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Income Experiment Offers Stockton Residents A Glimpse At The California Dream

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Stockton is halfway through an 18-month program that provides $500 a month to 125 people from low-income ZIP codes. Proponents say the program is a step toward economic equality, opponents say it’s unrealistic and enabling.

Speaker 1: 00:00 Since February 125 people from low income neighborhoods in Stockton have been getting a monthly cash boost with no strings attached. The 18 month experiment is aimed at finding solutions to the income inequalities that plagued the city and our state as part of our California dream collaboration. CAPP radio, Sammy K Ola reports that for the first time data has just been released on how the money is being spent on the 15th of every month, $500 show up on Giovan Bravo's debit card. He says it changes the way he approaches the family budget.

Speaker 2: 00:34 It's a good feeling knowing that we, out of that I share a little bit of income.

Speaker 1: 00:39 The 31 year old construction worker says the stipend has made buying school clothes and other staples for his three kids a little easier since he started receiving the money. He's cut his 68 hour work week down to about 50 hours.

Speaker 2: 00:53 It's been great. You get to spend a lot more time with the kids. I'm able to pick him up from school, able to do a lot more things on the weekend instead of always being tired.

Speaker 1: 01:02 The local organization running the experiment handpicked our subject for this story. Bravo is a member of their quote storytelling cohort. He's a Guinea pig for a concept called universal basic income, a fixed stipend that people can spend as they choose. Supporters see it as a replacement or at least a supplement for a broken welfare system. Several presidential candidates are running on some version of this. Here's Kamala Harris.

Speaker 3: 01:28 Almost half of American families are a $400 unexpected expense away from complete upheaval, and so I'm proposing that we give them a lift up and Andrew Yang, my flagship proposals, the freedom dividend of $1,000 a month for every American adult starting at age 18 critics

Speaker 1: 01:46 worry. People will use the money to buy drugs and alcohol or that they'll stop working altogether. Proponents say a little financial security could inspire people to start businesses and seek education. The first data to come out of the Stockton experiment shows recipients are spending roughly 40% of the money on food followed by clothing and home goods and then utilities. The data does not include cash expenditures from the debit card, but UC Berkeley economist Jesse Rothstein says pilots like the one in Stockton aren't the most accurate tool for predicting behavior because people won't make major life changes when the income bump is temporary.

Speaker 3: 02:22 They just can't be transformative at the scale. You'd have to scale them up by many orders of magnitude to have the kinds of impacts people are talking about and nobody has figured out how to pay for that.

Speaker 1: 02:32 Outside Stockton city hall cars rushed by on their morning commute. It's a diverse city. Fewer than half of residents are white. It's also a place trying to reinvent itself. A decade ago it was known as America's foreclosure capital and still more than one in five residents live in poverty. The city's mayor, 29 year old Michael Tubbs wants to see a Renaissance. He's planning major beautification projects downtown inside his at city hall. Tubs explains. He's trying to change the look and reputation of the city while giving some of the people here a hand up.

Speaker 4: 03:07 It's just all about breaking cycles of poverty and increasing. Then I have opportunity for everyone.

Speaker 1: 03:12 The mayor is acting as a front man for the experiment, but the city isn't footing the bill. The $3 million it takes to run the program comes from a private foundation pushing for universal basic income.

Speaker 4: 03:24 For so long. People have looked at Stockton for examples of when things are bad. Uh, but this is one of a couple of examples where now people are looking at something for a solution.

Speaker 1: 03:33 Joe Von Bravo is a Stockton native. He grew up poor and he has a criminal record, but he wants his kids to have a different life

Speaker 2: 03:40 stocked in. It's a very dangerous city at times. Um, so I try to keep my kids out of the streets and studying in school and stay busy and extracurricular activities.

Speaker 1: 03:56 That's why some of his monthly deposit goes to sports camps and gymnastics classes. When the pilot ends, he'll go back to working Saturdays to keep up with those expenses. Stockton is one of two cities with a basic income pilot underway. Joining me is capital public radio reporter Sammy, Kayla, Sammy, welcome. Hi. Thanks for having me. So are there any rules about the way this $500 stipend can be spent? So there are actually no rules at all about how this can be spent. And that's sort of part of the deal. The people running the project, they're called the Stockton economic empowerment demonstration. I'm going to call them seed from now on. They really are trying to show that people will use this money to better themselves and their families. So yeah, they get $500 a month on a prepaid debit card on the 15th of every month and yeah, they, they get to spend it from there.

Speaker 1: 04:49 And I would imagine Stockton mayor Tubbs has come up against some kind of of political resistance to this idea. Is that the case? Yeah, I would say so. There's a lot of skepticism about this idea. I think people worry that if you give recipients $500 a month or $1,000 a month, they will spend it on, you know, unnecessary items, maybe drugs or alcohol. And that this idea that people will use it to better themselves is optimistic. Uh, but I think mayor Tubbs, who is 29, he grew up in Stockton, he grew up in poverty. Uh, he watched his mom really struggle to make ends meet. He really thinks if you give people a hand up that they will change their circumstances and that they are just sort of victims of a broken system and that even people who are working very hard are not, uh, able to move themselves in their families to a better place or not able to achieve.

Speaker 1: 05:47 Um, you know, the California dream you could say. So he's really convinced that an extra $500 a month can do that for people. So he's really willing to argue for this program and he really believes in the residents of Stockton that they will use this money to improve their lives. And he also acknowledges that there are some challenges here. He gets criticized a lot because people think he's using taxpayer dollars, but he isn't the $3 million for this program comes from a private foundations. There's no city dollars involved. And you know, he knows that there would be challenges with doing this on a wide scale. He acknowledges that what happens when money for programs like this is supposed to come from taxpayers. Yeah. So I think there's a lot of resistance to that idea, especially for people who are skeptical that they don't know how, you know, people will use this money.

Speaker 1: 06:34 Um, and you know, all the, all the models are a little different. So Andrew Yang is proposing a value added tax of 10% that's a tax on goods or services that a business produces. And he also wants to consolidate or even eliminate possibly some of the welfare programs like Medicaid and social security. But you know, commonly Harris on the other hand is not trying to do universal income. She's more focused on lower and middle income people. And she wants to do that through the earned income tax. And you know, that would be an entirely different structure. And then you've got Cory Booker who is proposing a government funded baby bond. So you know, when people say universal basic income, there are a lot of different things that that could mean and a lot of different ways that they could pay for it. And tell us more about how some supporters of the basic income idea, belief stipends, could take the place of the existing social safety net, like Medicare and social security.

Speaker 1: 07:29 Yeah. So this is maybe one of the most controversial ideas out there that we would eliminate Medicaid or social security to pay for these basic income stipends. And what Andrew Yang says is that our welfare system is kind of broken and people should just get this money. They should have the freedom to spend it the way that they want without having to jump through bureaucratic hoops and fill out paperwork. But critics and economists that I talked to said it's, it's not really feasible to eliminate those programs and still expect people to be able to get by a a thousand dollars a month probably wouldn't enable you to buy health care and you know, get all the food you were getting on food stamps and get whatever you are getting through your maybe disability income. You know, for most people it's, it's probably not enough to make ends meet. That's, you know, at least one of the ideas that critics are putting forward right now.

Speaker 1: 08:20 And it's also gonna be a challenge for cities and States that are trying pilots to figure out how this stipend interacts with benefits people are getting in Stockton. They had to actually warn the recipients that you might, you know, lose your Medicaid if you take this by $100 if it puts you over the income thresholds and see the group that's running the pilot, they tried, you know, to get some waivers in place and get exceptions so that people could keep their benefits. But there, there was this sort of maneuvering that had to be done around getting this extra income and keeping people on their benefits. Uh, Stockton and mayor Tubbs don't want to eliminate any social programs. They see a basic income as a supplement to the current welfare system, not a replacement for it. I've been speaking with Capitol public radio reporter, Sammy K Yola Sammy. Thank you so much. Yeah, thank you.

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Maureen Cavanaugh and Jade Hindmon host KPBS Midday Edition, a daily radio news magazine keeping San Diego in the know on everything from politics to the arts.