Another takeaway from the report on SEED’s first year also found people used the money for necessities, and only 1% was spent on tobacco and alcohol.
STOCKTON, Calif. — People who were involved in Stockton‘s guaranteed income initiative transitioned to full-time jobs and better health, the report says.
In February 2019, former Stockton Mayor Michael D. Tubbs launched the Stockton Economic Empowerment Demonstration (SEED), the country’s first city-led guaranteed universal basic income experiment. It sent $500 a month for 24 months to 125 recipients with no strings attached.
The program was funded from $3 million in private donations. To qualify, people had to have lived in a neighborhood of Stockton in which the median income was at or below $46,033.
“Number one, tell your friends, tell your cousins, the guaranteed income did not make people stop working, in fact, those who received the guaranteed income were working more than before they received the guaranteed income and almost doubled in increase compared to those in the treatment group,” Tubbs said.
On Wednesday, the first results were released on the first year of the program.
“Each month, aggregate spending data were collected from the prepaid debit card to determine how recipients spent the $500,” the report says.
Participants largely spent the money on food, followed by “sales/merchandise” which the report says is also food at “wholesale clubs and larger stores like Walmart and Target.” Utilities and transportation were also categories that saw significant spending.
“I truly do believe that medicine matters, but for some things, it appears, at least to me, that cash is a powerful tool to help people with stress and anxiety that may manifest into some forms of depression,” Tubbs said.
Money was also transferred frequently, “approximately 40% of the money loaded to the prepaid debit card was either transferred to a pre-existing bank account or withdrawn as cash.” The report states participants said they moved the money from the debit card to an existing bank or withdrew for cash for one of four reasons:
1. Trust in pre-existing bank accounts. “Some preferred relying on existing relationships with financial institutions that they already utilized for household budgeting and paying bills.”
2. Preferred to use cash. “Others exchanged the $500 for cash, allowing them to pay rent, divide commonly held bills among family members, or for covering other bills to local payees that do not accept electronic payments.”
3. Lack of trust in financial institutions. “Pervasive lack of trust in financial services in the community and prior experience with predatory actors motivated some to quickly remove money from the card.”
4. Uncertainty in the program. “Prior to SEED’s launch, Ontario’s basic income program was canceled two years early and covered extensively by the press (Frazee, 2018). Recipients feared that if Ontario could end abruptly, then SEED might follow suit.”
One recipient of the money says he started off down on his luck, depressed, working a part-time hourly job just to makes ends meet supporting his family, but after starting to get the checks every month, he says he was able to land a full-time, higher-paying job at a Stockton agency, crediting this program with changing his life.
“Getting paid way more than what I did before, less stress and I’m actually helping my community, so I mean there’s big change, I’m trying to push the positive notion towards people and look at positive outcomes because if SEED wouldn’t have happened, I don’t know what would have happened to me,” Tomas Vargas Jr., a SEED recipient said.
Vargas Jr. says he feels both healthier and happier after spending 24 months in this program while staying focused on improving his life.
“Every day I get to wake up and enjoy my kids, time with my kids, that’s amazing to see them grow, my wife, we enjoy time together, didn’t have that before so the SEED program changed my life in the better and I thank them,” he said.
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