Big cities embracing universal basic income payments.

Universal Basic Income Programs: Providing Cash Directly to Residents

Universal basic income (UBI) has gained popularity as an economic policy in major cities, recognizing that giving cash directly to residents can significantly enhance their quality of life.

With the rise of UBI programs, cities, counties, and states are offering substantial monthly payments, some as high as $1,000, to their residents. Let’s take a look at some of the most notable UBI programs in the country that are currently distributing checks or have recently concluded their experiments with free cash.

Rochester, New York

The city of Rochester has launched a yearlong UBI pilot program, and applications are currently open.

Under this program, 351 individuals in the city, which has a population of over 200,000, will receive $500 per month for 12 months. The $2.1 million program provides “unconditional” funds, meaning there are no work requirements or restrictions on how the money can be used.

While recipients have the freedom to spend the monthly checks as they see fit, the program is limited to individuals living at or below 185% of the federal poverty level.

The program’s website states, “The belief behind this initiative is that people in poverty are best positioned to make informed financial decisions that address their households’ needs.”

The funds for this pilot program come from the American Rescue Plan, signed into law by President Joe Biden in 2021 as a COVID-19 relief package.

Alaska

Alaska has been implementing its own version of basic income for several decades through the Permanent Fund Dividend. This payment is an annual dividend distributed to Alaska residents from investment earnings of mineral royalties.

In 2022, the state dividend amounted to $3,284 and was available to Alaskans who were residents throughout the previous calendar year and intended to remain residents indefinitely.

While the $76.6 billion fund has been providing payments to Alaska residents for over 40 years, its sustainability is now being questioned. In addition to distributing checks, the fund has been supporting state government operations.

The fund’s managers are concerned about a combination of inflation eroding the fund’s value and lower-than-expected revenues. This has prompted discussions about reevaluating how the fund is utilized.

Gov. Mike Dunleavy (R-AK) may call a special session in October to propose an amendment that would protect the fund from being used for government operations.

Ann Arbor, Michigan

Ann Arbor is currently conducting a UBI pilot program, offering $530 per month for 24 months to 100 residents. The program is being carried out in collaboration with the University of Michigan, which will study its outcomes.

The program is funded by $1.6 million from the American Rescue Plan, allocated by the city in 2022.

Ann Arbor Mayor Christopher Taylor stated, “Guaranteed income programs are flourishing across our country, and they are proving to be an impactful tool to combat generational poverty. By partnering with the University of Michigan, Ann Arbor will increase our understanding of the effectiveness of these programs and serve members of our community in need.”

To qualify for the program, residents must not earn more than 300% of the federal poverty level. Additionally, they must be engaged in low-level entrepreneurship, such as gig work or informal businesses.

The University of Michigan’s Poverty Solutions will assess the program’s impact by comparing the experiences of 100 participants with 100 individuals who do not receive the payments. The study aims to determine whether the checks help beneficiaries secure housing, food, transportation, and improvements in their physical and mental well-being.

Cook County, Illinois

Cook County, the largest county in Illinois encompassing Chicago, is currently providing unconditional $500 payments to 3,250 low-income residents as part of a guaranteed income study.

The pilot program will run for two years, with payments being distributed from December 2022 to December 2024.

Officials state on the program’s website that this pilot is just the beginning, and they plan to make it a permanent program.

Los Angeles

As the second-largest city in the United States, Los Angeles conducted a UBI pilot program from March 2022 to March 2023. During this period, 3,200 residents received monthly payments of $1,000.

The payments were provided without any conditions and were part of a study on the impact of guaranteed income in combating poverty. A separate group of approximately 3,700 individuals was studied without receiving the payments.

UBI gained significant attention when former Democratic presidential candidate Andrew Yang made it a central proposal in his 2020 campaign. The COVID-19 pandemic further influenced lawmakers, from both parties, to approve substantial spending, including three separate relief payments, which boosted the popularity of UBI.

Various UBI pilot programs across the country have utilized funds from COVID-19 relief packages to test the effectiveness of this economic approach.

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