A new guaranteed income program has just been announced in the US, this time in the country’s second largest city, Los Angeles. In his proposed budget for the fiscal year 2021-2022, L.A. Mayor Eric Garcetti included a $24-million guaranteed basic income project that would see 2,000 families in the city receive an unconditional $1,000 per month for one year. Dubbed “BIG: LEAP” (Basic Income Guaranteed: L.A. Economic Assistance Pilot), the program is one of the biggest of its kind in the US. The announcement was made at the end of April when the city budget proposed for the financial year starting 1 July 2021 was unveiled, the budget is usually approved by the beginning of June.
The details of the plan are being finalised, but the Mayor has confirmed that the payment would be truly unconditional with participants in the program able to use the money however they please. There will be eligibility criteria however such as being at or below the federal poverty line (annual income of $12,880 for a single individual / $17,420 for two persons) and, most likely, supporting a child under the age of 18 and demonstrating financial or medical hardship connected to COVID-19. Immigration status, on the other hand, will not constitute a selection criteria. It also seems that the income will go to households and not individuals.
If approved, BIG: LEAP will be the latest in a series of city-led guaranteed income programs in the country. Jackson, Mississippi in 2018 and Stockton, California in 2019 with the launch of “SEED” (Stockton Economic Empowerment Demonstration) paved the way and over the past two years, cities as diverse as Oakland (CA), Patterson (NJ), Denver (CO), Chicago (IL), Gary (IN) and many more across the country have announced or implemented some form of guaranteed income programs.
And these efforts do not occur only at a city level. In Southern California alone, in addition to BIG: LEAP or the pilot implemented in Compton (Compton Pledge), the L.A. County Board of Supervisors has just passed two separate motions asking relevant staff in the administration to design a guaranteed income program for targeted county residents. These first designs are due within 60 days of the motions, i.e. by the third week of July (motion 1; motion 2). Within the city of Los Angeles there are also specific guaranteed income pilots in the South LA and Downtown districts.
Map: main city-led guaranteed income pilots in the US and network of “Mayors for a Guaranteed Income”
Note: programs vary from one city to the next (eligibility criteria, payment amount, duration). Some of the programs that have been announced are yet to be formally approved and started. The map also does not include other initiatives such as, for instance, the payment under the Alaska Permanent Fund which has sometimes been compared to a basic income. (Map by the author, sources: Mashable.com and Mayors for a Guaranteed Income)
Eligibility criteria vary in each city as do the amount of the cash payment or the duration of the experiment but at any rate, the multiplication of the number of programs in progress is indicative of the growing interest for basic income in the US. The COVID crisis is certainly a factor behind this growing momentum. One of the potential eligibility criteria outlined by Mayor Garcetti in his proposal for the experiment in L.A. directly relates to the pandemic. San Francisco has designed a program targeted at artists hit by the crisis and other cities have referenced the impacts of COVID-19 on the economic situation as one of the factors behind their interest for basic income.
Many of these city-led efforts are being supported by Mayors for a Guaranteed Income (MGI), a nation-wide network of mayors founded by former Stockton Mayor and initiator of the SEED program, Michael D. Tubbs. It is supported by various foundations and non-profit organisations such as the Economic Security Project (involved in the Stockton experiment) or the Jain Family Institute (involved in Compton or in a proposed scheme in Newark, NJ). Indeed, whilst these various programs are first a way to alleviate poverty in specific communities and are only local in nature, they are also seen as experiments that will add to the debate around basic income at the federal level.
A Pew survey conducted in August 2020 concluded that 54% of Americans oppose or strongly oppose a federal universal basic income.* Proponents of these programs are hoping that the experiments they are conducting will add to the growing body of evidence that unconditional cash transfers not only help to alleviate poverty, but also improve physical and mental wellbeing and, importantly, that they do not remove incentives for people to work. More generally they are hoping that they will contribute to changing the narrative around poverty and economic insecurity.
*Online survey of 11,001 US adults conducted between July 27 and August 2, 2020, results vary across age groups, ethnicity, political affiliations, and income groups.
Rachel Sandler has written an article for the Forbes website about an increasing number of US cities planning to establish Basic Income pilot projects.
The mayors of Los Angeles; Oakland, California; Atlanta, Georgia; Tacoma, Washington, Newark, New Jersey; Saint Paul, Minnesota; Jackson, Mississippi; Compton, California; Shreveport, Louisiana and Stockton, California, have joined Mayors For A Guaranteed Income, a coalition advocating for UBI policies, or the idea of giving out recurring cash payments to all individuals without any strings attached.
Readers of the article might wish to be aware that some of the terminology used in the article is somewhat indeterminate in its meaning. According to BIEN’s definition, a Basic Income is ‘a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement’. The article sometimes uses the term ‘guaranteed income’, which can mean either a Basic Income or a means-tested benefit: and it is not always clear which is meant. Readers might also wish to be aware that the experiments in Canada and the Netherlands are testing income-tested benefits, and so are not Basic Income pilot projects according to BIEN’s definition of Basic Income.
Talk of a universal basic income has been in the news a lot recently, but what does it all mean? First off, it’s important to make the distinction between free money and services that comes from your taxes – the money for a universal basic income has to come from somewhere, so it’s not free money but rather a useful return for your tax payments. The idea is to level the playing field as much as possible in an effort to eliminate poverty and give families a fighting chance in a world where the cost of living has long since surpassed any positive movement in wage growth. What’s more, the idea of a universal basic income is not a new one at all.
As far back as 1516, Thomas More wrote about the idea of a basic income in Utopia. More surmised that this type of social program would prevent people from becoming desperate enough to steal to feed themselves and their families, eventually becoming swept up in a criminal life that would turn them into corpses.
Later in 1796, Thomas Paine suggested in Agrarian Justice that providing a basic monetary endowment for every adult over the age of 21 would lessen the burden of transitioning from a landed gentry economy to a more egalitarian economy.
In 1967, the Reverend Dr. Martin Luther King, Jr. proposed a universal basic income by which poverty could be eliminated, thus giving African Americans the ability to achieve their potential as well as economic stability.
Rather than making these payments in vouchers, goods, or services, the main idea is that in order to give people the most benefit in terms of freedom of choice in work, lifestyle, and education these payments would have to be made in the form of cash payments. The ultimate goal is to end poverty and lessen violence, crime, and addiction thought the elimination of hopelessness. But can it actually work?
There are several ways that have been proposed to pay for this system. A flat tax would basically take a percentage of everyone’s money and then give them back the same flat rate – a basic redistribution of wealth. A VAT, or value-added tax, would be a high tax on certain goods and services, usually those that are considered to be vices or luxuries, which would go into a fun to make these payments.
Already there are several places around the world that are testing this idea with varied results. Throughout this year in Stockton, California, 100 randomly selected people are receiving stipends, while over the last two years in The Netherlands test groups are receiving varying levels of stipends and benefits. While these programs are still ongoing, Finland found great success with its own pilot programs, including increased confidence in recipients’ financial situations, greater optimism for the future, and better health, but declined to continue the program after the test due to a lack of impact on employment.
Regardless of the inconclusiveness of these tests, a universal basic income may be the only thing that prevents mass poverty as artificial intelligence and automation take over jobs in the next industrial revolution. Jobs will be both created and eliminated, but it will take time to get the right people into the right jobs just as it was during the last major industrial revolution. While it’s not a perfect solution, a universal basic income might be the best tool we have to make the transition smoother.
Learn more about the pros and cons of universal basic income here.
Author Brian Wallace Bio: Brian Wallace is the Founder and President of NowSourcing, an industry leading infographic design agency based in Louisville, KY and Cincinnati, OH which works with companies that range from startups to Fortune 500s. Brian also runs #LinkedInLocal events nationwide, and hosts the Next Action Podcast. Brian has been named a Google Small Business Advisor for 2016-present and joined the SXSW Advisory Board in 2019.
On June 18th, Maryland Delegate Gabriel Acevero was interviewed by the Basic Income Podcast, about his intention to create a social wealth fund in his state, created with revenue from medical cannabis (but not exclusively). These kinds of products can generate a great amount of revenue for the state (with Canada and the https://theherbcentre.net/product-category/bulk-weed/ options being a good example of this), so the logic is sound. The fund, also labelled “The Maryland People’s Fund”, is designed to eventually pay out to every citizen from the state a universal basic income (UBI). However, according to Acevero, first draws from this fund would go out to put in place a UBI pilot, a project focusing on “low-income families who are in urgent need of help”.
The bill proposed the creation of this fund, to be administered by the state treasurer, who oversees the management of other funds and “decides where state dollars are invested”. It would be created by the income of a 25% share on the proceeds from the medical and recreational cannabis taxation (on items such as the oil dab rigs online) accrued in the state. This depends on the level of investment giving to the cannabis industry since many cannabis businesses, whether recreational or medical, are quickly becoming the norm. Each business looks to different development facets, including the amount of investment they can obtain for their business. From cultivations (see Official Website here) to testing, and distribution, it all plays a part. However, unlike with other funds, this one would be exclusively dedicated to the distribution of the citizen’s dividend which, according to projections, would pay out a full UBI to all Marylanders in less than a decade.
Acevero transmits that the medical and recreational cannabis industry has mistreated communities of colour for a long time. According to him, it has “decimated communities of colour”, and was “intentionally done to disrupt” their way of life, in a clear reference to president Nixon’s drug policies back in his time in Office. As a consequence, the better-than-projected income to the state from taxing the cannabis industry (+90 M$ from last year alone, and only from medical cannabis) should be targeted first to benefit these communities. Actually, he defends, the “racial-equity” side of the policy “should be part of the legislating”.
As for funding sources, cannabis taxing revenue, be it from products like Blessed CBD oil or otherwise, is not the only income stream projected for the creation of the wealth fund. Simply raising taxes for the wealthy is one of those income streams, as obsolete tax codes still unfairly benefit wealthier individuals and corporations, not only in Maryland but across the United States.
The young black legislator is “a strong believer in evidence-based policy-making”, and so, in the presence of clear evidence showing how beneficial a would-be policy can be, public officials like himself have the “moral obligation” to write it into Law and implement those benefits in society. And, according to him, being able to cite success cases like the Alaska Permanent Fund and new basic income-style pilot programs like the one in Stockton is a clear indication that basic income-type of policies have plenty of “positive implications”. Plus, he believes this should not be something restricted to Maryland, but be spread out across the country, creating more wealth funds and distributing more benefits to the population.
The proposed bill, introduced to Maryland’s regional parliament, was done so in this year’s first trimester, but since it didn’t pass before de session was adjourned, it will need to be presented again. Acevero, far from being discouraged, is planning a state-wide educational campaign on the benefits of social wealth funds and UBI, so “an even larger coalition” can be built around these important matters. He believes that policies aiming at poverty alleviation and the promotion of social justice must logically include the opinions and preferences of those people they are trying to help, so he’s going far and wide speaking directly to people, spreading crucial information on UBI, social wealth funds and racial equity issues.
Last Saturday, May 25th 2019, an event took place in Maricá, a city on the coast of the state of Rio de Janeiro, where the mayor Fabiano Horta (representant from PT, Partido dos Trabalhadores), vice mayor Marcos Ribeiro and the secretary of Solidarity Economy, Diego Zeidan, announced that, from July 2019 onward, 50000 citizens, a third of its 150000 inhabitants, will receive a Citizen’s Basic Income of 130 Mumbucas, a local electronic currency, equivalent to 130 reais, or US$ 32,5 per month. The plan is to have all Maricá’s citizens receiving this unconditional cash, at least until the end of the present city government legislature.
Longtime politician (presently councilman in the City of São Paulo) and basic income activist Eduardo Suplicy had already explained the advantages of implementing basic income in Brazil, as a part of a general upgrade of social policy in the country. That policy, actually, has been written into Brazilian law since 2004 (Law 10.835/2004), but sanctioned by president Lula on January 8th 2004. There, it says that a basic income shall be rolled out in Brazil, step by step, starting with those most in need, until one day it benefits all citizens.
After an important Conference on Human Rights, held in Brazil in December 2015, where Suplicy reinforced his views, Maricá’s mayor at the time, Washington Quaquá, manifested his intention of implementing the Citizen’s Basic Income in his city. That same month, he was able to pass his purpose into municipal law, which would be introduced in phases: 95 Mumbucas per month in 2016 (85 Mumbucas from a Minimum Income program, plus 10 Mumbucas/month), 130 Mumbucas per month in 2017 (110 Mumbucas from the Minimum Income program, plus 20 Mumbucas/month), disbursed to 14000 families, and now in 2019, starting in July, that same amount will be enlarged to cover 50000 individuals. This payment will be now limited to citizens who belong to families enrolled in the Unique Register, having monthly incomes lower than three minimum wages (1 minimum wage is equal to around 1000 reais/month), but expected to cover all citizens in the village by 2021.
So, the ongoing cash transfer in Maricá is done in a non-transferable social local currency (Mumbuca), is set to cover one third of the population (although projected to cover the whole population by 2021), and amounts to the equivalent of 67% of the individual official poverty line in Brazil (1). Although far from ideal, this is a very significant step when in comparison to some recent basic income test trials such as in Finland (2000 unemployed citizens receiving 560 €/month for two years), Stockton California (125 citizens receiving 500 US$/month for 18 months), Namibia (1000 people in Otijivero receiving the equivalent to 12 US$/month, for 12 months) and India (6000 people in Madhya Pradesh receiving 300 (adults) and 150 (children) rupees/month, for 36 months).
Even though the Mumbuca is a local currency, most commercial stores in Maricá accept it. Also, a Communitary Bank Mumbuca was created in order to provide microcredit at zero interest rates, in Mumbucas, which can also fund housing projects. Maricá mayors (Quaquá and Horta) have, on the other hand, introduced social security measures / programs alongside with this more general basic income approach. For instance, a minimum income program has been created for pregnant mothers and youngsters. Additionally, starting in 2019, another specific program was initiated, dispensing 300 Mumbucas/month to 200 indigenous people that live in small villages near Maricá. There is also a Future Mumbuca program for young people, that are currently enrolled in high school courses involving solidary economy and entrepreneurship, which will pay 1200 Mumbucas per year. In that program, the valued is transferred once the youngster completes high school, starts a firm, a cooperative or becomes an undergraduate student.
Other social support programs have been created in Maricá, over the years, such as free transportation (14 lines in Maricá’s urban area), and special conditions for university students (around 4000), in and out of Maricá. Plenty other public investments were made in education, health, and even organic farming. This unusual plentiful municipal budget (16665 reais/inhabitant, compared to São Paulo’s 5041 reais/inhabitant) is the product of oil exploration royalties along Maricá’s coast. Despite the inherent pollutant nature of this municipal revenue stream, past and present city mayors have been investing in providing better living conditions for the population within their administration’s borders. This way, Maricá has become a bright example for all municipalities in Brazil, as well as for the federal government.
Note (1) – The official poverty line in Brazil stands at 387 reais/month per family. Considering a two-adult composition in each family, this equates to 194 reais/month per (adult) individual.
