One St. Paul family used the extra income to buy a child's winter coat and for rent, groceries and other necessities. A single mother of three said the $500 per month "lifted a big weight" from her budget after she was laid off from her job in the early months of the pandemic.
Still another mother said the additional money allowed her to cover bills and have a little extra for modest Christmas presents — during a year when her family expected to be too strapped for money to have any gifts.
All three families, who recently shared their stories with the Star Tribune, benefited from St. Paul's People's Prosperity Pilot, a program launched in November 2020 by Mayor Melvin Carter. Preliminary reviews of the effort show that it is working as intended. The monthly income bump is giving participants more financial breathing room by covering basic needs.
"One of the amazing things about this policy is the way in which just having enough money to get to the end of the month sort of unlocks a world of potential for families," Carter said.
Under the pilot, 150 lower-income families were selected to receive $500 a month for 18 months. Participants had to have incomes at or below 300% of the federal poverty level and demonstrate that they were economically affected by the pandemic. More than 80% of families selected for the pilot identify as people of color, and nearly half live on the city's East Side.
The $1.6 million program was funded with $214,117 of federal CARES Act money, with the rest coming from grants and nonprofit donors.
Carter is part of a growing group of U.S. mayors who are trying guaranteed income programs for low-income residents. The mayors say that sending cash to families without any strings attached is a simple, powerful way bridge the gaps for those who are only partially covered by or excluded from existing social safety net programs.
The funds move quickly into the economy, and recipients have the flexibility to use the money for a variety of needs such as rent, food, a car repair to get to work, a computer for distance learning or school supplies.
Studies from other similar programs, including one in Stockton, Calif., show those are typically the kinds of expenses recipients cover with these funds. That research, as well as studies of how stimulus checks were spent, shows that the funds are not wasted. In Stockton, participants reported improved health and quality of life — and their participation in full-time employment jumped from 28% to 40% in a year.
The universal basic income concept isn't new; it has been suggested numerous times during the past century, including when the late Martin Luther King Jr. promoted it during the civil rights era. Both conservative and liberal researchers have studied the idea, with some positing that direct payments could cost the government less than current programs.
St. Paul's program wraps up next year. City leaders and advocates across the country hope these pilot programs will lend momentum to the guaranteed income movement. Further analysis can help determine whether the payments should be used by the federal government to either supplement or replace current anti-poverty efforts.