Free money for all? Mayors hope tests bring big change
By triggering $1,400 stimulus checks for millions of people and expanding the child tax credit for many families, the pandemic offered a clear takeaway for some officials: That putting tax dollars in people’s pockets is achievable and can be a lifeline to those struggling to get by.
Now a growing number of mayors and other leaders say they want to determine for sure whether programs like these are the best way to reduce poverty, lessen inequality and get people working.
In experiments across the country, dozens of cities and counties — some using money from the $1.9 trillion COVID relief package approved in March — and the state of California are giving some low-income residents a guaranteed income of $500 to $1,000 each month to do with as they please, and tracking what happens.
A coalition known as Mayors for a Guaranteed Income plans to use the data — collected alongside a University of Pennsylvania-based research center — to lobby the White House and Congress for a federal guaranteed income or, for starters, to make the new $300 per month child tax credit that’s set to expire after this year permanent.
The surge in interest in these so-called free money pilot programs shows how quickly the concept of just handing out cash, no strings attached, has shifted from far-fetched idea to serious policy proposal, even as critics blast the programs as unaffordable or discouraging people from going to work.
“The pandemic showed us what is possible,” said Los Angeles Mayor Eric Garcetti, whose latest budget included a $24 million guaranteed income program to give 2,000 poor families $1,000 per month.
Former Stockton Mayor Michael Tubbs, who started Mayors for a Guaranteed Income in June 2020, launched a guaranteed income program using private funds in his Northern California city in 2019. An independent study found full-time employment for participants grew in the first year of the program more quickly than it did for those not receiving cash, a finding Tubbs argues contradicts conservative arguments against them.
Mayors for a Guaranteed Income started with 11 founding mayors and now has more than 50. Two dozen pilot programs have been approved, from Los Angeles County — the most populous county in the U.S. — to a county in upstate New York and the cities of Wausau, Wisconsin, and Gainesville, Florida.
Last week, California lawmakers approved a state-funded guaranteed income plan with a unanimous vote that showed bipartisan support. It will provide monthly payments to qualifying pregnant people and young adults who recently left foster care.
Some pilot programs have been funded privately — Twitter founder Jack Dorsey has donated over $15 million to MGI. Other places, like Minneapolis, are using federal dollars from the American Rescue Plan.
Matt Zwolinski, director of the Center for Ethics, Economics and Public Policy at the University of San Diego, has studied guaranteed income policy for over a decade and says the increased interest is remarkable.
But he says there’s a flaw in using the pilot projects as a “proof of concept.” Most are for one to two years and give money to a narrow slice of the population that knows the cash will eventually stop, so participants may be more likely to seek full-time employment during that period than if they knew the cash was permanent.
Zwolinski also questions whether people in the U.S. are willing to support a national program that gives money to people who could work but aren’t doing so.
“That really rubs a lot of people the wrong way,” he said.
Even in the smaller pilots there have been hiccups. In many cases, waivers are needed to ensure the new income doesn’t make recipients ineligible for other benefits they receive.
Gary, Indiana, started its pilot program in April, providing $500 per month to 125 households for one year. Burgess Peoples, the pilot’s executive director, said recipients receive “wraparound services,” including help with finding jobs. Already it’s making a difference, she said.
Peoples hopes more local experiments will pressure the federal government to change the way it assists poor people.
“That way they can get help the way they need it,” she said, “not just the way the government thinks it should be.”