Here’s Why Some Cities Are Giving Cash to Residents

Cities including Stockton, Calif. and Hudson, N.Y. are experimenting with different models related to universal basic income. In Stockton, a program that allocated $500 a month to 125 randomly selected households in low-income neighborhoods was scheduled to end in July has been extended until January. Meanwhile, Hudson is launching a pilot program to give $500 a month to randomly selected residents for five years.

KEY TAKEAWAYS
1. The funds have helped recipients get through the pandemic.

More than half of the funds from Stockton’s $3.8 million experiment have been spent on food and utilities, according to preliminary findings. Stockton’s 30-year-old mayor, Michael Tubbs, who pioneered the project, said of the spending, “What we found is that you can trust people to make good decisions.”

2. Critics are skeptical about the concept.

Some economists argue that no-strings-attached cash could be a disincentive for people to find work—especially if the money is only given to low income households. However, studies of universal cash transfers in Alaska and among the Eastern Band of Cherokees in North Carolina found no negative effect on work. On a national level, a similar program targeting households within certain income brackets could cost as much as $1.2 trillion, according to economists Melissa Kearney and Magne Mogstad. Kearney said it would likely have to replace existing safety net programs.

3. Some mayors are still willing to give it a shot

Roughly two dozen mayors from cities as large as Los Angeles and as small as Holyoke, Mass., have signed on to a newly formed coalition advocating for a nationwide guaranteed income. “This Covid[-19] economy has just yanked the rug out from our communities across the country in a way we’ve never experienced before,” said Melvin Carter, mayor of Saint Paul, Minn., and a member of the group. He said his city is working with donors to set up its own experiment similar to the one in Stockton.

Read the original article by David Harrison here.

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