What Denver can learn from universal basic income tests in U.S. and Canada

Offering no-strings-attached monthly payments to Denver’s homeless population should result in less money going toward alcohol, drugs and other vices if programs in other cities are any indication.

Stockton, Calif., and Chelsea, Mass., tried initiatives like the one a Denver entrepreneur is proposing, and officials on both coasts say the money they’ve offered to low-income residents helped with stable housing, access to food and full-time employment.

“Just because households and families are experiencing poverty because of systemic and racial inequities in our economy, that does not mean they’re irresponsible,” said Alex Train, who is the director of housing and community development in Chelsea, just across a river from Boston.

The Denver Basic Income Project, if fully funded as envisioned by clothing company owner Mark Donovan, would give money to three groups of people only experiencing homelessness with no rules on how it can be spent. One would receive a one-time payment of $6,500 and then monthly payments of $500 for 11 months. The second group would receive $1,000 each month for a year. And the third group would receive just $50 a month for participating in the study.

There is no city money being used, though Mayor Michael Hancock said he is in favor of the experiment.

While an estimated 820 people experiencing homelessness would be part of the study — a fraction of Denver’s estimated 4,171 homeless — it’s a chance to see whether universal basic income is both humanitarian and a financially responsible approach to helping people find employment and lessening reliance on costly social services, according to University of Denver professor Daniel Brisson.

Brisson directs DU’s Center on Housing and Homelessness, and will study Donovan’s program, with the goal of tracking how the money is spent, beneficiaries’ employment and housing security, as well as their sense of control, which is linked to stress and anxiety.

“The idea behind a universal basic income isn’t to give people money for nothing,” Brisson said. “But the work they’re doing doesn’t give them enough to afford a home in Denver’s ridiculously costly market, doesn’t give them enough money to feed their children or for a simple car repair or to take care of a hospital bill.”

Stockton, Chelsea and Vancouver

Perhaps the biggest indication that the Stockton Economic Empowerment Demonstration (SEED) was succeeding was people in the central California city of more than 300,000 who weren’t part of the program wanted to be, former Mayor Michael Tubbs said.

The first of its kind in the U.S., SEED gave 125 people in low-income neighborhoods $500 each month for two years, Tubbs said.

Stockton residents who received money saw income fluctuations flatten month to month and they had lower anxiety and depression when compared to a control group.

“It gave them the ability to deal with an unexpected emergency, take time off to find a better job or to pay for tires if their tires popped,” Tubbs said.

But the effects were more than anecdotal. Independent researchers and professors at the University of Tennessee and the University of Pennsylvania found households that received money saw a 12% increase in full-time employment, more than twice the control group’s increase. And less than 1% of the money, tracked through debit card purchases, went toward tobacco or alcohol.

The homeless population in Vancouver, British Columbia, is smaller than Denver’s, with one estimate putting it above 3,600. It tried a variation on basic income, giving 50 people experiencing homelessness a one-time payment of $7,500 each to be spent on anything.

A study by researchers at the University of British Columbia found that compared to the unpaid control group, people who received money moved into stable housing faster, retained more than $1,000 in savings for a year and reduced their reliance on shelters. They also spent more money on food, clothing and rent and reduced spending on drugs, tobacco and alcohol by an average of 39%, the study showed.

In Massachusetts, Chelsea officials wanted to try basic income as a way to combat food insecurity, Train said. Of the city’s roughly 40,000 residents, about 60% do not have reliable access to affordable or nutritional food. And importing more than 100,000 pounds of food each week and employing more than 20 people wasn’t an efficient operation.

“That’s an Amazon-scale operation for a municipality,” Train said.

The easier solution was also more cost-effective: Chelsea gave 274 low-income households between $200 and $400 a month between November and April, which was as much as it could do between using its own funding and philanthropic donations, Train said.

About 85% of people who received money spent it on food and basic necessities, Train said. Another 15% went toward utilities, rent or “getting their kid a winter jacket.” And less than a percent went toward drugs or alcohol.

Prejudices and recommendations

Data collected from these basic income programs — whether they’re for homeless residents or low-income residents — is invaluable in the growing movement, which Tubbs in Stockton said includes 49 mayors and 15 pilot programs.

“Those statistics work wonders in the face of opposition largely centered around misinformation or age-old, often racist, tropes,” Tubbs said, noting that the most common complaints are that people receiving money will spend it on drugs or alcohol or use it as a way not to work.

“People disagree based on a flawed understanding of how the economy works, but that’s not rooted in data,” he said. “Most of the opposition was really just opposition to me.”

(Indeed, Tubbs lost his reelection campaign late last year, and he told the Los Angeles Times that one factor was a four-year misinformation campaign against him.)

One way to counteract those prejudices and misinformation, Tubbs said, is for Donovan’s team and others in Denver to overcommunicate.

“Maybe we should have done weekly updates, ‘Hey again, we’re doing this pilot …’ You think you’ve said it a million times but there’s always someone new out there,” he said.

Train said Chelsea’s program didn’t have such substantial pushback, and thinks it might be because it was framed as a way to combat food insecurity.

Both Train and Tubbs also agreed that Donovan’s team should set realistic expectations.

“Guaranteed income is not a panacea for everything,” Tubbs said. “Money solves money issues,” but not mental health or substance abuse problems.

Donovan said Thursday he’s raised about $1.5 million, but needs another $5.5 million to offer participants the full amounts. Should the fundraising effort fall short, he said they’ll still offer whatever money they can.

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