California city gives residents $500 a month. Is this the future of progressive politics?

STOCKTON, Calif. — After losing a steady job two years ago, Zohna Everett struggled to make ends meet. She drove for ride-hailing services, clipped grocery coupons, turned in recyclables for gas money and traded manicures for press-on nails from Walmart.

Then a phone call changed her financial outlook. Everett learned she had been selected to become one of 125 Stockton residents receiving $500 a month for 18 months, a first-in-the-nation pilot test of a universal basic income, or UBI.

“Everything in me was like, yes!” says Everett, 48. “I needed this right on time.”

Eight years ago, this central California agricultural town known for producing almonds and grapes became the nation's largest municipality to enter bankruptcy. Now, Stockton is in the news for a project that seeks to lift up low-income residents with a UBI, an oft-resurrected economic idea thrust into the national limelight by the recently shuttered presidential campaign of Andrew Yang.

The idea of free money grabs headlines and stirs debate. While extra cash each month no doubt is a boon to the dozens of Stocktonians in the program, economists, researchers, politicians and labor leaders are mixed about whether this small and privately-funded experiment will provide major proof points in support of a truly national UBI, which by some estimates would cost taxpayers upwards of $3 trillion.

Supporters are resolute that a financial assist to those living at the poverty line allows recipients to gain control of their financial lives, improves their mental and physical health, and gets them focused on investing in their own futures.

“Overall, the results of a UBI are quite encouraging,” says Ioana Marinescu, assistant professor of public policy at the University of Pennsylvania’s School of Social Policy and Practice and the author of 2017’s “No Strings Attached: The Behavioral Effects of U.S. Unconditional Cash Transfer Programs.”

Marinescu has researched similar programs where taxpayers get money from the government unrelated to employment, such as the Alaska Permanent Fund, which since 1976 has socked away some $64 billion in oil production revenue that is used each year for dividend payments to residents. In 2019, 631,000 Alaskans each received $1,606.

“We found that UBI increases health and education outcomes among the poor,” says Marinescu. “It does not increase spending on drugs and alcohol, and one study showed a decrease in drug use and crime.”

Critics of a universal basic income, however, worry that free money would erode the value of work as well as jeopardize existing social safety net programs on which many living at or below the poverty line rely. Others stress it's difficult to predict whether a national UBI program would work for a nation as large and politically divided as the United States.

“I expect Stockton’s UBI experiment to be positive,” says Jesse Rothstein, co-director of the Opportunity Lab at the University of California, Berkeley, which examines the causes and impact of poverty. “But you can’t answer the really big questions until you implement it on a large scale for a long time.”

Mayor: Everyone can use 'a little help'

The Stockton Economic Empowerment Demonstration, or SEED, began in February 2019 and will conclude in July. It has a $3 million budget for both the financial payments and resulting research, with $2 million coming from donations from foundations and individuals, and $1 million from the San Francisco-based Economic Security Project, which supports economic efforts to battle poverty.

Natalie Foster, co-founder of the Economic Security Project along with early Facebook employee Chris Hughes, says "whether it’s seeing people leave behind a side job or not driving another five hours that day for Lyft or being with their families more, that sense of well-being $500 can give them is very profound."

Stockton's 29-year-old mayor, Michael Tubbs, grew up here in poverty watching as his mother worked long days and rarely had time off.

“A lot of people are struggling in our national economy, not just single mothers,” says Tubbs, the city's first African American mayor. “There are teachers, cops, firefighters, social workers, people with a lot of credit card debit or student loan debt or rising housing costs. And everyone could use a little bit of help.”

Most of the randomly selected participants are women (70%), and the overall group breaks down as 47% white, 28% African American, 11% Asian, 2% American Indian, 2% Pacific Islander and 10% other. Roughly 43% have full- or part-time jobs, 20% are disabled or not working, 11% are caretakers and 11% are looking for work.

When asked by researchers what they have been using the $500 on each month, recipients report that 40% of the money was spent on food, 25% on merchandise and 12% on utilities, according to a report SEED officials released last fall.

“People are covering their basic needs and using the money in a way that makes sense for their families,” says Stacia Martin-West, who helps lead Stockton's SEED research team.

She says she isn't surprised grocery runs make up half of the spending. "Food is the one thing you can control, it expands or shrinks based on the amount of resources.”

Stockton has known hard times

The city of Stockton sits in the heart of the San Joaquin Valley in central California. A massive river delta flows from the San Francisco Bay about 70 miles inland to Stockton, giving rise to the Port of Stockton.

A racially diverse city — just 19% of its 300,000-plus residents identify as white, with the rest reporting largely as Hispanic and black, according to the Census — Stockton has Gold Rush roots but in recent years has fallen on hard times.

Crime, poverty and illiteracy have been persistent issues; in 2009 and 2011, Forbes magazine named Stockton one of the country's most miserable cities. In 2012, poor city leadership, unsound financial decisions, soaring unemployment rates and a crippling housing crisis created by the 2008 Great Recession resulted in the city declaring bankruptcy. At the time, it was the largest city in the U.S. to do so.

Since exiting bankruptcy in 2015, the city has improved its lot and was even cited in 2018 as a model of fiscal responsibility by the California Policy Center. But its citizens still need help. Today, 66,000 of Stockton's 300,000 residents live below the poverty line, that 22% representing about twice the national average. The poverty line is $12,000 for an individual and $24,000 for a family of four.

Stockton may be starting something. Local leaders in Newark, New Jersey, Milwaukee and Chicago currently are mulling over their own UBI pilot programs, and Tubbs says he’s heard from state senators in Washington and Massachusetts, as well as city supervisors in San Francisco who are interested in copying the program.

With the income inequality gap in the U.S. growing, the need among the poor is dire. According to a report on economic well-being put out last year by the Federal Reserve, 27% of Americans would need to sell something or borrow money if they suddenly had to raise $400.

“For the city of Stockton, which has had its ups and downs, for us to now be at the center of a global conversation about what capitalism and the economy look like in the 21st century, it’s very special,” says Tubbs.

It's unclear what sort of long-term benefits the program will provide for participants or for the city. Stockton researchers are monitoring the effects on not just a family's financial standing but also its emotional well-being.

SEED researcher Martin-West does anticipate one hypothesis will be proven correct when the UBI experiment concludes: that the $500 will “reduce the amount of stress and anxiety in the brain and body from the fluctuation of an unstable financial situation … The money provides a floor for people to rest their feet on."

Can free money empower families?

For Stockton resident Tomas Vargas, 36, getting $500 extra each month has changed his attitude on life. It’s all a far cry from 2012, when 13 of his friends were killed in a period when Stockton was plagued by homicides.

Vargas is married with two children under his roof, an 8-year-old girl and a 6-year-old boy; another child died, while still another lives with his parents. One of the things he managed to do with the UBI grant was spring for tutors for them. His daughter wants to be an astronaut and his son is good at math.

“It freed me up and gave me just another gust of wind,” says Vargas, who recently landed a new job at the local airport.

He remembers what it was like growing up poor. Often, he wouldn't even have dinner. School lunches, and sometimes breakfasts, were his only meals. As an adult, he still can't go down the Hamburger Helper aisle of the grocery store without getting queasy because he ate the boxed meal so much as a kid when his family was low on money.

These days, Vargas feels more free, psychologically if nothing else. He stops in on his mother more often and sometimes lingers to tease her cat. And his new job pays around $40,000, a sum that promises to provide him with enough to help his young kids achieve their potential.

“Some people need encouragement and it's rare to see somebody just give somebody something,” he says.

As an economic concept, UBI has deep if controversial roots in American politics. Figures as politically disparate as Richard Nixon and Martin Luther King, Jr., talked about different versions of a UBI program. Conservative thinkers often argue that a UBI should replace costly social safety net programs, while liberals insist such a payment must supplement those critical services.

More recently, UBI has been touted in talks by the likes of Tesla founder Elon Musk and Facebook founder Mark Zuckerberg, who see it as a hedge against tech-fueled job displacement.

Democratic hopeful Yang took particular aim at tech companies while on the campaign trail, saying they benefit the most from today’s economy and, with a coming age of artificial-intelligence robots taking over jobs, deserved to pay into a UBI.

Sukhi Samra, SEED's director, says she is buoyed by some signs that leading politicians are trying to address the nation’s growing income inequality gap, even if it isn’t by talking specifically about a national UBI.

For example, she points to California Gov. Gavin Newsom’s expansion of the Earned Income Tax Credit, which refunds money to low-income earners, a reform that many economists say is the simplest way to put more money into the pockets of those struggling on the margins.

Samra also cites national efforts to put more money in low-income people's pockets, such as Sen. Kamala Harris’ LIFT the Middle Class Act and Rep. Rashida Tlaib’s BOOST Act, each of which would provide $6,000 a year to middle and working-class families through a tax credit.

“It’s all about trusting and empowering folks,” says Samra. “Success for us looks like moving the policy conversation to one where we’re recognizing that everyone deserves an income floor and that the economy just isn’t working in its current form for a lot of people.”

Critics say Americans should earn their money

Not everyone agrees. Many politicians have argued that welfare programs hinder people from bettering themselves. President Donald Trump has repeatedly slashed benefits programs since taking office, including an announcement in December that some 700,000 unemployed people would be losing access to food assistance this year. Administration officials have argued that people should only be eligible if they have found some kind of employment.

Even some labor officials have concerns about UBI's implications. Steve Smith, spokesman for the California Labor Federation, says jobs are indeed in danger because of massive leaps in automation. But he says giving people, say, $1,000 a month to compensate for this impending shift is “a trojan horse” trotted out by the tech community. Instead, Americans need better jobs and pay, he says.

“This is their plan to essentially keep pitchforks from coming out when they start to automate jobs on a massive scale,” says Smith, whose organization represents 2 million members across 1,200 unions. “Under this scheme, inequality would be exacerbated.”

Smith says unions such as his want a federal jobs guarantee, such as the one put forth by Democratic candidate Bernie Sanders. Under the Vermont senator's plan, citizens would be guaranteed a stable job that pays a living wage, with some 20 million jobs to be created in a proposed Green New Deal, and still more in healthcare and early childhood education.

For many Americans, the notion of free money in a country known for pull-yourself-up-by-your-bootstraps capitalism is far from an easy sell. A 2019 Gallup poll found that only 43% of Americans supported a UBI as a means to hedge against automation-related job losses.

Many critics of UBI tend to raise the same issues. Beyond the big one — where would the money for a multi-trillion-dollar national program come from — there’s the issue of putting the value of work in jeopardy. While some UBI researchers repeatedly stress that UBI-type programs and pilots suggest a regular small check does not discourage recipients from getting jobs, others remain skeptical.

“We have something in place that cuts your taxes so as to help bring you up to a level where you’re doing OK, and it makes sense to use tools that encourage work rather than just hand out money, because that’s welfare and that didn’t work,” says Peter Cove, author of “Poor No More” and founder of America Works, which helps those living on the margins find employment.

In Stockton, four-time city councilman and Tubbs critic Ralph White has reservations about his hometown's UBI experiment in part because he feels the money, which was randomly distributed, isn't going to the truly needy.

SEED recipients all met the criteria of living in neighborhoods where the median income is $46,000 a year, but White says some residents make as little as $1,000 or less a month, “and those people are the ones who need $500.”

White also is bothered about the lack of details released to date about the 125 beneficiaries and wants to know things such as whether they live alone or with an extended family, precisely how much they make each year, what their bills amount to each month, and how many children they have.

“I’m against what I don’t fully understand,” says White.

Universal Basic Income gives some new hope

For Everett, Stockton's UBI program felt literally heaven-sent. The $500 has allowed her to fill the tank not only of her own car regularly but also that of her husband's. The money also goes to everyday expenses such as her mobile phone plan, home Internet bill and doctor co-payments.

When her husband, who has worked as a contract-based based truck driver, isn't employed, gets sick or just needs a break, the couple now has extra cash to fill the gap.

"I know it's God, there's no way around it, all these people in this city," she says.

Everett still collects recyclables for extra income and looks to save money however she can. As they do for other participants, those UBI funds each month offer her a safety valve from life's sudden financial pinch points.

"It's those little pieces being put together, it's less arguments in the marriage," she says. "It's, you know, all of that."

Things are looking up for Everett. She recently heard that her temporary job at Tesla's automotive plant will become permanent, perfect timing as the SEED program heads into its final stages.

When she's not building upscale electric cars, Everett says she plans to take online courses to earn a bachelor's degree in accounting by 2024. She wants to become a certified public accountant. She jokes that maybe Tesla founder Musk might need her one day.

If there's one misperception about a universal basic income that Everett would like to correct, it's the notion that the money is a license to relax. If anything, she says, it is merely a lifeline out of poverty that empowers her to stay positive.

"People say it's extra money, but it's not extra money," she says. "It's money that you need now."

Marco della Cava (@marcodellacava) is a national correspondent for USA TODAY based in San Francisco; Cassie Dickman (@ByCassieDickman) is the Community Diversity Reporter for the Stockton Record, which is part of the USA TODAY Network.

This article originally appeared on USA TODAY: Free money for some residents in California city sparks national debate