urgency due to the Covid-19 pandemic, which forced the largest-scale one-time cash distribution in the history of the federal government, and the racial economic inequalities that he believes underpinned the protests following the death of George Floyd at the end of May. Tubbs notes that Martin Luther King Jr. wrote Where Do We Go From Here: Chaos or Community?, the 1967 book in which he called for a guaranteed income policy, following a summer that saw around 159 race riots in cities from Newark to Detroit to Milwaukee.

“A guaranteed income is in line with the traditions of Dr. King, and it’s in line with the 10 demands of the Black Panther Party,” Tubbs told me. “It’s a universal solution, but it does help groups that are most likely to be in poverty, and in proportions people of color are more likely to be in poverty, women of color in particular.”

How Mayors for a Guaranteed Income could change the debate

Tubbs made clear that the role of Mayors for a Guaranteed Income is not necessarily to implement the policy at a city level.

City budgets are already battered by the collapse in sales tax revenue brought on by Covid-19’s throttling of consumer spending, and an ongoing recession will also hurt income tax receipts in the cities that levy them. Cities cannot run indefinite deficits the way the federal government can, and their ability to run even very temporary deficits is limited due to higher municipal bond interest rates and rules meant to make it hard to issue bonds (like requirements that voters approve new bonds in referenda).

And even if all those weren’t issues, cities face an adverse selection problem: If they adopted a guaranteed income but their neighbors didn’t, then low-income residents of nearby towns will likely move in, adding to the program’s cost without improving the city’s ability to pay for it. Especially for a city like Stockton, which set a record as the largest city to declare bankruptcy when it did so in 2012 and is wary of taking any policy risks that could put them back in that situation, the fiscal burden of a large-scale guaranteed income is too much to bear.

“A guaranteed income is in line with the traditions of Dr. King, and it’s in line with the 10 demands of the Black Panther Party”

The group’s bigger purpose is to support pilot programs in various cities around the country. $1.5 million out of the $3 million donated by Twitter CEO Dorsey will go to supporting city pilot programs to be launched “before the end of the year.” Mayors for a Guaranteed Income say in a fact sheet released to press that they plan to support 15 cities with $100,000 each. This approach, the group says, allows it “to stretch the resources and make the case in multiple cities.”

One reason to conduct pilot programs like this is to add to scientific knowledge on the effects of guaranteed income programs. The thing is, researchers have dozens of tests of a basic income or related policies to study already, including several going on right now. There’s the permanent dividend of Alaska (funded through oil revenue), a casino dividend for the Eastern Band of Cherokee Indians in North Carolina, tests across the US from 1968 to 1974 that enrolled some 7,500 people, the Stockton trial, and an experiment being run by startup incubator Y Combinator — and that’s just in the US. My colleague Sigal Samuel has a full list of every place that’s piloted basic income programs, and it’s very, very long.

So far, these experiments have focused overwhelmingly on one variable: labor supply. That is, researchers want to find out if recipients of unrestricted cash work less. And the vast majority of evidence to date suggests that the elasticity of labor supply with respect to unrestricted cash transfers is very low — in plain English, basic income might discourage work, but the effect is quite small. That’s led some researchers, like Berkeley economists Hilary Hoynes and Jesse Rothstein, to argue that further pilots might not have much to tell us unless they are trying to estimate different variables of interest (say, effects on long-term health, or debt and savings). We know a lot about cash and work already.

What’s more, pilots actually meant to be scientifically meaningful are expensive. The Stockton trial, which with a treatment group of 125 recipients (plus 5 alternates in case of attrition) is very small as these studies go, costs over $1.5 million for the two years it will run, just for the cash transfers themselves. The cost of distributing the money and evaluating the program is extra. A larger study with more statistical power would cost significantly more, as would a study that ran longer and could pick up longer-term effects.

But additional, cheaper pilots can still be politically persuasive. A good example touted by Mayors for a Guaranteed Income is the Magnolia Mothers’ Trust, a program in Jackson, Mississippi, supported by group member Mayor Chokwe Antar Lumumba. Run by the nonprofit Springboard to Opportunities and its leader Aisha Nyandoro, the Mothers’ Trust initially offered 20 women $1,000 per month for one year, from December 2018 to November 2019. That’s much too small a sample size for a formal evaluation, but it brought significant attention to the idea, with coverage from the NBC Nightly News to CNBC to PBS. Now the group is conducting a follow-up with 110 mothers, which is more scientifically valid and will bring more attention to the initiative and the idea.

One way to understand Mayors for a Guaranteed Income is as a vehicle for two, three, many Magnolia Mothers’ Trusts. It could provide seed money for pilot programs in a large number of cities across the country that could do similar visibility and advocacy work, building pressure on the federal government to act and implement a policy that cities can’t implement on their own.

“Social programs have to come from the federal government and in the interim we’ll do what we can with the resources we raise,” Tubbs said.

What we can still learn from basic income pilots

The primarily lobbying purpose of Mayors for a Guaranteed Income does not preclude some members from conducting rigorous evaluations that can tell us more about the policy. The Stockton demonstration is being evaluated by the University of Pennsylvania’s Amy Castro Baker and the University of Tennessee’s Stacia Martin-West, who organized a true random assignment design. The recipients of the $500 were randomly selected, as was a control group enabling an apples-to-apples comparison of people getting and not getting the money. The demonstration is designed to provide information primarily on the effects of the $500 monthly payments on income volatility and psychological and physical health, rather than on labor supply.

Hoynes and Rothstein, the Berkeley economists, argue that well-designed pilots could still tell us useful information if they try to go beyond the labor supply evidence base. They offer a few different ways pilots could be organized toward that end.

“There are a couple of things that we might try to learn about with ‘multisite’ UBI pilots. One would be how the impacts of the program are affected by differences in the labor market in these areas — Stockton versus NYC versus San Jose,” Hoynes said. Offering cash to people in rich cities like San Francisco with high wages and relatively low unemployment might have different effects than offering cash to people in more struggling cities like Stockton — for one thing, it’s possible that in SF landlords will jack up rent in response, whereas there’s enough empty housing available in Stockton that landlords can’t afford to do that.

“The second is how the results differ between ‘more universal’ versus more targeted programs. Now I know that no pilot will be universal, but it would be interesting if we could see how they vary if the criteria is, say, 300 percent of poverty versus 100 percent of poverty,” Hoynes added.

Rothstein thinks looking at income volatility and health, as the Stockton demonstration is meant to do, could be worthwhile, even in the short run. “Long-run health is probably not something we can get at with a short-term pilot, but I think a pilot that lasts a couple of years would make it possible to expand our understanding of the effect of additional income at crucial points in the life course on child development,” he said.

“These pilots could be used to build on the existing literature on the permanent income hypothesis, about how people decide how much of a transitory income shock to spend versus save, and how they allocate their spending on durable investments versus transitory consumption. … For example, at the end of these pilots, have people gotten out of a cycle of using paycheck cashing services, or paid off credit card balances? How long does it take for this to occur after the pilot starts?”

The Jain Family Institute (JFI), a family foundation and think tank based in New York, and the Economic Security Project (ESP) are currently working on a pilot that seeks to get at these and a few more novel questions that the existing research on basic income has left unsettled. JFI and ESP both worked on a task force report released last month by the city of Newark, which recommended beginning a pilot program in the city to test guaranteed income and pushed for a federal guaranteed income policy.

That pilot’s preparations are currently ongoing, and Sidhya Balakrishnan, director of research at JFI, says it is consciously designed to avoid duplicating past guaranteed income pilots. Specifically, the pilot will be focused on determining the optimal amount and frequency with which a guaranteed income can be delivered. How much different would a $200 per-month benefit be from a $600 per-month benefit? (These are just examples, not the actual ones that will be tested.) How would debt, savings, etc., evolve under a benefit that’s delivered in one lump sum once a year versus one delivered every two weeks? (Again, these time intervals are just examples.)

These are parameters of a guaranteed income policy that haven’t been tested extensively yet, and Balakrishnan argues the Newark trial is well-equipped to answer. “There’s very little evidence on what the optimal cash subsidy looks like,” Balakrishnan told me. “You need evidence with a large sample size. It’s also important to know when people need that money.”

The Newark pilot is still fundraising; running a sufficiently large study like this can easily run into the millions of dollars. But the hope is that the Newark study, supported by groups like Mayors for a Guaranteed Income, can provide us with new scientific data on the effects of basic income and related policies, not just advocacy.

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