Twin Cities at forefront of guaranteed basic income experiment
Hundreds of families receiving $500/month with no strings attached
When Sydney Hunter got a flier about St. Paul’s guaranteed basic income program, she thought it was just junk mail. $500 a month with no strings attached seemed too good to be true. But she verified it was real online, and was chosen to participate in the pilot program.
That monthly payment came in handy almost right away, when Hunter was unexpectedly laid off from her job in the medical field.
“I used that $500 to pay my rent,” Hunter said. “That helped me secure my housing and avoid potential homelessness in the meantime when I search for another job.”
Minneapolis and St. Paul are at the forefront of a national experiment in what happens when people are given a few hundred extra dollars a month.
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During pilot programs in both cities, residents are given $500 dollars a month and can spend it however they want. Guaranteed basic income programs are being tested in small groups across the country as a way to alleviate poverty. Some would like to see the concept expand to include everyone.
St. Paul Mayor Melvin Carter said he was drawn to the idea of a basic income program because he grew up with neighbors who struggled to pay their rent or feed their families. St. Paul’s first pilot launched in the fall of 2020 with 150 families — it was one of the first in the country.
“I don’t think anyone would argue we’re winning the war on poverty, so that means that we have to change our approach,” Carter said.
Participants were chosen at random from the city’s CollegeBound Boost program, which helps residents save money for their children’s college costs. They had to earn at or below 300 percent of the federal poverty level.
Carter said people in the program told stories about the sort of costs you might expect: Fixing a truck so they could get to work or putting a son or daughter in childcare. Although the final report on the pilot is due next year, they also found that people in the program got jobs at higher rates than those not enrolled.
“Five hundred dollars didn’t just help people survive to the end of the month, but it unlocked a whole world of economic potential for those families,” Carter said.
One challenge Carter and his team faced in creating the pilot programs in St. Paul was ensuring that people who got the payments each month didn’t lose other benefits, like housing or childcare assistance.
“We've built eligibility criteria that actually keep families from getting a raise, from participating in our guarantee or taking a new job promotion,” Carter said. “This for me is really exposing a lot of the ways in which it's our systems that we've created, systems that we maintain, the policies that we've written, that keep people stuck in poverty.”
St. Paul found that more than half of the funds were spent at stores like Target on household supplies, food and clothes. More than a quarter was spent at grocery stores. And just about 5 percent each is spent on car costs or housing.
The pilot wasn’t targeted by race or gender, but ended up serving 91 percent women, with almost half mixed race, and almost equal parts white and African American. That’s in a state with some of the highest educational and economic disparities in the country.
The People’s Prosperity Pilot was just one of a suite of programs Carter has launched in St. Paul, including college savings accounts for kids and even an income guarantee pilot program aimed at artists. He said leaders need to show Americans examples of government programs that work well and make people’s lives better.
Fueled partly by examples in Stockton, Calif., and St. Paul, 128 different locations in North America are now hosting some sort of pilot program, according to the Stanford Basic Income Lab at Stanford University.
Another of those cities is Minneapolis, where a guaranteed income program launched in June 2022 with 200 families.
Mark Brinda, Minneapolis manager for workforce development, said the pilot was purposely targeted at neighborhoods that had high economic and educational disparities, which included residents of nine zip codes and parts of 51 neighborhoods.
In one month, Brinda said they got 14,000 applicants. About 80 percent of the city residents in the pilot are people of color, and more than half make less as a household than $20,000 dollars a year.
”What kind of data could we start collecting that would add to that national discourse around [guaranteed basic income] that can be added to the literature to say what’s working, what doesn’t, where this should be aimed and maybe where it doesn’t work?”
Brinda and other staffers will survey participants at six months, one year, two years and then after the survey finishes to track the impacts. They also have a separate control group who aren’t currently receiving the funds to help flesh out the larger picture of how the funding affects residents.
People know best how to use the money
Minneapolis Mayor Jacob Frey said one of the best things about the program is that it gives the participants dignity by allowing them to decide for themselves where they spend the money. That’s different from many social safety net programs which dictate how funds should be used.
“People know where they need to spend,” Frey said. “People know where their daily needs are located, whether that's getting the mechanic to fix up a car, or that's eating a little bit healthier, that's buying a new shirt and maybe a tie so you can go in and do an interview to get a job.”
Frey said leaders of cities across the country are better able than the federal government to try experiments that make the lives of people in their cities better.
“Traditionally cities keep the streets clean, and they plow the snow and they pick up the trash,” Frey said. “But in these last five to 10 years, you've seen a full transformation, in part because cities are having to pick up some of the most difficult issues of society that state and federal governments don't want to touch with a pole.”
Laboratories for democracy
It's no surprise to Sean Kline of the Stanford Basic Income Lab that most of the efforts across the country have come out of city governments, which he said are more connected to the daily needs of its citizens.
"I also think cities have tended to really represent laboratories for democracy, taking bold decisions and experimenting on issues that may be stalled out at the state or federal level for political reasons," Kline said.
The idea to provide people with a guaranteed basic income has been around for hundreds of years, Kline said. It was a mainstay of Martin Luther King Jr’s vision. But the spread of COVID-19 boosted the concept, as tens of millions of Americans started to receive direct cash assistance, including through an expansion of a child tax credit.
“COVID really brought to the fore a recognition of a longstanding trend of growing economic insecurity and racial inequality and inequities,” Kline said. “We’re in a window of time where I think there’s a heightened sensitivity about how we address those challenges head-on and directly.”
The pilot project’s goal is to collect more evidence about how basic income programs affect people’s lives in a variety of different circumstances. So far, Kline said there’s evidence that the unconditional cash programs work to reduce participants’ depression and anxiety, as well as improve their health and well-being.
The main criticism of these programs comes from the notion that “there’s no free lunch,” which you see in American social programs with conditions like work requirements. Kline said the evidence collected so far refutes the idea that people will exploit unconditional benefits.
”The evidence is overwhelming, both internationally and domestically, that unconditional cash does not lead people to pursue what we call vices: gambling, tobacco, alcohol drugs any more than the average population across the country,” Kline said.
Precious Matlock, 25, was chosen to participate in the latest round of St. Paul’s guaranteed income program. Her jobs cover her main bills, so she’s excited to invest most of her monthly payments into her daughter’s college savings fund.
”It’s very important for myself, and it’s very important to her too because she loves learning,” Matlock said. “I just already know that she’s going to be somebody. She’s going to be the next future … everything.”