 Okay, good morning folks. This is the morning meeting of the House Appropriations Committee on Friday, April 9th. And as happens after we complete our budget work, and if we don't have any bills that urgently need our attention, we take this opportunity to learn. And sometimes we look at aspects of state government or sometimes we look at other sorts of topics and I invited Joyce Manchester with the joint fiscal office into have a presentation. I'm sorry about the dog on basic income and I'm going to stop talking so I can mute the dog and I'll turn it over to unmute myself, not the dog. Joyce, thank you for joining us. Thank you very much. Good morning everyone for the record I'm Joyce Manchester from the joint fiscal office. On Wednesday I was asked to prepare some notes about the program that's known as universal basic income. Sometimes it's called guaranteed minimum income, and we'll talk about maybe a semantic difference there. The basic idea is that a universal basic income program would provide monthly payments to households or individuals with no strings attached, and it's meant to cover some basic necessities. But it does not require work it does not require a certain income level. It's simply meant as a payment to help folks do better in their daily lives. Your opponents see it as a way to alleviate poverty, reduce inequality, or provide a more robust safety net to workers and rapidly changing labor markets. So the idea is that you get this money and that frees up some time and some energy so that you can decide what it is that you need to do to to have a better life. The problem is that there have not yet been enough experiments out in the real world to know exactly how people would respond to receiving this monthly payment to use however they please. So, there have been some interesting experiments in in some recent years and we'll be talking about those in just a minute. First I want to address the term guaranteed minimum income because that is a term that you often hear. And I've, I've sort of decided that some people use it one way and some people use it another way. So quite often people use the term guaranteed minimum income. When they're thinking about a program that says every person or every household should have an income of at least x, and maybe x is 40,000 or maybe it's 20,000 or maybe it's 10,000. But if you're already working and you already have that amount of income coming into your home, then you don't receive this guaranteed minimum income. And every household should have at least some amount. And if you've already got that amount coming in then you don't qualify. On the other hand, the universal basic income program would say every household gets a payment regardless of what other activity is going on in the household you could be working you could be getting a pension you could be who knows having independent source of income, but every every household could get this income. So I'm using the term universal basic income today to talk about a program in which all households would get a certain amount of income per month. Okay, so why are we hearing now about universal basic income. Well, I've got a little bit of history here just because I thought it was so interesting. And it turns out that people have been talking about universal basic income, since the early 16th century in Europe, and Thomas Payne our very own American Thomas Payne promoted it in the late 18th century here in America, specifically for young adults, he felt that this was a good way to help young young adults get established in the new world. So it's sort of hung around for a while. And then in the 1960s, a letter was signed by about 1200 economists calling for guaranteed income for every American and there was quite a lot of discussion at that time about such a program, and it helped lead to a minimum income payment by the Social Security Retirement Program, and also in the Social Security Disability Insurance Program. So now there is a minimum amount that every Social Security recipient would get if they work a minimum number of years at some wage level. So in 2016, there was a lot of discussion in Switzerland and there was a referendum which ultimately rejected a basic income program but again it did spur a lot of conversation around the issue. And you may remember that presidential candidate Andrew Yang proposed $1,000 per month to every American with no requirements. So that's a huge universal basic income program that did not come to fruition but it was certainly out there in the policy discussion. So now we come to the present day and we've seen that COVID-19 has hit a lot of people very hard. And so lots of countries, many, many countries have been discussing basic income and cash transfers. And as you know, the United States provided these cash payments $1,400 per individual to many, many people there was an upper income limit, but lots and lots and lots of people received that payment. And also we've had a reduction in the employment requirement as you know, currently if you are unemployed you do not have to be actively searching for work in order to receive unemployment insurance benefits. So that's a big change and it makes the unemployment payment more like universal basic income because it does not require that you be actively looking for work. And you should feel free to interrupt as I'm going through this. There's lots of interesting stuff going on here. So then we get to some recent universal basic income pilot projects that have been taking place. And some of these have been evaluated so we can actually think about what the results have been. The most prominent one has taken place in Stockton, California Stockton is a town that's what east of San Francisco south of Sacramento, not not a very well to do town. The mayor back in 2018 2019 was Michael Tubbs and he really spurred the the universal basic income pilot project in his city. It was called seed the Stockton economic empowerment demonstration. It was funded completely by philanthropic interests. So no tax money was used to to pay for it. Let's see recipients had to be 18 years old. The median income median household income in the city of Stockton was about 46,000 and recipients had to be living in a neighborhood where the median household income was not greater than 46,000 so these were not the folks living in higher income neighborhoods within the city. But if you lived in a neighborhood with median income 46,000 and happened to have higher income, you still could be a recipient of this of this program. So what's interesting to me is that the town, the city of Stockton arranged to have waivers so that there was no reduction in other safety net programs. So if you were receiving food stamps or rental assistance or pensions or other other unemployment insurance, those benefits were not reduced. You simply received an extra payment. And in this case it was $500 a month. And after discussions with community folks they decided to issue it via a prepaid debit card, so that nobody could feel that they were left out of the program because they didn't have a banking account or they didn't have a way to access the money and so forth. So they were mailed a prepaid debit card for $500. Okay, so this was a randomized control trial. And if you're familiar with experiments out there in the world of social policy you know that randomized control trials are the gold standard. But what happens is that you find a lot of similar types of households. You assign some of them to receive the benefit, and you include the others who don't receive the benefit, but they are the control groups so you're looking at how they behave relative to how the recipients of the monthly income would behave. So this program started in 2018 and I'm sorry in February of 2019 it actually got underway. And after February of 2020, a research group was was able to access a lot of data and study the results. So, oh yes, I forgot to mention the entire program cost about $3 million. So that's that's what it costs to get it going. And we now have these results after one year of the program. So here are some of the results that have been found to date. Now this is from the first year of the program and there will be even more research conducted once the program is completed after the two year stint. But this is what they've found so far. We have recipients experience less income volatility over time, and relative to the control group. So, here's an example of why you want to have a control group, maybe that the city of Stockton was on an upswing from February 19 to February of 2020. And maybe everybody was doing better. Okay, so this control group allows you to compare the recipients to the folks who did not get the extra money. Yes, there was less income volatility among the recipients. Secondly, and this is the result that's probably gotten the most attention recipients obtained full time employment at more than twice the rate of non recipients. So, the idea is that if you have extra income, it may mean that you can take a day off from work and look for a better job, or get the certification for the work that you're doing, or enroll in a an evening class, because you can afford a baby center for your kids, it just might offer enough flexibility, so that you can do other things. Should we stop for a question. Yeah, I did, but I'm going to assume you just called on me so thank you, Chair. Joyce, thank you. So I'm reading the footnote regarding the income fluctuation I just want to get a good definition so that I can understand that the footnote states that recipients income fluctuated 46.4% monthly so let's just round it to 50% and I'll give you an example of what I think it means. If your income was just pulling number out of the year $100, it could go down to 50 or up to 150 on a monthly basis is that is that what this, you know what the study is found. Yes, that's right. It's actually the coefficient of variation which means it's the standard deviation divided by the mean, but you don't have to get that statistical if you don't want to. So, okay, so I think I think you're on the right track. Okay, thank you. Okay, so, so now we're talking. Sorry, Joyce, another hand, Jim. Thank you, Mary, we can just call on ourselves if you that's easier. Joyce, it's interesting in looking at this. Stockton example and some of the results from the, you know, study. So, they couldn't pick the worst time with the pandemic starting in 2020 because, you know, kind of begs the question with the world turned upside down. You know, what is it, what does it really mean but I'm curious, you know, oftentimes we hear, you know, we've got a, you know, an area might have a generous safety net. But does it attract people and sometimes there's barriers to picking up and moving across the country, but I would think in a city, you might actually be able to measure that because you've got neighboring communities that wouldn't be that hard to move in, but maybe they put some, you know, barriers to doing that I'm just curious if they measured that at all what's or any change and maybe a year too early to, to knew where it was just a pilot. Participate in the program you had to be a resident of Stockton at the beginning of the program, and they're going to follow the same people over two years so I don't think it's possible to move in midstream and become part of the program. So I wanted the continuity of the same people in the program for two years. Okay, thank you. Sure. All right. Now we're good so we're talking about this employment effect and I will mention that this is a big deal in part because other experiments have not found an employment effect. There's going to be a lot more investigation of exactly why this has happened in the Stockton experiment and not in other experiments. I want to put a little bit more specifics on this. The recipients who are employed full time went from 28% of recipients to 40% after one year. And if you look at the control group, they, they went from 32% up to 37%. So, a 12 percentage point increase for the recipients and just a 5 percentage point increase for the control group. It's true that the second year of this experiment is really going to be influenced by the COVID-19 experience, which is in some sense, very sad, because it's going to put a new wrinkle into all the results. On the other hand, they're able to see how having this basic income will help people during such a big economic downturn. And that could provide some some really good insights. So, about a year from now we will tune in again and see what the results look like. Joyce, we have another question. Bob. Yes, thank you. Just quickly, what would, can you give me an example of what a philanthropic income dollar is? Well, so these are primarily nonprofits that are in the business, well, not in the business. Their goal is to explore different social experiments. So, for example, there's the economic security project who donated a million dollars to this pilot project, and they receive donations from regular people from corporations and so forth. And their goal is to try to test some new ideas and see what works out in the real world. Yes, but in, and I won't, I won't go any further than this one. I kind of thought kind of that, but California's a lot different than Vermont, as far as available. I don't have money's in that respect. Or I certainly would think so, you know. So that may be I, I have not investigated where all the philanthropic dollars came from but I would imagine that some of them are coming from nationwide nonprofits not necessarily just located in California, but we can look into that. Yeah, right. Thank you. So, so we've talked a little bit about the employment effect and how having this basic income may just allow people the freedom to explore more avenues for future employment and, and getting certifications and so forth. And there are some other notable results as well. For example, recipients were less anxious and depressed, both over time and compared to the control group. And of course when you're less anxious and depressed you probably do better on the job, and you probably are more willing to think about what comes next step after your current job. So I saw statistically significant improvements in emotional health, fatigue levels, and overall well being. And again, these are all measured using instruments that are known to people in the, in the world of measuring mental health and emotional well being and so forth the Kessler 10 and the SF 36, which means nothing to me but probably means something to some of you. And so, the researchers also asked, if you had an unexpected expense of $400 this month, how would you pay for it. And at the beginning of the experiment, the recipients 25% of recipients said they could pay for it with cash, and the others would have to borrow money who knows where they would borrow it from but they didn't have $400 in hand to pay for an unexpected expense. But after a year, that number went up to about 50%. So about 52% of people were able to pay with cash for an unexpected monthly expense. Yes, and the researchers did say that that that could be particularly important given the pandemic that hit everybody shortly after the end of the first year of this experiment. The researchers also asked how people spent this basic income, and about 37% of the money was spent on food, about 22% on sales of various kinds merchandise such as home goods clothing and shoes, discount dollar stores, about 11% on utilities 10% on auto costs, and 21% on alcohol and or tobacco. So this has always been a big question, how are people going to spend the money are they just, you know, spending it on frivolous things or are they spending it on necessary things so it's important to, to look at the data on that. So that's where we are on the Stockton pilot project some of you might have heard the NPR story Wednesday morning which spurred some of the conversation that led to this investigation. So, it is getting some attention and I, I expect it will get further attention as time goes on. Okay, so we can move on to a few other examples and I know much less about these other examples, but it's interesting to think about how different experiments were conducted. So Ontario established the basic income pilot project in April 2017. The pilot project was set up with the goal of giving fixed income to people with with lower no income so again, an income threshold. The project was supposed to run for three years. So this experiment, if there was other earnings. So if people had a job, their basic income was reduced 50 cents on the dollar. So if you earned $100 a week, your basic income was reduced by $50 a week. Okay. After about a year, the government in Ontario changed from the Liberals to the Conservatives, and the program was stopped. So instead of three years of data there's about one year and a few months of data. And of course, people felt rather annoyed, upset, and frustrated that the experiment was stopped midstream. So, there were very few employment effects detected in that experiment, but recipients did say that their health self esteem and job prospects were enhanced. That's the Ontario project. Now, this is an interesting one in Finland. 2000 unemployed folks were given about $600 a month for two years beginning in 2017 no strings attached. This was the first nationwide basic income experience, but it was not considered a big success in part because employment effects again were minimal, only a very small difference between the study group and the control group in terms of finding work. Again, the recipients did report statistically lower levels of insecurity and stress. This may be that in Finland, of course, many basic needs are taken care of by the government. So you have health insurance, you have childcare, you have lots of things that are quite different from the way the world works in the United States. Joyce, we have a question, Robin. Yeah, thanks. And thanks, Joyce. That actually was going to be my question or comment because as a Scandinavian country, I know they offer much more in the way of support. So I wonder if there's any way to control for that or, you know, look at the data in a different way because maybe it's a success in that it's less needed because there are other supports. I don't know if there's a way to look at that differently because it really isn't comparing. We have much, much more unequal distribution of wealth in our country and they do not. Absolutely. And I think as there are more experiments in different countries will be able to control for those other social factors that will give us a better understanding of what what programs would do in different settings. Okay, so this doesn't surprise me that it would be less of a success and that it would be more in a place like Stockton where the inequality is so much greater. Great. Thanks. I'm going to wrap up. I see I've just about run out of time. There's an experiment going under going on right now in Kenya, with a very high level group of researchers running the show in terms of collecting data and evaluating it. About 15,000 households in almost 300 villages in Kenya were randomly assigned to either no payment or a payment monthly for 12 years. So remember this just started in 2018 and we'll go on for 12 years. Another group will receive payments to cover basic needs for two years. And then a fourth group will get payments to as a lump sum. So just a $1,500 payment. And the experiment, it seems to be really well designed so that they can look at the various outcomes from all of these different groups. They've got a Nobel Prize winner, Abhiji Benerji, who is well known from MIT, who's going to be helping with that evaluation. So let me stop there. I see we're almost out of time. Yeah, thank you, Joyce. That was, to me, very interesting. And I had not realized that so much was happening, nor that the history of this, which I particularly enjoyed. Dave. Are we wrapping up at 930 sharp? I'll try that. Not at sharp. I think. I'm set. And that wasn't my question, but I'll try to be succinct. Joyce, could you imagine some type of hybrid in Vermont? We provide a lot of cash assistance to people. None of it a full therapeutic dose. If you're eligible, we say here's money for food. Maybe cover 30% of your food allowance. If you're eligible, we say, here's money for childcare. Doesn't cover the full cost of childcare. If you're eligible, we say here's money for housing. Section eight, you could argue might cover the full cost of housing. We provide significant amounts of money. If you're eligible for reach up, here's a monthly cash assistance doesn't cover enough to make ends meet. But if you add it all together, it's not insignificant. But today it's very categorical. If you're eligible for reach up, it's not significant enough to meet the needs for which it's it's given. Could you imagine going to the federal government requesting a waiver to pool those dollars, and then not for everybody, it wouldn't be folks, perhaps like us, but for certain income categories, and with financial coaching, etc. I would say to a person and say, with certain parameters, how would you like to use this money, and you might say, you know, I'm going to nail the housing because I want to be stable I want to have a place where I put my head on the pillow and not worry about it. I'm going to get some reliable transportation. Then I can get a job and I'll take care of my food budget, but it's more independent you might feel better about things and it might be more productive. Is there been any pilots or waivers along that line that you're aware of. Thank you. Right. So that's a great question and that's exactly why people are studying the experiments in Kenya so carefully because of course there is that lump sum. And it says here's a lot of money, you can decide how to use it some people might decide this is the time to to invest in education, and I'll skimp on housing and I'll skimp on food and whatever. Other people might decide this is the time to start a business and I'm going to plow the money into a business and so forth. So, yeah, that's the best experiment that I know about that would say, just give people a basic income and let them decide how to allocate it among the various needs that that they have. Absolutely. Yeah. So, um, Dave asked the, the more detailed question that I had had in my mind, and I was just up at the kind of boy we've tried lots of different ways to alleviate poverty, and have spent so much money over the years. In fact, there seems to be more poverty now than at least times in the past we certainly haven't made the progress that I think folks had hoped or thought we would coming out of the 30s and 40s. I'm not proposing that we do something like this but I think this is an interesting question about, can we be rethinking about how, how we support folks who who are trying to climb their way out of difficult circumstances and that would that was some of my thinking behind just asking for a presentation on it not not because there is a proposal coming, but just what we're doing doesn't seem to be working as well as we had would hope, and is there a different way to think about this. I'm not seeing any more hands and I know that we're past 930. And I just let me say, thank you very much, Joyce. And I know that you're planning on turning this into an issue brief when you have a chance and maybe it's something we can continue to use the term of art, noodling on over time. Peter. I know this is interesting. I, I, you know, I enjoyed seeing how people felt about about these, these funds and receiving these funds on a whole different topic. Hopefully, did you see my response email regarding the the pension sheet going forward. In other words what our a deck would be going forward we need to get that updated. And understand the, the, the results of the, the input results of the experience study and how it's going to impact future payments. So we do need to get that that that updated, perhaps made it can contact the the treasurer and ask for that updated sheet or we can ask Joyce Manchester to add to ask Chris Roup to, to get that together or both. Yeah. So, thank you Peter yes I did see your email and, and we will get that information. So, let's say thank you to Joyce and let her get on with her day. Appreciate it again thank you for responding so quickly to our request. Thank you and if folks have other questions just send them along because I do plan to finish up an issue brief in the next week or so, so if you have more questions let me know. Okay, good. Thank you. Bye bye. Folks, we, the floor is now we have, you know, been scheduling things for next week we are not meeting on Monday we will meet on Tuesday. I forget what time. So far it's the afternoon starting at 115. So pay attention to because we're on the floor in the morning. So pay attention to email just to see how the agenda gets updated. Yes, I see any other questions or thoughts Robin. So we're done for the day in this committee. Yeah, yeah. Well, you picked a lovely couple of days for this we appreciate it madam chair we, we need the spring weather and to get restored. I think restoration is in order for all for this committee you guys worked really hard. So my thanks have a terrific beautiful weekend and we'll see everybody on Tuesday.