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This city gives some residents $500 monthly to help make ends meet

Posted at 6:05 PM, Feb 16, 2019

Residents of Stockton, California have been through a lot: from widespread foreclosures to the city going bankrupt. But for a handful of residents, some help is here.

One hundred Stockton residents started getting monthly payment of $500 on Friday. They’ll receive the extra money for 18 months as part of an experiment testing the impact of universal basic income, also known as UBI.

The goal of UBI is to reduce poverty and inequality by giving people a regular minimal income. It’s gained support from billionaires such as Elon Musk, Richard Branson and Mark Zuckerberg.

The Stockton project is a collaboration between Stockton Mayor Michael Tubbs and the Economic Security Project, an organization that advocates for basic income. Its fund contributed $1 million to the Stockton project.

“Too many families and Americans are trying to piece together multiple jobs and incomes and aren’t able to make ends meet,” Dr. Stacia Martin-West, a researcher who will be studying the Stockton participants, told CNN Business.

Roughly 89% of Americans see their income fluctuate by more than 5% from month to month, according to the JPMorgan Chase Institute. One hope is that UBI would decrease some of this volatility and allow people to better plan ahead while meeting their basic needs.

In the Stockton project, the 100 recipients will be able to spend the money how they choose with no strings attached. Researchers will be able to see what categories people spend the most in but not the actual purchases they make. The money will be distributed via pre-paid debit cards.

“The idea is to provide a foundation, a floor on which people can build,” Chris Hughes, a Facebook co-founder who co-chairs the Economic Security Project, told CNN Business.

“As a moral issue, a matter of economic justice, we should create a floor in the US. The vast majority of people participating are having a hard time making ends meet. The point is to help the people who need it most.”

Hughes said Mayor Tubbs’ vision for the Stockton program came from Dr. Martin Luther King Jr. who advocated for guaranteed basic income as a way to end poverty. While Hughes acknowledged that UBI isn’t a silver bullet, he said it’s one crucial part of fighting poverty.

The Stockton experiment is not the first test of universal basic income. Similar programs have already been conducted by organizations and governments in countries like Canada and Kenya, and in US cities like Oakland, California and Jackson, Mississippi.

Two researchers, Dr. Amy Castro Baker and Dr. Martin-West, will be studying the Stockton project in real time. Their hope is that the data they collect can be used to increase awareness about UBI’s impact and inform policy around the concept. For example, one of the questions they hope to address is whether UBI helps to ameliorate housing costs.

“So often social science and economic experiments are designed outside the real world and they don’t take into account the capacities of real cities or states,” Castro Baker told CNN Business. “We’re working within and alongside government to implement the program while running the science.”

Martin-West said Stockton “looks a lot like the rest of the US,” which makes it ideal for the project. Stockton has a population of over 300,000, with one in four people living in poverty. The median household income is $48,396, compared to $61,372 nationally, according to US Census Bureau estimates. It’s also diverse: More than 70% of the city’s population identify as minorities.

“We see UBI as a nice addition to social policy not a replacement,” Castro Baker said. “This project will help push discourse based on science not just based on assumptions we may have about poor people and what they need.”