Government Benefits and Trust in People

Lessons from Stockton, California Part 2

Andrew Wolk
Jul 29, 2019

How does a guaranteed income impact on financial insecurity and volatility? To what degree will a guaranteed income impact drivers of inequity and social determinants of health? How does guaranteed income unleash potential among recipients and generate agency over one’s future? What do the residents of Stockton think policymakers need to know about guaranteed income and living paycheck to paycheck?

Those are the four specific questions the Stockton Economic Empowerment Demonstration(SEED) seeks to answer with its universal basic income (UBI)-like experiment that is taking place in the small city in Californias Central Valley. Until next summer, SEED is giving out $500 every month on debit cards to some 125 Stockton residents with no strings attached. I wrote about it in my last blog post, which featured my recent conversation with Erin Coltrera, SEEDs research, and program officer. My focus then was on some of the particulars of SEED and some examples of changes in peoples lives it’s already making. This time, I’ll focus on some of the key arguments against the experiment and how SEED is addressing them, as well as how SEED has handled the issue of recipients who are already receiving other government benefits. Let’s start with the latter.

There is, in my view, an inextricable link between any UBI and government benefits namely, that any UBI experiment will have to confront the fact that some participants, by virtue of their participation, may lose those benefits. For instance, TANF, which assists families with children when the parents or other responsible relatives cannot provide for the family’s basic needs, and the Special Supplemental Nutrition Program for Women, Infants, and Children, known as WIC, which provides nutritious foods, both come with strings attached that could affect continued eligibility. Losing benefits would defeat the purpose of UBI, and recipients could end up with less than they had before the money from a given UBI experiment.

At some point, as the debate on the value of UBI unfolds, it stands to reason that we ought to discuss whether money spent by government benefit programs might be better allocated in a UBI-like manner. Were talking about a large sum: TANF and WIC combined, for example, disperse some $18 billion in assistance each year.

The good news is that a UBI experiment ends up confronting the fact that additional income can result in losing government benefits, which moves the debate forward because it shines a bright light on some of the ridiculous barriers governments have erected. SEED has taken that seriously beginning with full transparency for potential recipients (as outlined in its Vision document and hasbeen actively pursuing waivers related to government benefits to ensure participants who receive them are not made worse off, even partnering with existing bureaucracies in that pursuit which is itself a miracle.

The objective, as Erin put it, is to ensure that our individuals who are receiving [government assistance] don’t receive a reduction in their benefits based on their receipt of SEED for the length of the study. These recipients, as would be the case anywhere in the United States, are subject to maximum income levels above which one becomes ineligible. In California, for instance, welfare payments seek to bring a family of four up to what the state stipulates as the Minimum Basic Standard of Adequate Care, which in Stockton is $1,639 per month.

We realize were a time-limited intervention, Erin said. The question is not will people get off benefits while they’re on SEED? It’s about how does this impact their income volatility and how does that shape their life.

My discussion with Erin about government programs and the barriers they sometimes create led us to a discussion of the lack of trust that is so much a part of our national discourse about meeting basic needs and helping people in general. Annie Lowrey, from whose Atlantic article I drew in my previous post, posed the issue well: [W]hat if the vast majority of people, given the chance, would be good stewards of money like SEEDs monthly $500? What if public policy were predicated on that kind of trust and lack of judgment?

SEED, Lowrey wrote, wants to make those what-ifs reality, showing that just giving people money would be a humane and cost-effective intervention, versus providing vouchers or food stamps or complicated tax incentives.

So I asked Erin about resistance and counterarguments.

Anytime you are proposing something truly radical, she responded, there will always be folks who are going to say there’s no way that will work. UBI and guaranteed income have a lot of naysayers who embrace traditional narratives around poverty with the idea that poor people don’t know how to spend their money. Erin countered this unfair narrative that began in the late 70s that poor people will spend their money on alcohol, drugs, giant TVs.

Erin put it very plainly: People know what they need, and sometimes I think what people need isn’t what you or I would look at them and say they need, but it’s their life, and so they get to make those choices.

There is pushback from Stocktonians who are not involved, Erin told me. And we welcome that pushback because that is a dialogue point. There are people on both sides of the political spectrum who think guaranteed income is a mental idea that will cost too much and not have enough benefit. But there are also people on both sides of the political spectrum who think maybe that’s not true, that may be the social effectiveness and the cost-effectiveness of something like guaranteed income or universal basic income has merit and could make a real difference.

SEED has the potential to spark a national discussion about what people need and deserve, a different way to provide support, and what a new social contract ought to entail.

Beyond the individuals it helps, spurring narrative change may well be SEED’s biggest contribution which I hope will happen. SEED made another great decision by identifying 25 recipients who have agreed to be storytellers to get their experiences out to the public, through the media. That’s why it’s so worth continuing to explore, which I’ll be doing in my next postin part through another interview, this time with a leader of a UBI experiment in Mississippi. In doing so, I hope to unpack more of what makes UBI and a guaranteed income seem so compelling, especially here in the worlds richest country where we ought to be able to do so much better at allocating resources toward addressing inequality, getting people on the pathway to lifelong success and making sure they can stay on it.