Policy Summary 

This policy category includes policies that provide cash income supplements, universal child benefit programs, as well the universal basic income program. Many versions of these policies exist, and typical features include a base level payment provided on a given recurring schedule, the regular cost of living increases, and eligibility regardless of work status. The amounts vary by proposal ranging from $500 a month to models suggesting as much as $1,000 a month. 

Case for Equity

The case for cash assistance has gained traction recently due to the increased recognition of the impacts of an automating economy and the seemingly intractable and ongoing economic downturn of many communities. These trends are disproportionately impacting communities of color, rural communities, and deindustrializing areas like Rust Belt communities. The argument for cash assistance is that it would provide a source of income for people that would allow for the procurement of basic needs, and/or provide a mechanism for lifting millions of children out of poverty. While such a policy would provide a significant benefit to communities of color (which have been hardest hit by the pandemic and prior economic shifts), such a policy would also be of immense benefit to the growing number of white Americans who have found themselves experiencing the same destabilizing effects that have plagued communities of color for decades. Whether cash assistance is the answer to these issues will likely continue to be the subject of debate. Nonetheless, it is increasingly evident that we are headed towards a future where reimagining the social safety net will include looking at wide-scale initiatives that stave off the impacts of poverty and other social ills for huge swaths of the population. 

  

Issues to Resolve & Lingering Questions

  • Some models focus on the elimination of the social safety net in lieu of the provision of cash assistance. This potentially sets the nation up for a range of negative spillover effects for those who need more targeted programming/assistance.
  • How do we ensure labor force participation? Based on the limited number of evaluations, there is not necessarily an anticipated impact on labor force participation when cash assistance payments are relatively small. With larger payments, there is some evidence of a decline in labor force participation (based on the US and Canadian negative income tax experiments of up to a 4-percentage point decline in employment rate).

Return on Investment

Return on Investment for this policy is rated as LOW to MEDIUM. Because of the extreme variation in potential models, the possibility for eliminating other safety net programs, the large costs, and the indeterminate impacts of these combinations, it is possible that the policy could yield a range of outcomes. It is likely that this policy could incur major cost outlays and possible revenue losses while yielding major positive impacts for participants. Simultaneously, it is possible that the policy could create negative outcomes if the structure is too restrictive/limited.  

The lack of a true Universal Basic Income from which to derive evaluation insights limits our ability to assess the potential impacts of a UBI on social and individual outcomes and the cost-benefit ratio. But projections from the Roosevelt Institute suggest that: Adopting an annual $12,000 basic income for every adult U.S. citizen over the age of 18 would grow the economy by 12.56% after 8 years (after eight years the stimulative effects of the program dissipate and GDP growth returns to the baseline forecast (Nikiforos et al 2017). Moreover, they conclude that a debt-funded version would create a national increase in real GDP, nominal wages, employment rate, and labor force participation. Similarly, there are several other studies that provide insight into how a UBI could possibly perform. Research on small-scale versions of UBIs suggests that a UBI could provide significant societal benefits in the form of reductions in crime, substance abuse, poverty, low birthweight, and obesity (see Marinescu 2018 for a summary). Most importantly, research suggests that a UBI does not necessarily lead to declines in labor force participation, although that outcome is likely dependent upon the level of remuneration. 

Those outcomes suggest that there would be financial impacts that would reverberate throughout a given community and create significant savings in social services, safety net, and criminal justice expenditures. Evidence from other income provision policies like the Earned Income Tax Credit (EITC) demonstrate tremendous benefits for individuals in the form of improved health and child education outcomes, decreased criminal offending, employment, and poverty reduction (Nichols and Rothstein 2016 and Hoynes and Rothstein 2016).  In the case of the EITC, it has been demonstrated that every $1 of EITC spending has a net budgetary cost to the government of $0.17, suggesting the potential for even greater benefits from a UBI.

Research Base

The research base is rated as being LOW but promising. Sufficient evidence from related subject areas exists, as well as strong (although limited in number) individual evaluations that directly assess the policy’s outcomes.  

 

There is relatively robust literature that focuses on examining policies that feature basic income elements. However, restricting the review to those initiatives that closely resemble a true UBI (unconditionality and direct monetary payments), long term in nature, those implemented in the US, and further exempting the range of income support policies that are in place in the US through the tax code or through social safety net programs leaves four initiatives undertaken by the State of Alaska, the Eastern Band of the Cherokee Nation, and two California programs based in Stockton and Oakland. 

Even among those examples, it is difficult to glean how a UBI would perform because of issues like low levels of funding disbursed to participants which violates the core idea of a truly “basic income.”  From those, the two initiatives that come closest are the recently launched Oakland model ($1,500 a month) and the Cherokee initiative that provides up to $6,000 a year. The Cherokee example demonstrated improvements in mental health status, lower incidence of substance abuse, improved child education outcomes, and lower juvenile crime.  

Similarly, looking at the broader literature that focuses on the negative income tax policies of 1970 suggests that a UBI could decrease poverty, have short-term educational benefits, improve some health outcomes, and have mixed effects on labor force participation (Marinescu 2018). 

The international literature focused on child benefit programs shows that these programs in place across Europe were tied to decreases in child poverty, and evaluations showed that families expended funds on intended uses for child expenses (for a review see and article by Change and Madrick from the Century Foundation).

State & Local Ease of Implementation

This policy is rated as having a MODERATE to HARD level of ease of implementation. Enacting a UBI would, in most communities, require surmounting significant political barriers and, in any community, would require the creation of systems of implementation and monitoring. However, the ability to implement it at multiple levels makes for a higher potential for adoption.  

Impanel a task force made up of officials, community members, the academic community, and philanthropic organizations to ascertain the need and feasibility. If adopted, this group would also objectively report on outcomes and in the event of adoption, serve as a bulwark against political or bureaucratic shifts. 

Explore and identify potential revenue streams. This step should be informed by research on the community’s population dynamics, economy, labor market, and other factors. In 2020, the state of legislation was introduced in California to identify tax mechanisms. Other communities like Stockton and Newark NJ have identified and relied on philanthropic donations. In 1976, Alaska identified its newly found oil reserves as a permanent funding stream.

Commission a report to make the case for the policy that lays out the necessity, goals/needs, and identifies a target population. Although the core idea of a UBI is universal eligibility, local communities that have implemented this policy have targeted eligibility to specific populations. Examples include reports from Newark NJ and Stockton CA.

Innovations Across America

Newark, New Jersey | Universal Basic Income Pilot 

Action Space: Local/City Level  

Cost: $2.2 million in private donations  

Mechanism: City Resolution 2021 7R7-a 

In 2021, Newark, NJ launched a two-year pilot program that will provide cash payments to some 400 low-income residents. The city joined 22 other cities experimenting with UBI programs. Under Newark’s plan, participants will receive $12,000 over a two-year span. Eligibility is restricted to Newark residents who are at least 18 years old and earn at or below 200 percent of the federal poverty threshold. The program will eventually have 400 total participants who will be randomly selected for participation (as part of an integrated research study on the participant outcomes).

  • Much of the current interest in UBI was spawned by the experience of Stockton, CA. After leaving office, the mayor of Stockton formed Mayors for a Guaranteed Income as an organizing entity to serve as a resource for local leaders seeking to replicate the model.

Chicago, Illinois | Guaranteed Income Initiative  

Action Space: Local/City Level 

Cost: $31.5 million 

Mechanism: City Ordinance 2021  

The City of Chicago has been examining the idea of a guaranteed income across two successive mayoral administrations beginning with the Emmanuel administration and proceeding into the tenure of Lightfoot. Mayor Lightfoot introduced the initiative as part of her 2022 budget. Her model would be the largest initiative in the country serving 5,000 families and providing $500 per month to each of them for 1 year. The program’s targets are those families hardest hit by the pandemic.

Chang, C., and Madrick, J. 2015. Investing in Our Kids Using One Simple Tool: Cash. Century Foundation  

Gentilini, U; Grosh, M; Rigolini, J; Yemtsov, R. 2020. Exploring Universal Basic Income : A Guide to Navigating Concepts, Evidence, and Practices. Washington, DC: World Bank.    

Nichols, A. Sorensen, E., and K. Lippold. 2012. The New York Non-Custodial Parent EITC: Its Impact on Child Support Payments and Employment. Washington, DC: Urban Institute.  

Hoynes, H. Rothstein, J., Ruffini, K. 2017. Making Work Pay Better Through An Expanded Earned Income Tax Credit. Driving Growth Through Women’s Economic Participation. Washington, DC: The Hamilton Project, Brookings Institution.  

West, S; Castro-Baker, A;  Samra, S;  Coltrera, E. 2021. Stockton Economic Empowerment Demonstration: Preliminary Analysis: Seed’s First Year.  

Nikiforos, M., Steinbaum, M., Zezza, G. 2017. Modeling the Macroeconomic Effects of a Universal Basic Income.  

Forget, Evelyn & Marando, Dylan & Surman, Tonya & Urban, Michael. (2016). Pilot Lessons: How to design a basic income pilot for Ontario. 10.13140/RG.2.2.10404.68481 

Marinescu, I. 2018. No Strings Attached: The Behavioral Effects off U.S. Unconditional Cash Transfer Programs. Working Paper 24337. National Bureau Of Economic Research  Http://Www.Nber.Org/Papers/W24337  

Greenstein R. 2019. Universal Basic Income May Sound Attractive But, If It Occurred, Would Likelier Increase Poverty Than Reduce It. Center on Budget and Policy Priorities.    

The Easter Band of the Cherokee Basic Income Initiative  

Costello, E Jane et al. “Association of family income supplements in adolescence with development of psychiatric and substance use disorders in adulthood among an American Indian population.” JAMA vol. 303,19 (2010): 1954-60.    

Akee, Randall, William E. Copeland, Gordan Keeler, Adrian Angold, and E. Jane Costello. 2010. “Parents’ Incomes and Children’s Outcomes: A Quasi Experiment Using Transfer Payments from Casino Profits.” American Economic Journal: Applied Economics 2(1): 86-115. 

The Alaska Basic Income Dividend 

Guettabi, M. 2019. What do we know about the effects of the Alaska Permanent Fund Dividend? Institute of Social and Economic Research, University of Alaska Anchorage.   https://pubs.iseralaska.org/media/a25fa4fc-7264-4643-ba46-1280f329f33a/2019_05_20-EffectsOfAKPFD.pdf  

Baby Bonds

Education Finance Reform