L.A., Chicago giving away cash with no strings attached to residents in need. Are universal basic income programs working?

LOS ANGELES – Life was falling into place for Georgia Horton.

After more than 20 years in prison, she was building a new path forward with a blossoming career in sharing her story: She went from a prison inmate to finding religion and becoming an evangelist. But that all came to a screeching halt as the country shut down with the COVID-19 pandemic.

The happiness of her newfound success was replaced with worries about becoming homeless, joining the tens of thousands in the Los Angeles area who have no roof over their heads.

She credits a guaranteed basic income program that rolled out in Compton, just south of Los Angeles, called the Compton Pledge, with saving her. Each month, Horton receives $300 — money that comes without any stipulations or strings attached on how she can use it. She’s used the funds for bills and purchases like a laptop, which she says allowed her to continue speaking engagements and broadened her reach. She was also able to save and start up Georgia Horton Ministries, a feat she says would have never happened without the money.

The basic income program is just one of dozens rolling out in cities across the U.S.

The concept of universal basic income - namely, cash payments sent to citizens on a regular basis - has been around for decades. But it's seen an explosion of new supporters.

The pandemic, along with shifts in political tides and an influx of federal funds to communities across the country, have opened the door for cities to test out such programs.

“It has been life changing,” Horton said. “It gave me breathing room and mental relief. I had so much anxiety. I mean, my livelihood and my life as a whole was in danger. But now, there are all these new doors opening. It’s truly saved me.”

In Los Angeles, a new program attracted nearly 60,000 applicants this week for a universal basic income pilot that will offer $1,000 a month to more than 3,000 people — the largest program of its kind in the country. Chicago, similarly, is in the works to roll out a similar program, offering $500 payments to 5,000 low-income households for one year.

Supporters say a guaranteed income can alleviate stress and anxiety for those living in poverty while giving them the economic security needed to find good jobs and avoid debt. But critics argue free money with no strings attached could be used for illicit means and could eliminate the incentive to work and lead to the cutting of other government assistance programs.

More: Is universal basic income closer to reality? Cities are already testing monthly checks for residents

More: Push for universal basic income has outlived Andrew Yang's 2020 presidential campaign

L.A., Chicago to offer free money to low-income households

Los Angeles became the biggest city in the country to launch a basic income program this fall. Applications for those wanting to be considered for the cash assistance closed this week with nearly 60,000 people applying for the 3,200 available spots in project BIG:LEAP (Basic Income Guaranteed: Los Angeles Economic Assistance Pilot).

Only those with an income at or below the federal poverty line and who experienced economic or medical hardships due to COVID-19 can qualify. There aren't stipulations such as drug testing or background checks and even those who aren't U.S. citizens can apply. Those selected will be notified by January and funds will start being dispersed shortly after. The $1,000 payments will last one year.

Chicago is on track to become the second largest city to roll out a similar pilot program, offering $500 payments to 5,000 low-income households for one year.

Both programs will be the largest of their kind in the U.S.

Dozens of cities have launched similar programs or are in the midst of examining them, according to Mayors for a Guaranteed Income. That includes cities such as Minneapolis, Denver, Pittsburgh, San Francisco and New Orleans.

Still, the largest question about universal basic income programs is how to fund them.

When Andrew Yang, who made the issue a centerpiece of his 2020 presidential campaign, proposed offering $1,000 to every U.S. adult, it was estimated as costing $2.8 trillion per year. He said new taxes on businesses could help pay for the program.

Many cities eyeing programs are using federal money made available due to the COVID-19 pandemic. And the programs are being rolled out as short-term pilots with a clear end date. The future for them remains unknown.

Los Angeles is paying for its $38 million program in part with millions cut from the police budget after protests due to the police killing of George Floyd in 2020 in Minneapolis.

L.A. City Councilman Curren Price, who proposed the program, said the shift in resources is an example of how the city is both "reinvesting money in a way that benefits people in need" and reimagining everything from public safety to social services.

"We're looking for new ways to provide assistance and this program certainly provides an opportunity to reach individuals where they are," he said, adding that it "empowers" applicants with the "decisions on how the money is spent" since there aren't any rules or restrictions.

Price noted the pandemic put a spotlight on the concept of universal basic income. "People have been suffering, you know, working two or three jobs. And of course, COVID has just exacerbated that and really helped to illuminate the income inequality issues that plague urban areas all over the country."

He said L.A.'s one-year pilot will examine how the program is benefiting people and allow the city the opportunity to fine-tune any policies. But, Price added, the hope is to extend it and continue offering cash assistance to those who need it — noting the thousands who applied and the vast swaths of L.A. that are living in poverty and show a need to expand programs like this further.

Studies show universal basic income’s positive impacts. Critics remain

The idea of providing a universal basic income has been around since at least the 18th century. Even the U.S. government experimented with it in the 1960s and 1970s under President Richard Nixon.

The program had some hiccups, including a woman who spent all the money on alcohol and a man who went into debt buying expensive furniture for his government-subsidized apartment, according to a 1970 New York Times story. But the experiment concluded that the money did not stop people from working.

It’s gotten new life in recent years thanks to former Stockton Mayor Michael Tubbs, who launched a privately funded guaranteed income program in the Northern California city in 2019 that was one of the largest of its kind, and politicians like Yang. Then came the economic turmoil of the COVID-19 pandemic.

Already, a larger than average number of people in places like Chicago and L.A. were experiencing poverty, U.S. Census Bureau data shows. The pandemic hit many low-income households disproportionately, though relief funds, from stimulus checks to boosted unemployment benefits, helped decline the number of people living in poverty, the U.S. Census Bureau said.

“All of this illustrates that these pilots [programs] are necessary but not sufficient,” former Mayor Tubbs said in an interview. “There has to be a policy because the issue of economic insecurity is not going to go away when this pandemic’s over. People demand — people deserve — dignity. People deserve the ability to breathe, and people deserve a guaranteed income.”

Criticisms of giving away money persist. Aside from conservatives who argue against big government spending, those opposing such programs worry the cash assistance will demotivate people from working and eventually, put other government assistance and safety programs at risk.

Oren Cass, executive director of the conservative think tank American Compass, wrote in a National Review opinion piece that the concept of universal basic income is flawed to its core, writing it signifies cultural changes "that have absolved people of responsibility for themselves."

"A UBI would redefine the relationship between individuals, families, communities, and the state by giving government the role of provider," he wrote. "It would make work optional and render self-reliance moot. An underclass dependent on government handouts would no longer be one of society’s greatest challenges but instead would be recast as one of its proudest achievements."

And a study last year by Pew Research Center showed a narrow majority of Americans, about 54%, opposed a government universal basic income of $1,000 per month. About 73% of Black adults favored the policy while only 35% of white adults did, the survey found.

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

But a study examining the impacts of the cash assistance in Stockton found those who received the $500 monthly payments were able to pay off debt and had lower anxiety and depression. About 28% of those who got the assistance had full-time employment at the start of the program, but a year later that number jumped to 40%, the study found.

While supporters pointed to the study as evidence the money wouldn’t lead to people quitting jobs and becoming dependent on the government, Matt Zwolinski, director of the Center for Ethics, Economics and Public Policy at the University of San Diego, noted the study was limited due to the program only lasting for two years. He said people were unlikely to drop out of the labor force if they know the extra money is temporary.

Still, the concept has been studied across the globe and programs have been tried out in places including Finland and Iran.

Ioana Marinescu, an economist and professor, studied the impacts of universal basic income at the University of Chicago and found those who received the cash assistance reported better mental and physical health along with boosts in education and parenting. She also found there was reduced criminal activity and an insignificant impact in the labor force.

Marinescu, now teaching at the University of Pennsylvania, just finished examining a statewide program in Alaska where every resident of the state is offered somewhere between $1,000 to $2,000 yearly — including children. She said the impacts of the program, which has been around for decades, could be used to learn more about the rolling out of a universal basic income program on a broader scale.

Such programs could also offer a boost to racial economic equality, she added. “Chicago, in particular, has a lot of segregation and racial inequality,” Marinescu said. “These programs would make sure that everyone — no matter what — has something to live on. It levels up the playing field and brings people up to a certain level of economic security.”

In Compton, Horton noted that people who look like her and who have pasts like hers are often overlooked. That's what made the money even more valuable for her life and future.

“Look, I already have three strikes against me. I’m Black, I’m a former prison inmate and I’m a woman,” she said. “The chips are already against me. Then, add in the pandemic. If it wasn’t for this program, I don’t know what I would have done.”

Contributing: Associated Press

This article originally appeared on USA TODAY: Universal basic income: L.A., Chicago giving away money to those in need