Guaranteed Income Pilot Programs

Why guaranteed income?

Despite decades of policy interventions, the percentage of Americans living in poverty has held steady for 50 years, with the overall number of people living in poverty actually increasing. In 1972, 12 percent of the American population, or 24.5 million people, fell below the poverty level. By 2022, the number of Americans living in poverty had risen to 38 million, accounting for 11.5 percent of the population. 

While poverty is a pressing national problem across all demographics, Black and Latinx families  continue to experience higher rates of poverty due to historic and ongoing discrimination and disinvestment; as do women, children, adults aged 65 and older, and disabled individuals who are often financially vulnerable. 

It is well known that poverty negatively impacts all facets related to quality of life. Research has associated poverty with poor physical and mental health, food insecurity, lack of access to transportation, increased job insecurity and lack of quality employment, and housing instability. Children who grow up in poverty are more likely to live in poverty as adults, less likely to complete higher education, and more likely to experience health challenges.

Despite the persistence of poverty and its well-known negative impacts, policymakers have implemented income and work requirements grounded in racism that exclude the most impoverished Americans from accessing the full social safety net and have failed to ensure programs keep up with rising costs of living, resulting in benefits programs that fail to cover basic needs. Further, states have continuously diverted Temporary Assistance for Needy Families (TANF) funds from direct cash assistance programs to unrelated budgets, resulting in a 71 percent decline in basic assistance spending since TANF began. In addition, recipients of public benefits risk a benefits cliff in which slight increases in earnings can result in a net loss of income.

As a fiscal response to the COVID-19 pandemic, the U.S. government sent Americans direct cash in the form of stimulus payments and the expanded Child Tax Credit. Unlike responses to prior recessions in which stimulus payments were restricted to those with earned income, the Covid-era economic impact payments did not require a base amount of earnings for eligibility. Equally, the 2021 expanded Child Tax Credit payments were fully refundable, ensuring that no- and very low-wage earners received the full credit. These payments, combined with the expansion of unemployment insurance, reduced the number of Americans living in poverty by 53 million. When the programs ended, there was a surge in poverty, with rates for Black and Latinx households increasing to almost 20%—nearly double the historic low rates of 2021.

What are the potential benefits?

Unconditional, unrestricted, and consistent cash transfers provide poverty-burdened households with the flexibility to respond to immediate needs as well as the financial stability to plan for the future. Modern guaranteed income programs are rooted in the legacy of Rev. Dr. Martin Luther King, Jr., Johnnie Tillmon, and other civil rights leaders advocating for a guaranteed income as a way to abolish poverty. Today, years of research on guaranteed income or direct cash transfers has shown evidence of alleviating poverty for the duration of these programs, as well as ongoing benefits after programs end. In the heavily cited Stockton Economic Empowerment Demonstration (SEED) program evaluation, participants showed improved physical and mental health, greater agency and autonomy to find new employment opportunities, and less financial volatility. Individuals overwhelmingly spent their cash payments on basic necessities like food, auto care, and utilities, similar to aggregated findings from over 30 pilot program evaluations. 

Guaranteed income also offers relief from both financial and time scarcity, allowing individuals to set goals, take risks, and gain freedom and stability. It has the potential to increase entrepreneurship and employment—participants in the SEED program increased their full-time employment by 12 percentage points. It can also offer respite for caregivers, parents, and pregnant people who could benefit from more time caring for themselves and others. A guaranteed income can also give families resilience in financially stressful life events, such as unemployment, divorce, disability, or health problems. Halimah, a 40-year-old single mother of two, shared that the Atlanta IMPACT Program allowed her to catch up on her bills, cover basic needs, deal with emergency expenses, and finally enroll her children in sports. Having worked since she was 17, she noted that during the program, “I didn’t have to feel like I was just scraping by, I could actually breathe.” 

A 2023 study of guaranteed income pilots in four southern states found that increased incomes resulted in parents’ ability to cover basic needs, better behavioral and academic outcomes for children, better work-life balance for parents, enriched parent-child bonding, and improved parental mental health. The SEED program and other demonstrations have seen significantly improved mental health and well-being. Guaranteed income may also have the ability to increase worker power and autonomy as individuals often look for better jobs, quit their exploitative jobs, or start their own businesses.

How do you design an equitable guaranteed income pilot program?

Successful guaranteed income demonstration programs are designed to benefit those most impacted by systemic inequities, to ensure ease of participation, and to build the evidence base for a federal guaranteed income. As advocates, policymakers, and community members work together to build towards an equitable federal program, continued pilots and demonstrations will put money into the hands of people in need, strengthen communities, and bolster the case for change. We recommend the following practices:

• Ensure sufficient funding: Municipalities must balance the amount and duration of payments and the number of recipients against budget limitations. Program payments have ranged from $50 to over $1000 for a year or more, but a suggested best practice is to consider a minimum monthly payment of $500 and increase the amount based on the local cost of living over many years. For example, in its first year, Multnomah County’s Multnomah Mothers Trust program provided participants with $500 a month and also offered a one-time bonus of $3000. The Fund increased payments to $750 a month in its second year. As noted in the Magnolia Mother’s Trust Alumni Report, recipients see continued benefits once programs end, but many also revert back into a place of economic hardship. Mary Bogle, an Urban Institute researcher evaluating guaranteed income pilots, says that the data suggest that a sustained guaranteed income for at least three to five years would likely result in large economic mobility gains. With ARPA funds ending, municipalities must now look at other revenue sources to fund guaranteed income programs. 

• Focus on vulnerable populations and engage participants in pilot design: Guaranteed income programs tend to target specific populations with highest need and least access to other resources. Working with community members and organizations to identify a target population is a helpful way to center equity in program design. Once that target population is identified, meaningfully engaging anticipated participants in the design of the pilot is another best practice. Unconditionality is a fundamental requirement for any program, providing participants with a sense of dignity and autonomy. 
  
  Municipalities often work with advisory committees and stakeholder coalitions to define eligibility criteria and create accessible application processes. Demonstration programs have identified priority populations for participation based on level of income, as well as zip code, age (youth, seniors), gender, caregiving status, and more. Eligibility should remain as simple as possible based on one or a combination of the following factors:

  • Geographic eligibility based on zip code, neighborhood, or census tract. In Georgia, the GRO Fund’s In Her Hand Initiative focused engagement with Black women in Atlanta’s low-income neighborhoods and now expanded into rural Clay-Randolph-Terrell Counties, southwest of Atlanta.  
  • Means test eligibility uses an income threshold based on the federal poverty level or area median income. Programs should limit onerous means-testing processes. In contrast to current public benefits that frequently require multiple verifications and ongoing eligibility checks, guaranteed income demonstrations that use income as an eligibility factor tend to rely on the prior year’s income only.
  • Demographic eligibility is based on age, gender, race, employment or housing status, criminal history, profession, or other demographic characteristics. 

• Extend existing pilot programs: Reward success by extending pilot programs and engaging more cohorts of community members. In Denver, the Denver Basic Income Project shared mid-project results showing positive impact on homelessness and food insecurity for participants. The City of Denver and philanthropic partners committed to another round of funding to extend the life of this pilot program.

• Expand access to programs: Programs also may expand the access to these programs in particular income groups. In Cambridge, the program did not use a lottery system to determine participant selection. Instead they opened enrollment to every household that had children at or under 21 years of age with a household income at or below 250 percent of the Federal Poverty Level ($54,900 for a single parent with two children.) Out of 2000 eligible families, the City successfully enrolled 1,922 of those households.

• Create a fair and accessible recruitment and selection process: With limited resources, it is best to work with community-based organizations to reach priority residents and communicate information about the upcoming program through various communication channels with key leaders and in key languages. Once applications have been received, practitioners suggest a randomized lottery to select participants to promote fairness and limit political criticism. In Multnomah County, participants were identified through two community-based organizations serving Black communities in the Portland-metro area.  

• Control for benefits interactions and mitigate the “benefits cliff”: Increased income from a guaranteed income program can potentially create a “benefits cliff” where participants lose their existing public benefits like food assistance and health insurance. To ensure guaranteed income program design does not impact access to other public benefits, programs can classify payments to participants as gifts, seek waivers from public benefits agencies for program recipients, and, above all, make sure recipients give informed consent to participate so that they understand the potential effect on other safety net programs. In some cases, programs have allocated funds specifically to reimburse residents who lose eligibility or face increased housing costs.

• Establish an accessible, automatic income disbursement mechanism and assist un- and under-banked participants in accessing non-extractive financial institutions: Guaranteed income programs have sought out universally accessible disbursement methods that do not rely on participant access to a bank account in unavailable or potentially extractive check-cashing; instead, monthly stipends are often dispersed electronically on a prepaid and reloadable debit card. In addition, programs must identify a financial disbursement partner—a bank, credit union, or other financial institution—that participants can trust. Cities and counties participating in the Mayors for a Guaranteed Income or Counties for a Guaranteed Income support plans are partnered with disbursement intermediary UpTogether. Other programs have identified local financial institutions or online banking programs focused on unbanked individuals.

• Set up an evaluation process and storytelling mechanisms: Consistent feedback and refinement are essential to ensure that any program functions logistically, and a robust evaluation is critical to measuring program outcomes. Many pilot programs have implemented randomized control trials, creating a control group opposite of the program recipients that will not receive monthly payments but will receive compensation for participation in data collection. Collecting stories of participants can also balance quantitative data with qualitative narratives of impact. Strategic communications throughout all stages of a program should include storytelling directly from participants to promote the narrative of change. There are also a variety of online guides that offer talking points and key messaging strategies.

Where is it happening?

Guaranteed income programs have been implemented nationwide, ranging in number of participants, payment amounts, and duration. Although there are several program designs, all guaranteed income programs aim to increase financial stability and other beneficial outcomes for participants. Below are several examples that range in size, geography, and participant type.

• Cambridge, Massachusetts – Determined to center equity and access, Rise Up Cambridge is the first non-lottery based cash assistance program in the country. Unique in both its structure and size, the city of Cambridge dedicated $22 million in ARPA funds—its single largest ARPA investment—toward a guaranteed income program open to all Cambridge families with children living with incomes at or below 250 percent of the federal poverty line without restrictions. Disbursements of $500 per household began in August 2023 and will continue for 18 months. See our case study.
• Cook County, Illinois – The Promise Guaranteed Income Pilot Program is using ARPA funds to provide unconditional cash transfers of $500 a month to 3,250 participants over two years in Cook County, Illinois. Cook County supported a guaranteed income program after reviewing more than 300 studies that showed how cash transfers positively influenced participant spending by improving their economic, physical, and emotional well-being, including that of their family members. 
• Denver, Colorado – Seeking new strategies to address rising homelessness and create pathways to stable housing, the city of Denver dedicated $4 million of its ARPA recovery funds to the Denver Basic Income Project (DBIP), which provides monthly unconditional cash payments to individuals and families experiencing homelessness. Launched in January 2022, DBIP is one of the most extensive guaranteed income programs in the country focused exclusively on unhoused people and families— deploying more than $8.9 million to over 800 people. See our case study.
• Multnomah County, Oregon – Knowing the existing economic disparities for Black households, the Multnomah Mothers’ Trust Project (MMTP) was created in 2021 to support Black mothers. In collaboration with the Black Parent Initiative and WomenFirst, MMTP recruited 100 participants to receive $500 monthly payments over 12 months in FY2022. The programs’ success led to its renewal, and Year 3 of the program—funded by ARPA dollars—will run for two years with a focus on preparing participants for homeownership. See our case study.
• Stockton, California – The Stockton Economic Empowerment Demonstration (SEED) was a groundbreaking guaranteed income program from 2019 - 2021 that influenced future U.S.based programs, led by Mayor Michael D. Tubbs. Prominent successes from this program showed that a guaranteed income can lower income volatility, improve mental health, and increase full-time employment. This pilot has been referenced by several public agencies for its full program implementation and evaluation. The assessment of the SEED program found causal evidence of improved mental health, physical health, financial stability, and personal agency for participants.

What are complementary policies?

Guaranteed income programs help increase financial stability but cannot eradicate it alone. Combined with guaranteed income, these complementary public policies can make an even more significant impact on eradicating poverty.

• Other social welfare policies and programs – programs like the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance to Needy Families (TANF), Supplemental Security Income, Housing Choice Vouchers, living wage policies, and other supports help families in poverty afford basic needs. Combined with a guaranteed income, these programs should provide a robust safety net. Further, learnings from the guaranteed income pilot programs should be integrated to increase benefits access and equity.  
• Public banking – States can establish public banking infrastructure to manage disbursement of payments to participants and more importantly to provide accessible, quality banking retail services without predatory fees.  A public banking system can be established to assist local and state jurisdictions in administering guaranteed income funds through a centralized system. This system can also provide no or low-cost retail bank accounts capable of electronic funds transfers—no more paper checks.  Additionally, this system may assist in managing potential risks of benefits, cliffs and other state issues. Furthermore, a public banking system can help participants of guaranteed income programs build up experience with banking institutions to increase financial literacy and positive financial history.
• Child Tax Credit and Earned Income Tax Credit – The expanded 2021 Child Tax Credit (CTC) under the American Rescue Plan resulted in a historic low for child poverty, 5.2 percent When Congress failed to make the expansion permanent, child poverty then doubled in 2022 to 12.4 percent. Data has suggested that the expanded CTC did not discourage work among parents and caregivers, despite having no earned income requirement. Further, the long-term positive impact on children outweighs concerns about employment—an updated CTC could lift thousands more children back out of poverty. In addition, the Earned Income Tax Credit (EITC) is one of the most studied and most effective anti-poverty measures in the United States. Like the Child Tax Credit, the EITC’s anti-poverty effects increased during its expansion under the American Rescue Plan. The limitation with tax credits is the one-time delivery to households, which creates an oversized impact during the month of distribution. With the monthly payments provided during the 2021 CTC expansion, families had increased financial stability.
• Restructuring the Federal Tax Code – The Federal Tax Code has witnessed a decline in progressive taxation, which disproportionately benefits the wealthiest taxpayers, predominantly white households with generational wealth. There is a disconnect between the critical components of our tax system—federal progressive taxes offset regressive state and local taxes. Income derived from wealth is taxed at lower rates and less frequently, further expanding racial wealth gaps. In addition to this, the federal tax code is “race-neutral” and determines tax liabilities based on quantitative components rather than social and racial factors. An updated tax code can better support racial equity through raising corporate income taxes and increasing progressive revenues, increasing the EITC and CTC and ensuring full refundability, conducting adequate and complex audits of high-income filers and large corporations, taxing wealth at rates higher than income, and coupling federal tax policy with state and local policy.

Acknowledgements

This brief was initially researched and drafted by Samantha Guerrero and Leah Hubbard of Estolano Advisors, with contributions to the final draft by Madeline Neighly, Danielle Twiss, and Ashley Thomas of the Institute on Race, Power and Political Economy. Support for this policy brief was provided in part by the Robert Wood Johnson Foundation’s Policies for Action program. The views expressed here do not necessarily reflect the views of the Foundation.