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A California city’s cure for poverty and covid? Free cash

When Stockton, Calif. resident Gregory Gauthier had to take time off from his job at auto dismantler Pick-N-Pull to recover from hernia surgery, he was grateful for the city’s one financial cushion courtesy of him: a guaranteed paycheck.

The $500 no-strings-attached monthly stipend also proved crucial for a 48-year-old woman who came down with early-onset COVID-19. too much, before vaccines and treatments were widely available. The money allows him to stay home from work and take time off sick without worrying about how he’ll make ends meet.

The stipend also helped Stockton residents buy or repair cars so they could get their jobs, pay to have their work uniforms dry-cleaned, and find better-paying job opportunities. More generally, as the Stockton Economic Empowerment Demonstration (SEED) shows, recipients say extra cash improves physical and mental health.


Gregory Gauthier, 34, said he used the $500-a-month stipend he received under the Stockton Economic Empowerment Demonstration on a car, food and clothing for his children and paying bills.

Stockton demonstrates economic empowerment

Misconceptions “rooted in racism”

Advocates for the program — perhaps the nation’s most closely watched experiment in guaranteed income — say the results amount to proof of concept with important implications for public policy. Biggest benefit: Providing regular cash stipends to low-income people is a powerful tool for mitigating income volatility and maximizing human well-being. The findings also dispel the misconception that free cash discourages people from working and breeds laziness.

“It really proved that our thinking about economic security isn’t in the data, it’s rooted in racism,” said former Stockton Mayor Michael Tubbs, who launched the SEED initiative in 2019, when he was in office. “Because the data shows that the literal opposite of all the negative things that people assumed would happen if you gave people a little cushion with which to live and live with dignity.”

Tubbs told CBS MoneyWatch that critics of the program predicted it would discourage people on stipends from working and that they would likely spend it on drugs and alcohol.

“We were told it was somehow going to reward laziness or laziness, but what we saw was actually spending on necessities and allowing people to spend more time with their families,” he said.

Stockton, about 80 miles east of San Francisco and with an ethnically diverse population of just 322,000 residents, was perceived as a testing ground for basic income because of the precarious financial status of many of its residents.

The city’s median household income of $46,033 falls well below the state, while Stockton ranks 18th for child poverty. About a quarter of its residents live below the federal poverty line.

How Economic Security Fights Viruses

Although unplanned, the outbreak of Covid-19 in 2020 proved an ideal test of the concept that one goal of providing an income floor to low-income people is to help them weather unexpected hardships.

“It’s an important part of contingency planning, disaster response and pandemic preparedness. Economic security equates to these things,” Tubbs said. “For some people the seed was a blessing because it prevented people from spreading a virus that was devastating.”

Researchers Amy Beth Castro and Stacia Martin-West concluded in a report that the $500 stipend “allows for judgment about COVID and what conditions workers will tolerate for poorly compensated work.”

“Workers avoided Covid exposure by expecting more from their employers when their incomes were low,” the report said.

The full data will be published in the Journal of Public Health on Monday at 3 p.m. ET.

During the early and deadliest stages of the pandemic, millions of essential workers worked jobs that could not be done from home, while many did not receive sick days. This leaves two uncomfortable options: skip work and go unpaid, or risk yourself and family members contracting a fatal disease.

“Fixed income serves as an anchor or a bridge during a very difficult time, especially for those who have had no paid time off,” Tubbs said.

Improving public health by alleviating stress

Castro, an associate professor at the University of Pennsylvania’s School of Social Policy and Practice and Martin-West, an assistant professor at the University of Tennessee’s College of Social Work, said the exhibit shows a direct connection between cash and mental and health improvements. result

“There are incredible public health implications because we know that financial stress seeps into the body and can contribute to anxiety and depression. But more importantly, depression can affect the ability to attend to family and work,” Martin-West told CBS MoneyWatch. “We found that if you take a different path in terms of policy, you can block what can be a tremendous impact on public health.”

Taub, the researchers, and the participants themselves reiterated how important it is to be able to spend cash when they want to.

“Financing is so volatile from month to month. One month it could be one problem and the next month it could be something else, so having cash flexibility is powerful,” Tobbs said.

For his part, Gauthier first used his stipend to buy a car and later used the cash to buy food and clothing for his four children, as well as pay bills.

“It was nice that it didn’t have a lot of limitations,” he said.

Dozens of similar guaranteed income programs are now running in the U.S. Tubbs hopes more cities and counties will embrace the idea as the U.S. emerges from the pandemic and Americans face deflation.

“I’m more optimistic than ever because I believe the crisis we’re in will have a guaranteed income policy by the end of this decade,” he said.

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