California study shows guaranteed income works while Madison and Wausau build pilots

By: - March 9, 2021 7:00 am
Grocery store cart being pushed down supermarket food aisle

Grocery store aisle by Oleg Magni via Pexels

As two Wisconsin cities work to get guaranteed income pilot programs off the ground, the city that built the nation’s first experiment in the policy has found that no-strings-attached payments can improve people’s health, increase employment and reduce economic instability. 

Stockton, California and its former Mayor Michael Tubbs began an experiment in a new kind of economic policy two years ago when it started giving a selected group of 125 residents $500 per month. 

To be selected, recipients needed to be at least 18 years old and live in a neighborhood with a median income at or below Stockton’s overall median income of $46,033. A mailing was sent to 4,200 randomly selected households that fit this criteria and 125 recipients were chosen from those that responded.

Tubbs has since started a national program, Mayors for a Guaranteed Income (MGI), to test the policy in different types of cities across the country. 

In the past several months, both Madison and Wausau have announced the development of pilot programs through grants from MGI. Neither program is using taxpayer money to fund the payments. Madison announced a $600,000 pilot in December and last month the Wausau City Council approved a $100,000 program. 

Last week, the results from the first year of Stockton’s program were released and the verdict was overwhelmingly positive. Recipients reported having more time to spend on themselves or with friends and family while they were also more likely to have a full-time job than a control group that did not receive the money. The mental and emotional wellbeing of the recipients also improved. 

Covering the first year of the program, February 2019 through February 2020, the data released so far doesn’t show the effects of the COVID-19 pandemic and resulting economic fallout on the recipients of the payments. 

While not a panacea, the pilot found that monthly payments can greatly ease people’s lives. 

Madison Mayor Satya Rhodes Conway speaks to the crowd. (Henry Redman | Wisconsin Examiner)

“The $500 made making rent payments, covering childcare, and taking care of medical needs more bearable for recipients, but it was not nearly enough to cover the exorbitant costs of these necessities,” the report states. 

The mayors of both Wisconsin cities implementing their own pilots say they’re encouraged by the data out of Stockton and hope to learn more as different variables are tested in their cities.

For Madison Mayor Satya Rhodes-Conway the finding that stood out the most was the increase in employment for the recipients of the cash. While conventional wisdom in designing American welfare programs has often resulted in measures such as work requirements out of fear that extra money will incentivize people not to work, the Stockton study found the opposite was true. 

Having a little bit of extra money each month allowed the recipients to have greater agency and take risks in regards to their work and career paths. When combined with his family’s other government benefits, one recipient was able to stay in school and finish a certificate program. Others were able to take part-time jobs or internships that ultimately led to full-time work. 

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“The switch from families moving from part time to full time employment is really interesting and I think it contradicts the narrative that if you guarantee a certain monthly income that people will work less, when in fact we’re finding people were working more,” Rhodes-Conway says. “That’s interesting and a useful finding.”

Wausau Mayor Katie Rosenberg says she was excited about the data showing how the $500 was spent each month because there was some caution from residents about how no-strings-attached cash would be spent.

Mayor Katie Rosenberg
Wausau Mayor Katie Rosenberg. (City of Wausau)

The Stockton study found that overwhelmingly the money was used to pay for food. An average of nearly 37% of the monthly payments went toward food, the most common use. The second highest category, sales and merchandise, likely also includes food purchases because money spent at wholesale stores including Costco, Target and Walmart were all part of this category. 

Utility bills and transportation were also common uses of the money. Less than 1% of the payments were spent on tobacco and alcohol. 

“There was a bit of reticence because there’s no requirements,” Rosenberg says. “But now showing that a majority of that money is going to food and transportation and clothing. That gives the policy makers a lot of confidence in what we’re hoping to see.”

While in the same state, the designs of the Madison and Wausau programs will need to be differently tailored for the specific needs of each community. Like the Stockton program, each variation provides different data for policymakers to analyze the validity of a much larger guaranteed income program. 

“I think certainly just like you expect things to be different between Stockton and Madison, you expect things to be different between Madison and Wausau,” Rhodes-Conway says. “Those are really interesting questions. You do really need a diversity of cities to try this and make the case across the country. I also think there’s a growing recognition amongst mayors that there’s only so much we can do at the city level. We have any number of programs that are trying to put band aids over what is fundamentally a problem of poverty and incomes that are too low.”

While initially announced as being targeted toward helping Madison residents with housing, the city’s program focus has shifted as city staff have worked to fill out the details, according to Rhodes-Conway. Instead of housing as a focus, Rhodes-Conway says she’s especially interested in studying how guaranteed income can help neighborhood stability and reduce violence. 

The Stockton study found that the benefits of one household receiving the monthly payment extended out to a larger network as people felt more able to help friends and family. The goal in Madison would be to see if there’s a similar network effect for community violence. 

Though, Rhodes-Conway says, there are so many variables she’d like to study that it’s impossible to include them all. 

Madison is getting close to appointing a task force to oversee the program, she says and she hopes to announce something this spring. 

In Wausau, Rosenberg says they’re working on developing the criteria for inclusion in the program and deciding who will sit on its steering committee before getting “buy-in” from the city council and announcing the plan.

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Henry Redman
Henry Redman

Henry Redman is a staff reporter for the Wisconsin Examiner who focuses on covering Wisconsin's towns and rural areas. He previously covered crime and courts at the Daily Jefferson County Union. A lifelong Midwesterner, he was born in Cleveland, Ohio and graduated from Loyola University Chicago with a degree in journalism in May 2019.

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