Guaranteed Failure: Socialist Guaranteed Income Programs Are Ineffective and States Should Ban Them

Overview  

The American Dream is centered on the idea that through work, anyone can achieve success. The antithesis of this idea is the notion that all individuals need a handout from the government to survive. However, this is exactly the idea behind universal basic income. Across the country, non-profit organizations and activist government officials are attempting to build the case for universally distributed, taxpayer-funded cash payments by running pilot programs in local communities.

Guaranteed basic income pilot programs provide no-strings-attached cash payments to individuals or households.¹ The purpose of these programs is to study the impact and build a case for a national, universal basic income program.² Guaranteed income pilot programs have been run in at least 39 states across the country, and there are at least 40 active programs.³ There have been at least 163 of these pilot programs implemented nationwide.⁴

The stated purpose of these pilot programs is to develop research that demonstrates positive outcomes in order to build a case for a taxpayer-funded universal basic income program at the federal level.⁵ Advocates for these programs explicitly call for a permanent, universal program to distribute cash to all.⁶ Such a program would devastate the economy, costing an estimated $3 trillion each year, and $40 trillion over 10 years.⁷ Despite this being the goal of those who organize guaranteed income programs, the results of these experiments are devastating to the case for universal basic income.

The results of the pilot programs that have been foisted upon communities across the country demonstrate that they are a resounding failure. In every category, from health to education to financial outcomes, guaranteed income payments had no impact, or actively harmed recipients.

The results of guaranteed income experiments show reduced work and incomes

The results of recent research into guaranteed income programs prove what common sense dictates—welfare reduces work. In one study, 1,000 individuals were given $1,000 per month for three years, compared to a control group receiving $50 per month.⁸ Those receiving $1,000 payments worked fewer hours and were less likely to be employed compared to the control group.⁹ The payments caused a 3.9 percentage point drop in labor force participation, and among those who were unemployed, those receiving payments were unemployed for longer and applied to fewer jobs.¹⁰

Additionally, household income for those receiving $1,000 payments was lower than the control group by $2,500 to $4,100 per month.¹¹ The control group had higher incomes and were more likely to be employed at the end of the study compared to the group that received payments, demonstrating that work is the pathway to achieving success, not handouts.¹² Another study showed similar results—a $500 monthly payment made to part-time workers in California caused a 13 percent reduction in workforce participation.¹³ These recent studies confirm decades-old research that showed unconditional cash transfers caused people to work less.¹⁴

Some advocates claim that the reduction in work is a good thing, because it means that people are obtaining an education or job training.¹⁵ This is also not borne out by the results of the study. There were no significant increases in educational attainment, job quality, or entrepreneurial efforts among those receiving payments.^16-18 One recipient reported using the cash payments to “take a break” from working so that he could focus on relaxing.¹⁹

There was no long-term improvement in financial well-being among recipients. The results show a temporary improvement in financial health, which was zeroed out by year three of payments.²⁰

Guaranteed income programs fail to improve health and other outcomes

It was also hypothesized that basic income would improve the physical and mental health of those receiving payments. However, once again advocates were proven wrong, and the research showed that guaranteed basic income did not improve health outcomes.²¹ Among those receiving payments, there was no improvement in any measure of physical health, including self-reported data and health data collected through blood draws.²² While recipients of the payments were more likely to visit a doctor and increased their spending on health care, this spending did not cause better health outcomes, and recipients did not report an improvement in their ability to access health care as a result of the payments.²³ Recipients also did not report an increase in accessing preventative health care or healthy habits, such as better sleep or more exercise.²⁴

Those receiving payments also showed no lasting improvements in psychological well-being.²⁵ While in the first year of payments, there was a short-term improvement to mental health, there was no difference compared to the control group in subsequent years.²⁶ There was also no long-term reduction in food insecurity.²⁷ Beyond not improving health, there is evidence to suggest that guaranteed income could be harmful, as some studies showed an increase in alcohol and cigarette consumption.^28-29

It was also theorized that guaranteed income specifically for mothers would help improve outcomes for children in poverty. Baby’s First Years was a randomized control trial of 1,000 participants that looked specifically at child outcomes if the mother received a guaranteed income payment. In this study, guaranteed income had no impact on child or maternal development, health, or well-being.³⁰ Researchers looked at seven measures of outcomes for children, and there was no improvement in any of the measures, which include language development, executive function, social-emotional problems, high-frequency brain activity, visual processing, pre-literacy, and developmental diagnosis.³¹ This study also did not find any evidence of improvements for the well-being of the mothers, with those receiving payments reporting higher stress levels.³²

Another study showed an increase in behavior challenges for children whose parents received payments.³³ This study also looked at children’s academic performance and school attendance, and found no improvements compared to the control group.³⁴                     

Across the board, the results of these guaranteed income experiments have been disappointing for advocates of the policy. The biggest category of spending across several of the pilot programs was superstore retailers like Walmart or Target.³⁵ While some claim this is evidence that the funds are being used for basic needs, it is impossible to know if the money was spent on essentials, such as food, or non-essentials like jewelry or video games. Recipients of basic income also reported spending the money on things like travel to Miami and birthday parties.³⁶

Taxpayers are spending millions on these radical socialist experiments

Some of these guaranteed income pilot programs have been privately funded by billionaires seeking to restructure society.³⁷ For example, Sam Altman of OpenAI funded a large multi-state study to bolster his belief that technology such as artificial intelligence will replace millions of jobs.³⁸

However, these socialist experiments are not a harmless pet project of a few private funders. Despite the lack of evidence that guaranteed income alleviates dependency, organizers are working hard to turn temporary, local pilot programs into a statewide, taxpayer-funded policy.

• In California, initial, privately funded pilot programs in just a few communities quickly turned into a taxpayer-funded program with a price tag of $35 million.³⁹
• In Texas, the Austin City Council recently approved $1.3 million in the budget for their guaranteed income program, which has been running since 2021.⁴⁰
• In North Carolina, the city of Durham allocated $1 million to establish and expand two guaranteed income programs.⁴¹
• In Virginia, the city of Richmond recently initiated a fourth round of guaranteed income payments that provides $500 per month for two years to eligible residents.⁴²
• Legislation was also considered in Minnesota and Washington state that would have established new guaranteed income programs.⁴³
• In Michigan, the city of Flint used a combination of state funding and federal funding from the Temporary Assistance for Needy Families (TANF) program to create a guaranteed income program.⁴⁴ In the city of Flint, all pregnant women receive a one-time payment of $1,500, then $500 per month for one year, per child, without regard to income or need.⁴⁵ The program is expected to cost $55 million for five years, and the non-profit organization behind this effort is encouraging more states to use TANF dollars to set up similar programs.^46-47

Following the COVID-19 pandemic, President Biden signed the disastrously inflationary American Rescue Plan Act (ARPA), which flooded the economy with unnecessary federal spending.⁴⁸ Funds distributed through ARPA to states and local governments were used to fund dozens of experiments in cities across the country.⁴⁹ For example, the city of San Diego used ARPA money to fund three different guaranteed income programs, and the city of Chelsea, Massachusetts created a program to give $400 per month to 2,000 families.⁵⁰  

A review of current and concluded guaranteed income programs finds that more than half were partially or fully funded by taxpayer dollars.^51-52

States have taken action to ban guaranteed income programs and more should join them

Five states have passed legislation to ban guaranteed income programs. In 2023, Arkansas was the first in the nation to pass a law to prevent guaranteed income experiments from being tested in its communities.⁵³ Similar legislation was signed into law in Idaho, Iowa, Kansas, and South Dakota.^54-57

Even in states with no active or concluded programs, there may be activist local government officials eager to start a program. To date, there are more than 170 mayors and 43 county officials who are on the record as supporting the push for universal basic income nationwide and smaller programs in their communities.⁵⁸ More states should protect their economies and citizens from these ineffective and harmful experiments.

The Bottom Line: Guaranteed income programs are ineffective, and states should ban them to promote work over government dependency.

Universal basic income disincentivizes work, promotes government handouts over self-reliance, and is antithetical to the values of hard work and self-determination that the country was founded on. However, the argument against guaranteed income is not only philosophical. The results of the largest pilot programs have demonstrated that far from lifting people out of dependency and improving their well-being, these no-strings-attached handouts actually leave people worse off than they were before. From lower employment and earnings to higher stress levels, it’s clear that guaranteed income is not the way to help the truly needy. Yet, advocates remain committed to the cause. States should prevent their communities from taking part in this effort to radically expand the welfare state by banning guaranteed income programs.

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