In 2022, the city of Austin began an experiment to address a growing issue: As the local technology industry exploded, city residents were struggling to deal with a growing housing crisis that was especially crippling low-income residents.
Austin gave 135 low-income households $1,000 each month for a year, and tracked how they used the money and affected their lives. The result, one year later, was that they mostly used the money to pay their rent and other housing costs, according to a new report.
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The experiment was not the first in the U.S. to test the effects of temporarily establishing a universal guaranteed income—Stockton, California, most famously went through with a similar pilot program in 2019, as have other cities and counties since then—but it adds to the growing amount of evidence that the money is used by the families that receive it in a responsible manner to improve their lot, rather than thrown away on frivolous items.
An analysis of the experiment, released this month by the Washington D.C.-based think tank The Urban Institute, found that the families spent more than half of the money on housing costs, which helped them catch up on rent, reduce the likelihood they’d get kicked out of their home, and otherwise improve their housing situation “substantially.”
The extra money provided additional benefits as well. Most people’s employment remained stable, and the 9 percent who did work less used the extra time to learn new skills to get better jobs in the future or take on more caretaking duties at home. Another 7 percent said they worked more as a result of the extra money, using the cash to “break down barriers to better jobs,” including by covering commuting costs.
Take one security guard who works multiple jobs each day. According to The Urban Institute, he said that the extra money helped me cover the cost of cabs to work, which allowed him to get there early. Before he had the money, he had to talk roughly eight blocks to a bus, which was often late. “It’s hard trying to manage that,” he said.
The majority of funding for the experiment was covered by the city of Austin, and the rest was covered by philanthropic donations. The city has said it had studied other similar experiments, such as the one in Stockton, as well as in cities like Hudson, New York, and Oakland, California.
“We know that if we trust people to make the right decisions for themselves and their families, it leads to better outcomes,” the city explained on its website. “It leads to better jobs, increased savings, food security, housing security. The change is measurable, multi-generational and has a community-wide impact.”
The experiment is part of a broader push around the country and the globe to give low-income families no-strings-attached money. In the U.S., the issue is being championed by organizations like Mayors for a Guaranteed Income, which was founded by former Stockton Mayor Michael Tubbs.
Earlier this month, Harris County, Texas, which was ravaged by Hurricane Harvey in 2017, announced a similar pilot program, in which it will give $500 to 1,900 families. The initiatives have led to some pushback, including by Republican Texas State Senator Paul Bettencourt, who this month called Harris County’s plan unconstitutional.
One notable negative effect of Austin’s program did crop up: uncertainty surrounding what will happen when the experiment ends.
Six months in, participants were less likely to be constantly worried about their financial position. But, as the end of the experiment approached, “a substantial number of participants told the research team that they were deeply concerned about being able to make ends meet once the pilot ended,” The Urban Institute said.
