Researchers Find UBI Results in Better Employment, Less Debt

Photo by Bruce Lam

Researchers at the University of Tennessee and the University of Pennsylvania found that after one year of receiving a Universal Basic Income (UBI), participants got better jobs, paid off debts, and had “statistically significant improvements” in their mental health.

The idea of a UBI was a major part of Andrew Yang’s presidential campaign and is steadily gaining support from a number of billionaire entrepreneurs and religious figures. Richard Branson (Virgin Group), Mark Zuckerberg (Facebook), Stewart Butterfield (Slack), Sam Altman (Y Combinator), and Pope Francis have all expressed their support for a UBI. Proponents believe that giving people a guaranteed monthly income – even if it’s a small amount – can improve their financial security enough to help them avoid debt and get better jobs. Critics of the idea argue that a UBI eliminates the financial incentive to work at all, creating a culture of dependency on the government.

The results of the Stockton Economic Empowerment Demonstration (SEED), in which participants were given $500 per month for two years without any rules on how they could use provide some vindication to UBI proponents. The program included people who lived in census tracts whose income was generally below the city’s median household income of $46,033. The money was deposited once a month on a debit card, and researchers tracked how most people spent it.

They found that the majority of people spent the bulk of their money at grocery stores, with the second-biggest category on retail stores. However, those retail stores included Walmart and Target, which also sell groceries. The next highest categories were essentials such as utilities, auto, and other services. Less than 1% of the money was spent on often-criticized nonessentials such as alcohol and tobacco.

After one year, the percentage of recipients who had a full-time job rose from 28% to 40% – a 12 percentage point increase. A control group of people who did not receive the UBI only saw a 5 percentage point increase over the same time period. In addition, by the one-year mark, 62% of the recipients were paying off debt, compared to 52% before the study. The researchers also found that most UBI recipients moved from being likely to experience mild mental health issues to “likely mental wellness.”

“These numbers were incredible, I hardly believed them myself,” University of Tennessee researcher Stacia West said.

“The last year has shown us that far too many people were living on the financial edge, and were pushed over it by COVID-19,” said Stockton’s then-mayor Michael Tubbs. “SEED gave people the dignity to make their own choices, the ability to live up to their potential and improved economic stability going into the turmoil of the pandemic.”

A similar program is coming to New Orleans. In December, Mayor LaToya Cantrell announced that the City secured $500,000 in funding from Mayors for a Guaranteed Income (MGI) to test the idea of UBI in the city.

“As Mayors, we see the impact of this pandemic on our people every day. Many urgently require help with basic needs. Job losses and school closures mean people now have many expenses they didn’t have before. Roughly 44,000 are unemployed in New Orleans due to the pandemic,” Mayor Cantrell said. “Nothing helps a struggling family like money in the pocket, and nowhere is that more apparent than among Black Americans – who are more likely to be unemployed but less likely to get unemployment benefits. We need rapid and responsive solutions now; this is the time to invest directly in our people.”

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