Researchers Report Stockton California Economic Empowerment Demonstration Program Success

Now there is hope for Americans trapped for decades in a cycle of poverty. In 2019, former Stockton, California mayor Michael Tubbs launched a trailblazing initiative called the Stockton Economic Empowerment Demonstration, or SEED. This guaranteed basic income project began by granting 125 individuals $500 a month for two years. Volunteers were chosen from neighborhoods with a median income of $46,000 or below. Director Sukhi Samra and Researcher Dr. Amy Castro Baker talk with Hari Sreenivasan about the preliminary results and how the program works.

Our partners at Amanpour and Co. report on this story.

 

TRANSCRIPT

HARI SREENIVASAN: Christiane, thanks. Sukhi Samra, Amy Baker, thanks for joining us. Amy Baker, you were one of the principal investigators. Your job is to comb through all this information, make sure that the findings are robust. What did you find?

AMY CASTRO BAKER, ASSISTANT PROFESSOR, UNIVERSITY OF PENNSYLVANIA: Oh, so many things. You know, I think the top line, you know, things that we would point to would be that after one year, we saw a rise in the number of people who moved from underemployment to full employment. We also saw decreases in clinically significant levels of anxiety and depression in the treatment group, that that went down, whereas the control group stayed steady. And then we also saw that recipients had more liquidity to handle unexpected expenses. And what this meant was that it showed up as real change in the way that they were able to show up in their families, the amount of time that they had to engage in the relationships, engage in the community, and that — really that alleviation of natural burden created more time and space in their life.

SREENIVASAN: Sukhi Samra, you know, one of the critiques of any program like this is this notion of personal responsibility, that people won’t be responsible if you just give them a no strings attached check or a cash-in- hand. So, what did people do with the money? How did they spend it? What do we know?

SUKHI SAMRA, DIRECTOR, SEED: Yes. So, we know that one of the goals of SEED from the very forefront was to dispel exactly those types of myths that you’re talking about, that people are poor because of their own choices, that people are poor because that they don’t work hard enough, that poor are going to spend money on drugs and alcohol. We know this isn’t true, because the data speaks differently. In terms of spending, we saw our recipients spending on the basics. They’re spending on the necessities like food, like transportation, like utilities, like sales and merchandise. Less than 1 percent was spent on tobacco and alcohol. So, again, it’s really dispelling the myth that if you give people money, they’re not going to use it “responsibly.” We saw over and over again recipients using it to get ahead and to take care of themselves and their families.

SREENIVASAN: How did they do that? What were some of the stories that you heard about how they decided to spend this to get ahead?

SAMRA: Sure. So, one of them is Laura, she’s an older woman. She’s about 70 years old. And at the beginning of the pandemic, she used it to pay down her credit card bills, she used it to pay down her medical bills, she used it to get a new car for herself. And about a year — about six months or a year into demonstration, she actually ended up homeless and she talks about how she waited 70 years after working her entire life to become home because of an apartment fire in her complex. And so, at that point, she was able to use the $500 a month to put down a down payment as well as to pay for movers to move into her new apartment. We have Zone (ph) who used it, again, to pay down her bills. She used it for tithes and donations. She used it to finally have some date nights with her husband and really be able to spend time with her partner and her spouse. And we see that over and over again. We have other recipients using it to finally buy their gifts kids gifts that they’re always wanted to buy then but never had the sort of extra money to do. We hear about birthday cakes and dentures and just really the full gamut of things that, I think, folks who are economically secure take for granted, but folks who are experiencing poverty and economically insecure aren’t able to really enjoy for themselves.

SREENIVASAN: Amy Baker, you know, the idea of something added or a bonus like a birthday cake seems nice, but one of the things that you touched on was sort of the economic volatility and the emergency funds that most people don’t have. So, what does this $500 do or what did it do to those people when they inevitably got thrown a curveball?

BAKER: I mean, essentially, what it meant was that they had money on hand to smooth that shock, right. So, we know that pre-pandemic, 40 percent of American households could not afford a $400 emergency, which is why — part of the reason why, you know, the amount of money in this experiment was set to $500. And so, what we saw was a real decrease in the number of people who would have to put that expense on a credit card or would have to turn to friends or family in order to cover that expense. But also, just to kind of circle back to what Sukhi was just highlighting about those purchases, things like birthday cakes and prom dresses and dentures and all of these things that so many people take for granted, they’re not one-offs, right, those are, you know, what we would call dignity purchases, and they are part of the ways that most of us get to show up in relationships and get to show up as part of American life. And so, it’s sort of much bigger than just, oh, you know, I was able to buy a birthday cake, that sounds like a nice story, right, and it is a nice story but it’s not just about that, it’s about the fact that for that family, they were able to participate in a rite of childhood and in a rite of being a parent to actually take a breath, sit down and enjoy time with your kids. And so, we really see that reflected in both the narrative data and in also, of course, the quantitative data when you’re seeing things like decreases in anxiety and depression, which we know from a mountain of data impacts relationships.

SREENIVASAN: Sukhi Samra, did you see that this stayed in a single pocket? I mean, when you can see people that are in these communities that are already economically distressed, they are often times surrounded by other neighbors or other family members in the same boat. So, if one of them was lucky enough to be in this experiment, did they share that — not wealth, but funding?

SAMRA: Yes. And this is something Dr. Castro Baker and (INAUDIBLE) found in the data, which is that we the $500 just spread across our social networks. We know that — especially, women and women of color, when they take care of their entire communities, it’s not just their families, but it’s their extended families, it’s their neighbors, and we saw that really bear out in the data with the folks maybe not borrowing the money for food, but being able to extend that food over across their entire networks. And again, Dr. Castro Baker talks about this concept of forced vulnerability, that when you are poor, there’s this real tendency to glamourize the ways in which poor folks are able to rely on the social networks to get ahead, but it is cute that people who are experiencing economic insecurities have really close ties to their social networks. But that’s not the cause, they are forced to that because they have to rely on their social networks for money. And with the $500, we saw that people who just had so much more agency and choice not only in what they were spending on but also on who they got to engage with.

SREENIVASAN: One of the things that you mentioned was about employment and how you were surprised to see this transition from underemployment to employment. Because one of those myths or, you know, has been that, well, you give people money, they have a disincentive to go find work. What did you find in the numbers?

BAKER: Yes. So, I’ll start by saying part of the reason I was surprised was because that it happened so quickly, right. So, the data we’re releasing is only one — it’s only the first year, right. And so, in a longer-term experiment, I would expect to see those types of changes. But in something so short, it really shows my failure of imagination and my failure faith in what people are capable of. And so, what we saw, practically speaking, was 28 percent of recipients at the start of the experiment had full-time employment, and then one year later, 40 percent were employed full-time. And so, the question becomes, how, like what happened, right? You know, first we know, if anyone out there knows how you can live on $500 a month anywhere in the United States, please let me know, that sounds great. So, how $500 a month is going to somehow disincentivize someone from working just is an odd notion to me to begin with. But what we saw was financial scarcity really generates time scarcity. And so, there were many people who had this material barriers seeking full-time employment that they just could not get over without having that cushion or that floor of the $500. So, in comes cases, these were practical things. You know, if you cannot take a shift off of work to apply for another job that there is no guarantee you’re going to get, you literally cannot do it. So, think about the fact that most people are one paycheck away from financial disaster, you don’t have the time to actually stop, take off of work, apply for a new position, that’s probably the most common refrain that we saw in the data. The second one would be, again, thinking about the health and the well- being. So, when you’re trapped in a scarcity battle and every single minute of every day you’re locked in anxiety because you are fighting the fact that you cannot pay your bills, you don’t even have the chance to kind of take a breath and reimagine a different path forward. So, it’s sort of a combination of those two things, you know, one, removing those material barriers and then two, seeing increases in well-being that allow people to take the risks. And people said it to us over and over and over again, they would say, I’m finally able to take so many risks that I could not take before.

SREENIVASAN: Sukhi, when look across the City of Stockton and even with this small sample set, what does this tell about sort of labor potential that is right now going uncaptured, right? If you are in a job that you really need and you need every hour of work, you can’t take an hour off to get an interview at a better job. So, how many people are stuck like that?

SAMRA: Yes. I think one of the things that we see with SEED is just the way in which poverty really hinders people from reaching their full potential in the ways in which it solves people from fully participating in the economy. (INAUDIBLE) are thinking about just the employment data, one of the things that we also saw was the way in which a guaranteed income can compensate care work, that’s, again, work that’s primarily done by women, women of color, black women, Latino women, native women who — and we have seen the ways in which care work has really impacted and hindered the way that women are participating in the economy, especially during COVID-19. And we saw on the data, I mean, 11 percent of our recipients identified as care work as their primary form of employment. And so, the $500 a month really (INAUDIBLE) and to that work that was being done. And a lot of folks who feel compensated for the work that the — that is the only reason that the formal economy is working but that isn’t traditionally recognized because of the nature who does it.

SREENIVASAN: Do we have numbers on how people use this $500 to kind of roll with the punches as life happened and emergencies happened and that economic volatility happened in their lives?

BAKER: Yes. So, what’s so important to — you know, for people to understand is that income volatility, which is when your money goes up and down by the week or by the month because you’re a waged worker or you’re an independent contractor, what that does is that walks you out of, say, financial instruments but it also creates a lot of chaos and creates a lot of unevenness in household budgets. So — and what we saw was that after one year, those people who were in the treatment group were only experiencing a 46 percent monthly income volatility versus the control group who are experiencing a 67 percent monthly income fluctuation.

SREENIVASAN: And for people who don’t understand, what is 67 percent monthly — what is that —

BAKER: What does it mean? Like what does it matter?

SREENIVASAN: That’s a hard idea to wrap our heads around. What — when we talk about income volatility —

BAKER: Yes.

SREENIVASAN: — having 67 percent, that is a huge amount of uncertainty.

BAKER: It is incredible amount of uncertainty. You know, and — so, first, I mean, the market picks up on that, right. So, you know, just for clarity, whether you make on average $20,000 a year or $100,000 a year, if your income is constantly fluctuating, you cannot qualify for most mortgages, you can’t qualify for a lot of financial instruments because you are by definition unpredictable, right. And markets work predictability when it comes to extending things like credit, right. So, there’s of course that where it locks you in the economy. But then, second, you can’t budget, right. And how do you actually choose where to live and have kind of stability in terms of knowing where your rent is going to come from each month? So, if your money is constantly going up and down, you can’t predict what you’re going to be able to put away not can you save.

SREENIVASAN: Sukhi, someone’s going to look at this and say, all right, 125 people, $500 a month and one city in California, how do we scale this? Is it worth trying on a larger population, a larger cross section?

SAMRA: The exciting thing is that we’ve already scaled this. So, from SEED has grown merits for a guaranteed income, which is a coalition of about 42 mayors currently who are advocating for a federal guaranteed income through policy efforts through the pilots of their own and then by inviting other cities to join our work. We launched back in June of 2020 in response to not only the pandemic in the ways in which mayors are really stepping up to fill in when the federal administration wasn’t, but also in response to the protests that happened in the wake of George Floyd’s murder and in the wake Breonna Taylor’s murder, and really realizing that guaranteed income is a solution to — can be a solution to both racial justice and economic justice because we know that racial justice and economic justice are intertwine, you cannot have one without the other.

SREENIVASAN: Dr. Castro Baker, we kind of almost have a natural A-B sort of period here. There’s the pre-pandemic and the post. And the data you’re looking at now is just for the somewhat normal year when we had kind of the, you know, somewhat normal situations of poverty. But after this next years’ worth of information, we are going to face something completely different.

BAKER: Yes. I mean, essentially, we have two studies we’re going to study, right. So, we have one year of pre-pandemic data and then a second year of pandemic data. We’ll be able to compare those two. And so, the first thing that I think is really important to get is that while the pandemic is sort of all-consuming right now for everybody, you can’t escape it, right, it’s also — it’s a pandemic today, next week it’s going to be a hurricane, a year from now it will be a recession, there could be another housing crisis. Risk is part and parcel of American life. We are in a stage right now of late-stage capitalism where people experience constant economic shocks. So, one of the things that we’re really excited about is we’ll be able to say to what degree guaranteed income serve as a financial vaccine for people to whether the pandemic in a more stable position.

SREENIVASAN: Sukhi, have you seen the political landscape shift, I guess? And what were the sort of the primary causes? Because technically, some version of UBI has been around for a long time in Alaska and other places, we saw, for example, Andrew Yang, a presidential candidate, mention it a lot when he was on the campaign trail. But between him and what’s happened through the pandemic, how has the idea and its acceptance changed?

SAMRA: We’re definitely seeing new momentum for the idea and I would say that started even before the pandemic. When we launched back in 2017, guaranteed income was this crazy (INAUDIBLE) leftist idea that would never enter the mainstream. A couple of years later, we saw folks falling in Stockton’s footsteps, we saw a task force in Chicago and Newark, and we saw then-Senator Harris propose her Lift Act, which is essentially a guaranteed income of $500 a month to folks — to families making less than about $125 per year. We also had Representative Rashida Tlaib’s Boost Act which went a step further than Senator — then-Senator Harris’s Lift Act to have no (INAUDIBLE) for employment. Once the pandemic hit, again, we just saw the – – just the vast economic precarity that most American households were facing and we saw a number of folks advocating for recurring checks in the face of the pandemic. We haven’t gotten there yet. We’ve seen that $1,200 in the initial CARES Act. Now, we’re having conversations around $1,400 or $2,000 but the pandemic has really created a unique policy moment because it just exposed what we already knew to be true that most Americans are struggling. But now, everyone is feeling it so viscerally that it’s created this moment in which we can react to the policy that’s really people focused.

SREENIVASAN: Sukhi, why is this so personal for you? What drew you to this project?

SAMRA: Yes. Poverty is personal to me. I grew up in a two-parent household, but my mom was the only one that worked. My dad was disabled. And when I was growing up, my mom was working two to three jobs to provide for me and my two sisters. She was a cashier at a gas station, she worked at subway, she cleaned houses, and we were still relying on public benefits like medical (ph) and like food stamps. Not because we were lazy, not because my mom didn’t want to work, but because she was working and it just wasn’t enough. And for me — and just adding to that, my mom actually, over the past year, was studying for the GED because she really wanted to break out of the cycle of poverty and economic insecurity and to find a job with benefits. And my mom’s dream never came true, she passed away about nine months ago, in the middle of the pandemic. But for me, as devastating as her story is, it’s the norm and it’s — the guaranteed income, it gives us the potential to break that and to make sure that my mom’s story is an exception and that we’re really building an economy that works for everyone.

SREENIVASAN: I know that your mom was not part of the experiment. But if she was a recipient of $500 a month, how do you think that her life would have changed or your lives would have changed?

SAMRA: It would have been changed for the better. Growing up my — I saw the ways in which the trauma of poverty and economic insecurity was really etched into mom’s wife lie in really big ways and really small ways. She was never at home, she struggled with high blood pressure, which is like the hallmark condition of poverty, she struggled with depression, she struggled with anxiety. And I think the $500 a month would have really helped stabilized those health outcomes for her, would have made her happier, and less stressed. And, again, like I said before, she was passed away and she was studying for the GED. This wasn’t her first time studying for it, this is actually the third time, and she was committed this time that she was going to be able to get her GED, even if it meant that she had to retire by the time she finally did it. And I think about the fact that if she just had those $500 a month, the first or second time that she had tried to get her GED, she would have been working a different job when she passed away. She wouldn’t have been stuck in the low wage work in the ways that she was. And so, I think in the ways that we’ve seen with our Stockton recipients, it would have allowed her to reach her full potential because she was really smart, she had so much potential but she wasn’t able to act on it because of her circumstances.

SREENIVASAN: Sukhi Samra and Dr. Amy Castro Baker, thank you both.

SAMRA: Thank you.

BAKER: Thanks for having us.