Universal Basic Income in America
By: Nisha Shenoy
In 2016, national interest in Universal Basic Income (UBI) resurged: over the last ten years, the US has begun conducting experiments and pilot programs to explore the potential outcomes of implementing UBI throughout the country. Now, their results offer us insight into how unconditional cash transfers affect poverty, employment, and individual well-being.
UBI, simply put, is the idea that every individual should receive a regular, unconditional cash payment–a universal basic income–such that they are guaranteed a basic standard of living. It offers a unique kind of security, promising no forms, no conditions, and no stigma for the people it assists. Unlike traditional welfare programs that require proof of financial challenges, UBI attempts to ensure stability before the hardship begins. While no country has yet to implement a true nationwide UBI, cities across America have experimented with the policy implementation, testing smaller, targeted versions known as Guaranteed Income (GI) programs.
These GI pilots narrow the focus of UBI theory: rather than providing universal payments, they specifically support low-income and marginalized groups. Participants typically receive monthly payments between $500 - $1,000 for one to two years, with researchers tracking changes in housing, employment, and mental health. By limiting the scope of the test programs, policymakers are able to more directly analyze the outcomes for the group(s) that need financial support most. As of January 2025, 57 GI pilots were active, with over 20% of them in California. Funded by a mix of city budgets and philanthropic donations. The pilots aim to test whether direct cash transfers are more effective than conditional aid at offering financial stability to individuals.
So far, the outcomes of the studies lean in favor of GI. In Los Angeles, the BIG: LEAP program provided $1,000 per month to 3,200 families over the course of one year, finding a significant improvement in food security, mental health, and family dynamics. Denver’s Basic Income Project, which targeted individuals experiencing homelessness, reported that the number of participants in stable housing doubled in the first ten months of the pilot program. Even in smaller programs, like Elevate Boulder, researchers found significant declines in food insecurity and anxiety amongst participants. While each city’s pilot honed in on different effects of financial hardship, they all recorded similar results, most commonly being improved stability. This pattern in their outcomes reinforces how the strength of GI programs is in their primary, shared characteristic: unconditional income. Unlike federal aid, offering direct cash appears to lessen financial hardship efficiently while allowing individuals to maintain their dignity.
There are a few concerns regarding UBI theory and its potential effects on society: Would guaranteed income discourage people from working? Would the cash transfer be offset by reduced paid employment? Economists have theorized that reducing the need to earn could decrease the labor-force participation rate, slowing growth, and increasing dependency on financial aid. An ongoing GI pilot in Minneapolis is analyzing this issue. According to their findings from their 12-month survey, there was no significant impact on the labor supply due to the GI aid. Rather, instead of leaving the labor force, participants used their payments to pay for expenses that had previously burdened them, or prevented them from working consistently (e.g., childcare, medical bills, housing repairs, etc).
This result challenges what many economists have believed to be true: that financial support automatically decreases recipients’ motivation. Instead, this GI program found that participants had an increased incentive for labor force participation by removing “benefit cliffs”, where an increase in income can cause an individual to lose financial aid from the government suddenly. With unconditional payments, every dollar earned is viewed as a step towards financial security, not towards reducing their benefits. In this program, participants were rewarded for their effort, allowing individuals to take risks like furthering their education, starting new businesses, or changing their career path without fear of financial ruin.
Today, the main constraint of implementing a national UBI falls on its funding. While localized pilot programs are sustainable on small scales, a nationwide UBI would require a sharp increase in government spending. Based on data from the Commerce Department, the federal government would have to pay between $2 to and 4 trillion a year to expand even the local pilots – a 50% increase in current spending. An increase of that scale would significantly increase the national deficit and burden taxpayers with much of the cost. Further funding towards UBI could limit investment in other federal initiatives like funding rural hospitals, providing affordable housing, or promoting secondary education.
For now, the local pilot programs serve as a case study into the potential benefits of implementing UBI before any implementation on a national or state level. Federal programs like We’ve seen improvements in housing stability, mental health, and child welfare without a loss of incentive for work. From here, the challenge to face is a matter of scale. With almost a decade’s worth of evidence proving the efficacy of guaranteed income, the question that economists and policymakers must answer is no longer whether UBI works, but rather what risks the country is willing to take in order to make these benefits universal.
