In 2020, St. Paul Mayor Melvin Carter used federal, state and philanthropic dollars to launch one in all the nation’s first municipal guaranteed income projects — $500 per thirty days for 150 low-income families with newborn children.

The funds, issued across 18 months on a pre-paid debit card, carried no spending restrictions, and results were tracked by academic researchers through voluntary, compensated surveys and interviews.

The University of Pennsylvania’s Center for Guaranteed Income Research has accomplished a 59-page report on its findings, coming to the conclusion that St. Paul’s “People’s Prosperity Guaranteed Income Pilot” worked “protectively,” offering some financial respiratory room throughout the worst of the pandemic, though that soon disappeared after the money ended.

One of the vital elusive goals for participating families? Build up money savings.

18-month pilot study

Individual financial situations improved throughout the 18-month pilot study but tended to stay stable or drop afterward. Unemployment, however, declined for some participants, and still remained lower six months after the last payments, possibly reflecting the shifting pandemic-era job market.

Participants spent more time with family throughout the payment period, and household stability remained relatively regular at the same time as the stresses of the pandemic upended other young low-income families. There was an uptick in physical health and a few families switched to higher housing.

Other, less tangible effects were noted, including decreased isolation: “Participants still held improved attitudes towards life and its purpose in addition to some facets of hope and mattering six months after money disbursements had stopped, suggesting a permanent power … on participants’ sense of self.”

The participants were all chosen from town’s CollegeBound St. Paul program, which sets up college savings accounts for the families of newborns born throughout town. All participants had a toddler born in 2020. Each of the 150 families said that they had been impacted by the pandemic and had incomes at or below 300% of the federal poverty level.

Results from a high poverty city

The University of Pennsylvania researchers noted that St. Paul’s guaranteed income project was one in all the primary municipal experiments within the nation, and the primary to make use of public dollars for money transfers because the Seattle-Denver income maintenance experiment of the Nineteen Seventies and Nineteen Eighties.

Additionally they noted that St. Paul has a poverty rate — 17.6% — well above the national average and roughly twice the statewide average, and town is home to the biggest population of Hmong and Somali refugees within the nation.

Each participating family was offered optional advantages counseling throughout this system.

Of roughly 100 participants surveyed, 89 were female. About 60 were married or partnered. A couple of fourth were white, a fourth were Black, 20 were Hmong and 30 were of other backgrounds or mixed race. The common age was 31. The common household size was 4 members, with a median family income of $32,000. About half the participants had not accomplished highschool, though 34 had an associate’s degree or bachelor’s degree.

The researchers noted that while participants talked of hoping to make use of the money payments to accumulate savings for themselves and their children, debts similar to student loans, bank cards and mortgages — in addition to surprise expenses — tended to get in the way in which.

Referencing an interview with a lady named Mary, they wrote: “Many expressed plans for using the GI to pay down debt and enable saving for larger goals, but this proved difficult as emergencies and other urgent needs cropped up. Mary described saving the money as competing with life happening, like a automotive breaking down, repairs being needed on their home, or caring for her elderly father.”

Key findings

Among the many study’s particular findings:

• In the course of the pilot project, between 40% to 47% of participants said they may cover a surprise $400 expense in the event that they incurred it, but that dropped to 33% of participants six months after the money payments ended.

• In the course of the project, between 39% to 41% of participants had greater than $500 in savings, but that fell to 27% six months after payments ended.

• Income volatility, a measure of quickly changing income, varied between 3% to six% throughout the payment period and increased to 10% afterward. Overall, median household income stayed flat at about $32,000.

• Participants reported spending more time with family and experienced relative household stability throughout the payment period, decreasing isolation.

• The proportion of participants reporting feelings of “high hope” increased throughout the study from 15% toward the start, 21% at the top of the last payment period and 22% six months after payments ended.

• In the course of the project, 49% of participants were employed, in comparison with 63% six months after this system ended. A few of that increase could have reflected more jobs opening up after sudden work closures throughout the early days of the pandemic, and the role of the money payments in supporting job-seeking activities similar to childcare.

Programs across the country

The study results, in line with researchers, construct on findings from the same guaranteed income program in Stockton, Calif., where a study showed general improvements in positive outlook and greater economic gains as some recipients were in a position to afford to take day without work from work, buy a suit and attend a job interview, bettering their financial condition.

The St. Paul experiment was the primary launched under the auspices of “Mayors for a Guaranteed Income,” a coalition of mayors across the nation. Greater than 50 city-driven guaranteed income projects have since unfolded across the country, with some focused on recent moms, primary family caregivers or working parents enrolled in community college.

A program in Latest Orleans took a somewhat different approach, issuing payments to youth age 16 to 24 who are usually not at school and never working.

Other groups are also experimenting with guaranteed income, including Counties for a Guaranteed Income. Springboard for the Arts, a St. Paul-based arts organization, created the same program in 2021 focused on 25 artists within the Frogtown and old Rondo neighborhoods.

Five of the artists described their experience with creative works, including a podcast that featured various families enrolled in this system, in a mirrored image called “Artists Respond: People, Place, and Prosperity.”

In June 2022, Carter’s office announced that it might embark on a second phase of the People’s Prosperity Guaranteed Income Pilot, offering 333 families a $1,000 deposit into their child’s college savings account, on top of two full years of monthly $500 checks.

A University of Michigan researcher plans to check results to those of 333 families who were granted the $1,000 toward college savings but no monthly profit, and 333 families who were granted college savings accounts without an extra deposit.