California city is first to try guaranteed basic income, $500 per month

A night view of Stockton street in downtown San Francisco, California. Stockton is the eighth most "distressed" large city in the United States. Photo / 123RF

Stockton, a suburban outpost of about 310,000 people in California, may seem at a first glance like an unlikely place for a social experiment at the cutting edge of political thought.

A moderate Central Valley city sandwiched between the overwhelmingly liberal Bay Area to the west and more conservative and agricultural counties to the east, it has never been seen as a political bellwether for a state increasingly known for its progressive politics.

But Stockton has faced levels of economic hardship that separate it from many of the thriving municipalities just an hour or two away: it was the largest in the country to declare bankruptcy in the years after the recession, and it still suffers from high rates of poverty, foreclosures and violent crime. It is statistics like these that make it well situated for a test run of an idea percolating in idealistic circles in recent years as a way to reduce economic hardship: a universal basic income, a program to guarantee no-strings-attached money to certain swaths of the population.

The idea has grown in popularity, both on the left and among some more conservative-leaning corners of Silicon Valley.

Mayor Michael Tubbs - at 27, the city's first black mayor and one of the youngest of any race for any comparably sized city in the country - will soon unroll an experiment to give US$500 cash every month to a select group of families for about 18 months. The project, which will begin in 2019, is being funded by US$1 million from the Economic Security Project, a philanthropic group helmed in part by Facebook co-founder Chris Hughes.

Stockton will be the first American city to run a programme. Tubbs has spoken in interviews about his familiarity with the issue of basic economic need. His mother was on welfare for the first five or six years of his life, he has said, and he said he believes the programme could help people like her.

"I think something like this could help the majority of Americans," Tubbs told The Washington Post. "And that's why I'm proud to introduce this in Stockton, where plenty of people are working hard like my mother, but might not have money lined up for a rainy day or rising rents or anything like that."

Tubbs told the Los Angeles Times that he remembers reading Rev. Martin Luther King Jr.'s book "Where Do We Go From Here: Chaos or Community," in which King wrote in support of a guaranteed annual income.

But he has acknowledged that the idea is an experiment with unknown outcomes. At the end of the trial period, he said, he hopes to answer a basic set of questions: What do people do with the money? And how do their decisions influence other outcomes?

The idea of a universal basic income is not new - it can be traced to the notebooks of Enlightenment thinkers like Thomas Paine and others - but has been percolating more loudly in recent years. Historically, it has had some appeal to people on both sides of the aisle politically because of its potential to reduce the bureaucratic heft that can be a side effect of entitlement and welfare programs.

Mayor Michael Tubbs - seen here in 2014 - is at 27 the city's first black mayor and one of the youngest of any race for any comparably sized city in the country. Photo / Getty Images

"Universal basic income is about giving people cash without question, and trusting that they know how to use it in the most effective way they can," economist Luke Martinelli of the University of Bath in Britain told Nature.

And for people on the left, it is one solution, however unconventional, to the vast wealth gap in the United States that has grown worse in recent decades. Since 1980, only 3 per cent of total growth has gone to the bottom half of Americans.

Similar income experiments have taken root in other places, including trials of varying scope and implementation in Finland; Oakland, California; and Ontario. In poor areas of Kenya, some 21,000 people are receiving about $22 a month as part of a programme that will last 12 years.

But with the relatively disparate studies and small samples sizes, a strong economic consensus has not emerged about its success or failures yet.

"With a lot of these projects, the devil is in the details, and the design of research depends on a fine-grained knowledge of its impact," Rob Reich, a political scientist at Stanford University, told Nature.

Tubbs pointed to Alaska, where each resident gets an annual dividend based off oil revenue - US$1100 last year, but it has swelled as high as US$2000 in recent years - as a model.

The Stockton program came about serendipitously. Tubbs and his staff had already come up with a universal income as one potential way to address poverty in his city when he met Natalie Foster, a co-founder of the Economic Security Project, at a conference last year. She told him the organisation was looking for a city to pilot such a programme, he said.

Hughes, 34, has been a vocal proponent of the idea's benefit on the national level, suggesting a US$290 billion program funded by steep taxes for the wealthy where Americans earning less than US$50,000 a year received US$500 a month.

In Stockton, California, about one in four residents live in poverty. According to a study of economic indicators like rates of high school diplomas, housing vacancy, poverty and nonworking adults done by the Economic Innovation Group, a Washington, D.C., think tank, Stockton is the eighth most "distressed" large city in the country.

Still, some critics believe that government handouts with no conditions will be spent unwisely and could encourage people not to look for work.

The city has yet to determine which of its residents will receive the funds, but the emphasis will be on finding a way to get the money to the "working poor," Tubbs said.

"In this country, we have to have a conversation about who is deserving and what does 'deserving' mean," he said. "For whatever reason, when we talk about the social safety net, our images don't go to folks working hard, like a single parent working at Walmart. The image goes to someone using drugs."

He added:

"We want to push back against those stereotypes, by highlighting the stories and putting a face to this narrative," he said. "It's the mother who was able to pay for child care, it's the student who was able to go to community college, the couple with credit-card debt."