California lawmakers just approved the nation’s first guaranteed income program

dollar bills
  • California lawmakers approved a program that would provide monthly checks to residents.
  • This guaranteed income program will prioritize pregnant people and those aging out of the foster system.
  • The state is the first to implement this type of program, which many Democrats have been pushing for.
  • See more stories on Insider’s business page.

In the first-of-its-kind state initiative, California just approved a program to distribute monthly checks to its residents, marking a step toward a universal basic income in the country.

On Thursday, California’s state legislature unanimously passed a $35 million guaranteed income program funded by taxpayer dollars, in which residents can receive up to $1,000 monthly checks. According to the text of the bill, the program would prioritize residents who age out of the foster system and pregnant individuals, and it does not contain any restrictions on how the monthly payments should be spent.

“I’d like to thank my colleagues for partnering with me on this important work and investing in this concept that will uplift the lives of so many,” California State Senator Dave Cortese, who advocated for the program, said in a statement. “I’m excited that 40 million Californians will now get a chance to see how guaranteed income works in their own communities.”

Cortese added that this program is modeled after a successful universal basic income program passed in Santa Clara County last year, which offered $1,000 monthly checks for a year to young adults who were no longer eligible for foster care.

The California Department of Social Services will administer the funds equitably for both rural and urban applicants, and the bill now heads to California Gov. Gavin Newsom’s desk for approval.

The idea of a universal basic income is becoming increasingly popular. After the pandemic spurred Congress to approve three stimulus checks for Americans, some Democrats began to call for those checks to continue well beyond the end of the pandemic.

On March 31, in the midst of infrastructure negotiations, 21 Democratic senators urged President Joe Biden in a letter to include recurring direct payments in his infrastructure plan, saying that when checks ran out after the CARES Act, poverty rose.

Insider also previously reported that a fourth and fifth stimulus check could cut the number of Americans in poverty in 2021 from 44 million to 16 million while helping close imbalances in poverty, income, and wealth between white Americans and Americans of color.

Biden has not yet commented on if recurring direct payments will become a reality, but California might have paved the way for other states to follow suit and amplified Democrats’ calls to give every resident guaranteed monthly payments.

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The former head of Y Combinator wants to distribute UBI via cryptocurrency – and is testing an eye scanner that would identify recipients

In this photo illustration of the litecoin, ripple and ethereum cryptocurrency 'altcoins' sit arranged for a photograph
Jack Taylor/Getty Image

  • A new cryptocurrency is aiming to distribute wealth to everyone on earth, Bloomberg reported.
  • Y Combinator’s Sam Altman thought of the concept of Worldcoin in 2019.
  • Now, the creators have developed a way to scan people’s irises to assign the cryptocurrency.
  • See more stories on Insider’s business page.

A new cryptocurrency aims to distribute wealth to “every single person on earth” with the help of an orb-shaped device that would scan people’s irises to identify them, according to a new report from Bloomberg.

Sam Altman, the former president of Y Combinator, a seed-money company that helped grow Airbnb and Dropbox among others, thought of the concept of Worldcoin in 2019 in the hopes of capitalizing on the economic idea of universal basic income, Bloomberg reported.

According to an online job listing, the new cryptocurrency is “free, frictionless and not controlled by anyone.”

Worldcoin hopes to reach mass adoption by “distributing it to everyone on earth through a novel approach: a dedicated hardware device ensuring both humanness and uniqueness of everybody signing up, while maintaining their privacy and the overall transparency of a permissionless blockchain,” the post said.

The silver, basketball-sized device would scan peoples’ irises to create a personal identifier for the coin and prevent users from defrauding the system, Bloomberg reported, adding that the creators said the image isn’t stored. Bloomberg said the device is being tested in various cities with Bitcoin because Worldcoin itself is not yet ready to hit the market.

Altman – who is one of three founders and now serves as an advisor, according to the report – did not immediately respond to Insider’s request for comment for the story. Firms backing Worldcoin include Andreessen Horowitz, the venture capital firm behind Coinbase. The firm also did not respond immediately to Insider.

Worldcoin has yet to be formally unveiled, Bloomberg reported, as the founders, who believe crypto could give the whole world access to financial systems, are considering how to distribute the currency to everyone.

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Half of Americans want a major overhaul to the US economy, Pew says

NYSE Wall Street coronavirus
  • Half of Americans believe the US economy needs “major changes” or to be “completely reformed.”
  • People largely backed job training but were less supportive of universal basic income, Pew said.
  • Support for economic reform was far more common among liberals than conservatives, Pew added.
  • See more stories on Insider’s business page.

As the US enters a new normal, half of its population is ready for an economy that’s starkly different from that which came before.

About 40% of surveyed Americans believe the economy “needs major changes” as it emerges from the coronavirus pandemic, according to a Pew Research report published Thursday. One in 10 Americans said they saw a need for the country’s economic systems to be “completely reformed.”

Source: Pew Research Center

Conversely, only 12% of the US sees no need for economic change. Roughly 38% said the country’s economy needs only “minor” changes.

Pew conducted a survey across the US, UK, France, and Germany from November 10 to December 23. More than 4,000 adults across the four countries responded.

When asked which potential economic policies should be instituted, three-quarters of surveyed Americans said it’s “very important” that the government provide more job and skills training for workers. Nearly half of respondents deemed an increase of government benefits to the poor as “very important,” and 44% said it’s critical the government contribute to affordable housing.

About 45% said it’s very important for lawmakers to lift taxes on the wealthy. President Joe Biden proposed such tax hikes to cover the costs of his upcoming American Families Plan, which includes funds for universal pre-K, paid family and medical leave, and an extended child tax credit. The White House has said it won’t lift taxes on households earning less than $400,000 per year.

Only 31% of Americans characterized universal basic income as “very important,” making it the least supported of the five potential policies. Still, that marks a shift from discussions a decade ago, when universal basic income lingered on the fringes of progressive economic policy.

Support for economic reform was far more common among left-leaning respondents. More than three-quarters of US adults on the left said the country needs a complete overhaul or major changes, according to Pew. That compares to just 32% of right-leaning respondents and 46% from moderates.

Support of stricter government regulation received a more mixed response. Half of surveyed Americans said it’s generally bad for society if the government regulates business, while 46% said such regulation is good. That differs from responses in Europe, where the majority of residents in the UK, France, and Germany supported business regulation.

Even if major economic changes remain years away, Americans are largely optimistic as the country rebounds. Roughly 78% of US respondents said they have either “somewhat good” or “very good” chances at improving their standard of living. Only 7% said they have “very bad” chances, and 11% said their odds are “somewhat bad.”

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Los Angeles could offer thousands of poor residents $1,000 a month, ‘no questions asked’

california homelessness los angeles
Echo Park Lake Thursday, March 25, 2021 in los Angeles, CA.

  • Poor residents in Los Angeles could receive $1,000 direct monthly payments as part of the city’s budget.
  • LA Mayor Eric Garcetti outlined the $24 million proposal during his annual “State of the City” address.
  • The payments will “begin to tear away at poverty in our city,” Garcetti said.
  • See more stories on Insider’s business page.

Over one in five residents of Los Angeles live in poverty, making it one of the poorest big cities in the nation – a fact most visible in the tens of thousands of people who sleep on its streets every evening. But some could soon receive a cash infusion from their government.

“$1,000 a month to 2,000 households for an entire year,” Mayor Eric Garcetti said Tuesday, “no questions asked.”

In his annual “state of the city” address, Garcetti outlined a $24 million proposal to lift up the city’s poor residents without the bureaucracy of traditional welfare programs, which tie assistance to specific goods, such as food or housing. The aid, according to LAist, will be directed to families that live at or near the federal poverty line.

The “direct help,” Garcetti said, will “begin to tear away at poverty in our city and show this nation a way to fulfill Dr. King’s call for a basic income once and for all.”

In the 1970s, Dr. Martin Luther King advocated for a guaranteed income equivalent equal to the median wage, which would be over $30,000 today. Garcetti’s proposal will only make a dent in a region where hundreds of thousands of people live in poverty.

But, the Los Angeles Times reported, any city-wide effort will be supplemented by district-level initiatives, including one in South Los Angeles to provide $1,000 annual cash assistance to single parents.

Last year, Garcetti also announced that thousands of out-of-work food service employees would receive a one-time payment of $800, using private funds raised by his nonprofit organization.

Humanity Forward, the nonprofit of former presidential candidate Andrew Yang who was a major proponent of universal basic income and ran his campaign on the platform, partnered with the $1K Project last August to bring $1,000 direct monthly payments to struggling American families amid the ongoing COVID-19 pandemic.

“If Congress had its s— together, we’d all be getting direct, recurring payments throughout this pandemic, and something like what we’re doing with $1K Project would be less vital,” Yang, who is now running for mayor of New York, told Insider in August. “In the absence of congressional action, then what we’re doing seems even more immediate and vital.”

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Andrew Yang on which would more broadly help the most Americans: universal basic income or higher wages

Andrew Yang
Andrew Yang rides the Staten Island Ferry on February 26 in New York City.

Most progressives – really, most Americans – agree that income inequality is a tremendous problem. For over 40 years, the vast majority of profits have gone to the wealthiest 10% of the economy, and a gigantic portion of those gains have been scooped up by the wealthiest .01 percent. The $50 trillion dollars that used to go to the American working class has now been leveraged to a fraction of the population, and that disparity is now obvious to everyone.

In this case, though, identifying the problem is the easy part. A lot of very smart people have many different ideas about how to alleviate income inequality, and many of these ideas aren’t compatible with one another. So decisions will have to be made about how to get that money back in the pockets of ordinary Americans.

For Nick Hanauer, the host of the “Pitchfork Economics” podcast, the first step to address income inequality was easy. In Washington state, Hanauer became one of the leading voices in the Fight for $15, which called for a $15 minimum wage. Now that it’s been endorsed by almost every single high-profile Democratic politician, $15 seems obvious, though Forbes in 2013 characterized it as a “near insane” proposition.

In the latest episode of “Pitchfork Economics,” Hanauer describes those early days of the Fight for $15 to former presidential candidate and current New York City mayoral candidate Andrew Yang. And Yang is in agreement with Hanauer’s assessment that raising the minimum wage is good for the economy.

“Just about everything out of your mouth, I’ve always agreed with,” Yang told Hanauer. “But I think you would agree with me, particularly during this pandemic, that the extremity [of America’s income inequality] is accelerating and getting worse.”

Yang’s approach to fixing the economy

The entrepreneur and New York City mayoral candidate is perhaps the most high-profile proponent of the universal basic income (UBI), in which the government would send every American a check that they could then spend however they wish.

Andrew Yang
Andrew Yang.

“If I had a choice between something like universal basic income and a higher minimum wage, I would choose universal basic income,” Yang said. “But if I don’t get universal basic income, then I’m all for raising the minimum wage.”

“I’m on exactly the other side of that trade,” Hanauer said. “I really do believe in capitalism. I do believe that it is a great economic system – the best ever devised.” At the same time, Hanauer rejects the idea that “the whole system will come tumbling down if companies are required to pay their workers enough to live in dignity without food stamps.”

Yang told Hanauer that when he considered getting into public life, “I looked at the political possibility of changing the labor standards along the way you suggest.”

Universal basic income versus a higher minimum wage

Yang believes that the idea of a UBI is simpler and more suited to the modern world than reforming and updating the suite of labor standards instituted in the first half of the 20th century. He considers automation to be the leading problem for American workers in the 21st century, and believes that a significant portion of the American workforce will be made obsolete once technologies like self-driving cars and trucks finally mature.

If Yang’s dire prediction is correct, and millions of Americans are forced out of work and essentially considered useless to the labor force, a UBI might be better-suited to solve that crisis.

Nick Hanauer 100 list

Hanauer, however, believes that the coming wave of automation is not significantly different than the uncountable waves of automation that workers have lived through since the dawn of civilization. The invention of assembly lines, industrial farming equipment, and personal computing caused disruption in their fields that temporarily put people out of work, but all three technologies created jobs in the long run.

Hanauer believes that the real battle is to make sure that the newly created jobs pay enough that workers can afford to fully participate in the economy, because their consumer demand is what creates more jobs.

A meaningful path forward

The problem with internal debates among progressives is that there is no one right answer, and that these economic ideas are largely exclusive of each other – no politician that I know of is simultaneously calling for expanding the minimum wage and also establishing a regular series of UBI payments for all Americans.

The path forward can only be found through good-faith, informed debates like this, deliberating what action is possible, which outcomes are preferable, and who is persuadable. The debates of today are the crucibles that shape the policy of tomorrow.

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A California city gave some residents $500 per month. After a year, their unemployment rate had dropped, while the control group’s rose.

stockton basic income experiment
Lorrine Paradela, a recipient of basic income in Stockton, California, walks with Sukhi Samra, the pilot program’s executive director, on February 7, 2020.

It’s a decades-old debate: Does paying someone simply for being alive make it easier for them to find a job or discourage them from seeking work? 

One city got its answer on Wednesday: A new report evaluated a basic-income pilot in Stockton, California, that gave 125 residents $500 monthly stipends for two years. The results showed that unemployment among the recipients dropped during the program’s first year, from 12% in February 2019 to 8% in February 2020.

The experiment’s control group – residents who didn’t receive monthly stipends – saw unemployment rise from 14% to 15% during that year.

The results challenge one of the most common criticisms of universal basic income: that unconditional cash reduces the incentive for people to find jobs. 

“I remember telling people, ‘I think that $500 will allow people to work more if they choose to do so,'” Michael Tubbs, the city’s former mayor, told Insider. “And that playing out in the data – it makes me so proud.”

Tubbs launched the pilot program, officially known as the Stockton Economic Empowerment Demonstration (SEED), in February 2019. The experiment ended in January, so there’s still a year’s worth of data left to analyze, but so far, the trial seems to have been a success.

In addition to a decline in unemployment, SEED recipients also saw a rise in full-time employment, from 28% to 40% during the program’s first year. Full-time employment increased less dramatically in the control group, from 32% to 37%.

A test of basic income

Stockton basic income debit card
SEED participants received their monthly payments on a debit card.

Basic-income experiments are hard to compare, since they often evaluate different types of outcomes – such as participants’ happiness, wellbeing, life satisfaction, or unemployment. Groups enrolled in such programs also differ in size or socioeconomic status.

Still, for the most part, studies have shown that cash benefits don’t keep people from entering the workforce.

A 2018 report found that the Alaska Permanent Fund, which has been distributing cash to state residents since 1982, increased part-time work by 17%. But the cash transfers had no effect on overall employment numbers (the share of people who had jobs), according to the researchers. This might be because more people assuming part-time work for the first time, but the number of available jobs climbed.

Finland’s basic-income trial, conducted from January 2017 to December 2018, also found that employment rates between stipend recipients and those in the control group were about even. But the results were complicated by the fact that participants had to give up part of their standard conditional benefits – things like housing allowances and illness compensation – to receive their monthly stipends. 

For Stockton’s experiment, the qualifications were simple: Participants had to be adults living in a neighborhood where the median household income was the same as or lower than the city’s overall, about $46,000.

“We were the first city to do it,” Tubbs said. “We announced we were doing it before my good friend Andrew Yang even announced that he was running for president, much less talking about a universal basic income.”

Yang, a 2020 Democratic presidential candidate, made basic income a prominent part of his campaign platform, pledging to give $1,000 a month to every US citizen over 18.

‘Now we have data’

Michael Tubbs
Michael Tubbs discusses his basic income program in Stockton, California.

Tubbs said he wasn’t surprised to see unemployment decline among Stockton’s basic-income recipients. 

“The big change was how it helped me see myself,” Tomas Vargas, a SEED recipient, told The Atlantic. “It was dead positive: I am an entrepreneur, I think of business ideas, I make business choices, I want to be financially stable.” 

Tubbs has a theory for why full-time employment increased as well: Before the stipends, residents who held part-time gigs may not have been able to afford time off work to apply for full-time jobs. 

“It’s hard when you’re on the wheel to get off the wheel,” Tubbs said. “And that’s what people were saying: ‘We work part-time, we need money today, but if I had the opportunity to apply full-time, I would take it.'”

Stockton’s trial bolsters decades of research on guaranteed income, so Tubbs thinks it could help bolster a case for a national basic-income policy

“People said they wanted data,” he said. “Now we have data.”

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