November 12, 2019
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A basic income experiment finds poor people spend money on necessities

Rich Pedroncelli | AP
Rich Pedroncelli | AP
In this photo taken Wednesday Aug. 14, 2019, Stockton Mayor Michael Tubbs discusses a program he initiated to give $500 to 125 people who earn at or below the city's median household income of $46,033 during an interview in Stockton, California.

A legislative committee is studying the feasibility of a universal basic income in Maine. The concept behind such assistance is that providing people cash assistance can be more beneficial, and bureaucratically simpler, than providing help through a variety of programs targeting specific needs, such as housing and food.

Maine’s work should be informed by what is happening in Stockton, California, one of the first cities in America to offer a universal basic income to low-income residents.

One of the aims of the Stockton experiment, which is initially being funded by the Economic Security Project, a pro-basic income advocacy and research group, was to examine the notion that low-income people are poor because they spend their money frivolously.

For the past eight months, the city has been giving $500 a month to 125 residents who earn less than region’s median income. A recent analysis found that they are spending most of the money on food, utility bills and clothes.

“In this country, we have an issue with associating people who are struggling economically and people of color with vices like drug use, alcohol use, gambling,” Stockton Mayor Michael Tubbs told the Associated Press earlier this month. “I thought it was important to illustrate folks aren’t using this money for things like that. They are using it for literal necessities.”

The experiment is small — the 125 recipients are a tiny fraction of the city’s low-income residents — and the program has been underway for less than a year. Still, the results are informative.

Since the program’s start in February, people receiving the money have on average spent nearly 40% of it on food. About 24 percent went to sales and merchandise, which include stores that also sell groceries. Just over 11 percent went to utility bills, while more than 9% went to auto repairs and fuel. The rest of the money went to services, medical expenses, insurance, self-care and recreation, transportation, education and donations, according to the first round of data collected.

Forty-three percent of the Stockton participants are working full or part time; 8% are retired, 20% are disabled and 10 percent stay home to care for children or an aging parent. Two percent are unemployed and not looking for work.

“A universal basic income, a regular cash payment that goes to every legal resident, would be the most effective policy against the poverty trap,” Michael Howard, a professor of philosophy at the University of Maine, wrote in a May column in the Bangor Daily News.

Because a universal basic income goes to everyone, it does not come with the stigma and hurdles of traditional assistance programs. More important, taking a job or promotion does not risk losing benefits needed to house or feed a family, Howard wrote. It also empowers employees and makes it easier for workers, most often women, to take time away from work to care for a child or other family members.

“Basic income security would provide an important support and buffer for the people we serve,” Heather Zimmerman, the advocacy director at Preble Street, told lawmakers earlier this year as she testified in support of the basic income study bill. “It would mean the difference between eating and going hungry for people who run out of SNAP benefits midway through the month. It would mean saving up for a security deposit for people who are experiencing homelessness. It would mean being able to go to the doctor about a health concern that has been put on the back-burner because people don’t have money or adequate insurance to cover preventative care. It would mean being able to afford childcare so people can get back to work or go to school to increase their skills.

“Unconditional cash assistance could mean any number of things for the people we serve, but most importantly basic income security has the potential to lift more Mainers out of poverty — something we all strive for in our work,” Zimmerman said.

A universal basic income has many potential benefits, but many questions remain to be answered. Stockton’s real-life work, coupled with the Maine committee study, can help clarify the benefits and drawbacks of this type of assistance.

 



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