Austin is getting ready to become the first city in Texas to roll out a guaranteed income program. The pilot will give a group of about 85 low-income residents $1,000 per month, equivalent to about one-third of the city’s median income, for one year.
People will be able to decide for themselves how to best meet their needs. The money can go towards a person’s typical expenses— rent, food, child care—but with no strings attached, unlike most public benefit programs such as food stamps or housing vouchers.
The initiative builds on other smaller income programs funded by private non-profits. Austin’s program stands out for using $1.1 million in public funds allocated in the city budget last August. The plan was born out of a set of recommendations from Austin’s Reimagining Public Safety Task Force, a group convened in the summer of 2020 to examine the city’s policing and public safety policies in the wake of the police killing of George Floyd in Minneapolis. City council members were expected to vote to approve the measure at a meeting on April 21, but decided to postpone the vote by two weeks, to May 5.
Austin is joining Denver, Baltimore, and a wave of other US cities that have recently introduced basic income pilot programs. The initiatives are small-scale experiments in universal basic income, an economic theory suggesting that giving people money directly is a more effective social safety net strategy to combat poverty than prescriptive policies that attach other conditions to aid for essentials such as food, shelter, and other services.
A truly universal basic income guarantees all residents, regardless of income, enough money to cover basic expenses, dispersed at regular intervals allowing people to incorporate it into their financial planning. The US has never embarked on such an ambitious effort. But federal assistance during the first two years of the pandemic—disbursing billions of dollars via one-off stimulus payments and child tax credits— amounted to a national experiment in unconditional cash transfers for a large segment of lower-income Americans. This went a long way to help people stay in their homes (pdf), build savings, and even alleviate child hunger, according to Census Bureau survey data.
Today’s pilot programs in Austin aren’t full-blown universal basic income projects. While they aren’t likely to make a dent in the US poverty rate now at 11.4% in 2020, US cities are the new labs collecting crucial evidence to show if giving people money is one of the best ways to cut poverty.
Do basic income programs work?
A common critique of basic income programs is that they disincentivize people from working, and entice people to spend the money on luxuries or vices such as drugs. Yet basic income experiments since at least the 1960s have consistently found the opposite.
A 2018 study of Alaska’s truly basic income program, the Alaska Permanent Fund, revealed money paid to citizens every year from oil and mineral lease revenues—between $1000 and $2000 per person— didn’t lead to a decrease in overall employment. For most people, the money is an essential source of income for essentials such as housing, food, and heating fuel in the winter.
Researchers obtained similar results in Stockton, California. The city, which struggles with a poverty rate of around 17%, introduced one of the first US guaranteed income programs in decades in 2019. The Stockon Economic Empowerment Demonstration (SEED) program provided 125 people with $500 per month for two years. A 2021 analysis (pdf) of Stockton’s program found that the consistent flow of income gave recipients more stability, increasing their economic opportunities. At the start of the experiment, 28% of recipients had a full-time job. By the end, 40% did. Similarly, the vast majority of Stockton’s recipients used the money on common expenses like housing, transportation, food, and healthcare. Less than 1% of purchases tracked in the study were for tobacco or alcohol.
US cities are embracing basic income pilots
Austin is among more than 60 US localities warming to the idea of cash transfers for low-income residents. At least 29 cities have started pilot programs, and 33 more have expressed an interest in pursuing one, according to the organization Mayors for a Guaranteed Income.
Many of the pilot programs launched in 2020 and 2021, like the ones in Oakland, California, Newark, New Jersey, and Richmond, Virginia, relied on private donor funding. These programs typically give recipients between $200 and $1,000 dollars per month for 18 to 24 months, with certain eligibility requirements such as living in a particular neighborhood, or an income threshold.
But increasingly, leaders are building guaranteed income into their city budgets. Los Angeles mayor Eric Garcetti requested $24 million go towards a guaranteed income project in the 2022 budget. With additional private funding, it now has $36 million to spend over three years. This month, Chicago will begin accepting applicants for its $31.5 million guaranteed income program.
Update (April 22): This story was updated to include the fact that the Austin city council vote on the guaranteed basic income program has been postponed to May 5, 2022.