STOCKTON, Calif. (CN) – It has been over nine months since 130 Stockton, California, residents started receiving a no-strings-attached $500 monthly payment as part of a pilot program to stem poverty, and the results so far are encouraging.
The 18-month project, named the Stockton Economic Empowerment Demonstration (SEED), began this past February and was made possible through $3.1 million in private donations. It is the first of its kind on this scale in the nation.
Stockton, a city of over 310,000 in which 20% of its residents live below the poverty line, is fertile experimental ground for just that reason.
Sukhi Samra, director of SEED, is excited the program is already getting buzz from city officials in major metropolitan areas.
“They have come to us because they are interested on implementing guaranteed income locally,” Samra said in a phone interview. “Chicago actually launched a task force to explore the feasibility of a basic income, and in Milwaukee they are going to try a similar program next year and give $500 per month to 50 families, but they are inspired by our work.”
As of now, the closest the United States has to a guaranteed income is in Alaska, where the Alaska Permanent Fund Dividend has been giving eligible residents an annual lump sum payment from oil and gas revenues. Since 1982, the program has disbursed more than $23 billion in dividends.
That seems well and good for a state that already has its solution paid for, but in California getting the money is a dicey issue.
Samra said that if publicly funded, the money could come from a wealth tax, carbon tax or cap-and-trade. Other options could also include a value-added tax, so there a number of sources where the money would come from.
“I can’t give a definitive answer on what type of tax it could or should be,” she said. “But I think if we’re really committed to this idea of guaranteed income as a tool for equity, it’s really about looking at our tax system and making sure that we’re helping folks who aren’t benefitting from the economy in the same way others might be.”
Matthew Freedman, a professor of economics at the University of California, Irvine, said in an interview that the real value of this current experiment will be in what we learn from it.
“What is exciting about the Stockton program is that it will tell us about the merit of some of these concerns and whether or not problems arise with these benefits that might affect our willingness to adopt universal basic income on a broader scale or whether or not (these concerns) are overblown,” he said. “A lot of the resistance from universal basic income (UBI) comes from what people might spend the money on and how it might affect decisions about if and how much they’ll work.”
Critics have pointed to concerns that the money, which is disbursed through prepaid debit cards, can be withdrawn and the cash can be used without being tracked. But statistics from the SEED dashboard, which releases updates on tracked spending, proves that isn’t the case.
About 40% of disbursed funds have been transferred off of the debit card since February, mainly because people had trouble believing it wasn’t a scam and moved the money over to more trusted sources. They also routinely pulled out cash to handle transactions that cannot be paid for by card.