Oakland to give low-income residents $500 a month, no strings attached

The mayor of Oakland, California, on Tuesday announced a privately funded program that will give low-income families of color in the city $500 per month with no rules on how they can spend it.

The program is the latest experiment with a "guaranteed income," the idea that giving low-income individuals a regular, monthly stipend helps ease the stresses of poverty and results in better health and upward economic mobility.   

The idea isn't new, but it's having a revival across the U.S. after some mayors launched smaller scale pilot programs across the country in a coordinated campaign to convince Congress to adopt a national guaranteed income program.

The first program launched in 2019 in Stockton, California, led by former Mayor Michael Tubbs. Tubbs, who later founded the group Mayors for a Guaranteed Income, expects six other cities to launch similar programs by this summer.

An analysis of the first year of the Stockton Economic Empowerment Demonstration (SEED) found that compared to a control group, residents who received regular payments experienced less income volatility, secured more full-time employment, were better parents and partners, and even saw improvements in their health and overall well-being.

Oakland Mayor Libby Schaaf said of her city's new initiative: "We have designed this demonstration project to add to the body of evidence, and to begin this relentless campaign to adopt a guaranteed income federally," 

The "Oakland Resilient Families" program has so far raised $6.75 million from private donors including Blue Meridian Partners, a national philanthropy group. To be eligible, individuals must have at least one child under the age 18 and an income that is at or below 50% of the area median income — about $59,000 per year for a family of three.

Half the spots are reserved for people who earn less than 138% of the federal poverty level, or about $30,000 per year for a family of three. Participants will be randomly selected from a pool of applicants who meet the eligibility requirements.

Local people of color only 

Oakland's project is significant because it is one of the largest efforts in the U.S. so far, targeting up to 600 families. And it is the first program to limit participation strictly to Black, Indigenous and people of color communities.

The reason: White households in Oakland on average make about three times as much annually than black households, according to the Oakland Equity Index. It's also a nod to the legacy of the Black Panther Party, the political movement that was founded in Oakland in the 1960s.

"Guaranteed income has been a goal of the Black Panther platform since its founding," said Jesús Gerena, CEO of Family Independence Initiative, a partner of Oakland's program. "Direct investment in the community in response to systemic injustices isn't new."

The idea of a guaranteed income dates to the 18th century. The U.S. government experimented with free money in the 1960s and 1970s when Republicans Donald Rumsfeld, later a defense secretary, and Dick Cheney, the future vice president, oversaw four programs across the country during the Nixon administration.

Analyses of the programs found that the money did not stop people from working, leading Nixon to recommend expanding the program. But the proposal never made it through Congress.

Decades later, progressive mayors and other proponents of basic income have revived efforts to to bring the concept into the mainstream. 

A review of the Stockton SEED program which concluded in February found that after one year of receiving a guaranteed income, 40% of recipients had full-time jobs, compared with 28% before the program started.

Former Democratic presidential candidate and current New York City Mayoral candidate Andrew Yang has also long advocated for a version of a basic income for every American adult. 

Yang's "Freedom Dividend" program could have expanded the U.S. economy by 12.6% to 13.2% — or $2.5 trillion by 2025 — and would increase the labor force by up to to 4.7 million people, according an analysis from the Roosevelt Institute.

A form of guaranteed income could take effect for many parents this year as part of the latest federal stimulus package. Congress expanded the child tax credit, with the goal of giving many parents temporary monthly payments of up to $300 per month. 

In California, a proposal by Assemblyman Evan Low to give low-income adults $1,000 a month could cost up to $129 billion annually — more than half the state's total budget — paid for by a new 1% tax on incomes above $2 million. Low said his bill is unlikely to pass this year, but he said his goal is to get people comfortable with the idea.

"The initial shock seems to wear off the more people are educated and realize the benefits of having more control over their lives," Low said.

Critics of such programs fear that they could eliminate other safety net programs, like Social Security and food stamps. But Oakland's Schaaf insists "the social safety net programs must remain."

"We believe that those safety net programs should not go away, but should be supplemented with unconditional cash that gives families the dignity and flexibility to meet their needs," she said.