California City to Fight Poverty With Guaranteed Basic Income

A city mayor in California has a unique plan to alleviate poverty in his jurisdiction by guaranteeing a “no strings” basic income of US$500 a month for its residents, Reuters has reported. 

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Starting early 2019, Michael Tubbs, the 27-year-old mayor of Stockton, California, plans to provide the monthly stipend to a select group of residents as part of a privately funded 18-month experiment to assess how people use the money.  

"And then, maybe, in two or three years, we can have a much more informed discussion about the social safety net, the income floor people deserve and the best way to do it because we’ll have more data and research," Tubbs told Reuters.

The city is yet to decide how many people will receive income from the trial project, which is funded by The Economic Security Project, a charity network co-chaired by Facebook co-founder Chris Hughes. 

The Economic Security Project is providing US$1 million to fund the Stockton trial after approaching Tubbs to ask if his city would be interested in piloting a basic income program. 

Hughes, 34, proposed the U.S. government give a guaranteed income of US$500 a month to every working U.S. citizen earning less than US$50,000 a year, at a total cost of US$290 billion a year. He added that a 50-percent tax rate on income and capital gains for U.S. residents earning over US$250,000 would help pay for it.   

Providing universal basic income to citizens has gained traction worldwide. The Finnish government is already running a two-year trial to provide 2,000 unemployed people with monthly payments of approximately US$660.    

In Alaska, residents have long received an annual dividend check from oil revenues from the Alaska Permanent Fund, which Tubbs said is a model for his approach. Last year, the payout in Alaska was US$1,100. 

“I jumped at the opportunity,” said Tubbs, who was familiar with the concept from the writings of civil rights leader Martin Luther King Jr.
The issue of economic empowerment touches a chord with Tubbs.

In Stockton, where he grew up, one in four residents live in poverty and his family relied on government assistance to meet their basic needs.  

Community organizer Trina Turner, a pastor working with economically disadvantaged people, hopes the experiment will change the way people see Stockton, which declared bankruptcy in 2012 and has high rates of crime and homelessness.

“I think it will begin to shift the narrative about Stockton,” she told Reuters. “Instead of being the miserable city, we’ll be the city that people are waiting to come to for all of the right reasons.” 

The scheme, however, has stirred some controversy. The Organization for Economic Cooperation and Development stated that providing an unconditional basic income to everyone of working age would do little to combat poverty if not funded by extra taxes. 

Critics also pointed out that the move would encourage people not to look for work.