Economic News

Paterson, NJ Releases Results of Basic Income Test Program

by Kyle BurbankFeb 27, 2024

After completing a basic income pilot program in 2022, Paterson, New Jersey has released some of the initiative’s findings.

About the program and results:

From June 2021 through June 2022, the City of Paterson gave 110 residents monthly payments of $400 with no strings attached. To qualify, individuals needed to make less than $30,000 per year while families with incomes under $88,000 could also qualify. Meanwhile, while the program was running, researchers from the University of Pennsylvania helped the city set up a control group and collect data from the pilot.

First, it was discovered that those participating in the program saw increased financial stability. While those in the control group saw their ability to cover a $400 emergency decline sharply during the one-year test, those receiving the basic income managed to maintain their ability to cover these expenses. Additionally, 15% saved more than $500 by the time the program ended.

Many who participated in the program also saw shifts in their employment, including several turning to gig work, self-employment, as well as part-time work coupled with caregiving responsibilities. At the beginning of the program, the average income among participants was $16,604. This increased to $24,810 six months after the end of the pilot program. At the same time, the control group’s average income landed at $19,078 (from $17,761 when the test period began).

Beyond financial matters, the pilot program also proved to have an impact on mental health. Recipients reported a significant decrease in stress levels, which continued six months after the program’s conclusion.

In October 2023, Paterson Mayor Andre Sayegn expanded the pilot program, selecting an additional 200 participants who will receive $400 a month for 12 months. This expansion is funded by the American Rescue Plan.

What they’re saying:

Commenting on the results of the study, Sayegn stated, “The guaranteed income program is not only about putting money in people’s pockets, it is also about restoring dignity. This pilot demonstrated the power of relatively small, no strings attached payments. Our goal is to seek more private and federal dollars to support a possible expansion of the program.”

Additionally, one program participant named Dante shared how the pilot impacted him, noting, “I have never been able to build credit at all. But now since I have the sort of steady income and I know it’s going to be coming in, I took some of the money out. I put it in a bank account, and I opened up one of those credit cards that they use like with your own money. And I’ve been able to, you know, finally have credit. And it’s going well. I have—you know, my credit is like at 712.”

My thoughts:

I’ve gone on record as a fan of the universal basic income concept. And, for the record, I was born about 20 minutes away from Paterson. So, clearly, I found this particular story to be of interest.

With that said, there are some aspects of these results that seem a little too obvious to be considered a win. For example, it makes sense that those whom you’re giving $400 a month to could be better equipped to cover a $400 expense. At the same time, though, other findings are indeed fascinating, such as the shift in employment seen among program participants and the fact that the mean income rose even six months after payments ended.

Overall, I think it’s great to see more cities trying basic income, but I can’t help but wonder how long it will be before a larger and truly universal basic income program comes to fruition.

Author

Kyle Burbank

Head Writer ~ Fioney

Kyle is the head writer for Fioney. He is a personal finance nerd, constantly looking for new apps and services to test and incorporate into his own financial game plan. In addition to his role at Fioney, he's written for other publications including Born2Invest, Lifehack, and Laughing Place, as well as his own site Money@30. He also creates personal finance and travel-related videos for Fioney's YouTube channel, which has garnered more than 2 million views. Currently, Kyle resides in Springfield, Missouri with his wife of 10 years. Together, they enjoy traveling (including visiting Disney Parks around the world), dining, and playing with their dog Rigby.

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