Economy

This City's Unprecedented Experiment Gives Poor Residents Money to Spend However They See Fit

Elzy Kolb

Published: May 28, 2019 2:11 pm

Last Updated: January 6, 2020 4:18 am

Recent jobs and economic reports herald good tidings, though growth across the country has been uneven. Many families and towns are still hurting, with 46 million Americans living below the poverty line. Typical U.S. household incomes were up in 2017, according to Census Bureau data. But in more than half of the 42 poorest metro areas where families bring in is less than $45,000 each year, the median family income has actually dipped. These are, in fact, the poorest cities in America.

What would it mean to families if they had a supplemental household income they could rely on month to month? The city of Stockton, California, intends to find out.

By numbers, California seems to be doing well — it’s one of the 13 states where incomes are booming. Income growth has been up more than 24% and GDP up 22% over the past 10 years. Everything isn’t quite as rosy in Stockton, a high-poverty city located just a little more than an hour away from the booming San Francisco Bay Area.

Through the recently implemented the Stockton Economic Empowerment Demonstration (SEED), the city aims to help families and give a little boost to the local economy by providing $500 a month to 130 residents for 18 months. This is the first city-led guaranteed income initiative in the United States. To recruit people for the program, the city sent letters to randomly selected households of neighborhoods where the median income is at or below the Stockton average of about $46,000. The recipients were randomly chosen from among the responding households.

How the families spend the money is not monitored but researchers will study how they fare while on the project. Some of the recipients have talked to the media about their experience on the program, including a family that lost its income due to medical disability. They reported that the monthly SEED money gave them some financial security as they readjusted their plans to encompass changes in health and income. Another family uses the money for educational spending, both for the children’s future and for the head of household.

SEED has generated a lot of attention and is certain to be carefully scrutinized by both supporters and naysayers. In addition to providing for immediate needs, it may also have peace of mind benefits for people fearful of the future and reduce the income gap in the country. For reference, these are the 25 counties with the widest income gaps in the country.