California city's universal basic income test: What to know

By U.S. EconomyFOXBusiness

Newark looks to test universal basic income

Reason.com managing editor Peter Suderman on how New Jersey’s largest city plans to test a universal basic income program.

Some residents in Stockton, California, are being given a free stipend to live on as part of a universal basic income experiment.

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Universal basic income (UBI) is a modern welfare scheme through which citizens are granted a consistent, livable income from the government, without condition.

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Called the Stockton Economic Empowerment Demonstration, the test involves at least 100 residents who are set to receive $500 each month in guaranteed income over the course of 18 months.

The money is distributed on pre-paid debit cards. The program is funded entirely by private donations – including The Economic Security Project – a Silicon Valley-based organization.

In order to qualify for the pilot program, residents must be at least 18 years old and live in a neighborhood where the median income is at or below $46,033.

The pilot began in February and there has so far been little to report in regards to progress, according to the Los Angeles Times, which said it has reached out for interview opportunities multiple times.

In order to assess the success of the program, independent evaluators will publish a study outlining what impact the additional income had on recipients after it concludes.

Universal basic income is an idea has gained traction among some more progressive Democrats.

Businessman and 2020 candidate Andrew Yang has advocated for UBI for American adults, while the country is “experiencing the greatest technological shift the world has ever seen.”

California Democrat Kamala Harris proposed legislation called the LIFT the Middle Class Act, which would provide families with a refundable tax credit for as much as $6,000 per year, or $500 per month, to live on. The proposal is viewed as similar to UBI.

Not everyone is convinced UBI is a feasible solution to economic and income inequality, however.

Billionaire businessman Bill Gates has said the country is “not rich enough to give up work incentives.”

“People can do the math on UBI and figure out what the costs would be,” he said on Reddit earlier this year. “I think we still need to focus benefits on those in need - those who can't work or who need retraining. Admittedly this means [identifying] those people rather than just writing checks to everyone and government does this imperfectly.”

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While Stockton became the first city to implement a UBI test program, Newark is also looking into the possibility. San Francisco has also expressed interest.

Finland scrapped a UBI test program last year., as did Ontario.