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The city of St. Louis is giving out $500 a month to 540 families, and in just three months recipients say it's helped them pay off debts and their bills.
The guaranteed basic income pilot program, launched at the end of last year, is one of several similar initiatives that have rolled out in cities across the US in recent years — and the evidence shows they are working.
In St. Louis, recipients were chosen from over 5,500 applicants. In December, they received their first $500, which is issued via a debit card and can be spent on anything.
Every month, the city is given reports from the card issuer with broad spending category data.
"The main categories where we see spending is pretty much where we anticipated," Adam Layne, the St. Louis city treasurer, told Business Insider in an interview. That includes utilities, groceries, and other bills, like rent or a mortgage, as well as outstanding debt. Food and nutrition was also one of the biggest categories.
Layne said some recipients said they were one car payment away from losing their car — which would mean being unable to get to work or get their kids to school — but that the payment helped them avoid it.
"Similarly, we had folks that were one missed payment away from being out of their home," he said.
Some recipients have used the basic income payments to get out of predatory payday cycle lending, where they were paying 500% interest on a $100 loan, he added.
Other notable spending categories include phone and internet bills as well as books and school supplies, Layne said the data showed.
The participating families were chosen in November based on just a few criteria. They had to be residents of St. Louis, have a school-age child, and have had a negative financial impact from the pandemic. They also needed to make less than 170% of the federal poverty level; for a family of two, for instance, that would be $33,524.
The pilot program, which is set to last for 18 months, is primarily funded by money St. Louis received from the American Rescue Plan. Twitter cofounder Jack Dorsey's #startsmall philanthropic initiative also contributed, allowing the program to take on an extra 100 families.
Layne said the guaranteed basic income program took about a year and a half of planning and coordinating with partners, including researchers at Washington University in St. Louis. He said they are committed to gathering quantitative and qualitative data to measure the success of the program and that an in-depth progress report is planned for the halfway point of nine months.
In the short term, measuring the program's success means tracking what recipients are spending money on and the immediate impacts it's having on their lives. That could mean if a person is able to go from having two jobs to one job and spend the extra time providing academic support to their kids.
In the long term, that could mean the recipients are in a more stable place financially at the end of the 18 months.
"I do see it as an opportunity for people who are struggling to make ends meet to get to a place of stability," Layne said. "Then from that place of stability, they can actually make better decisions, and decisions that are going to impact them long-term."
He said the plan is to track recipients well after their participation in the program to measure the long-lasting impacts. For instance, recipients may be able to raise their credit score, something that 10 years down the line could make them more likely to become homeowners.
For Layne, a large measure of the program's success will simply be if they can continue it beyond this initial pilot program and do another cohort of recipients.
"We want to get people to a place of thriving rather than surviving," he said, adding, "That's why the success of the program is critical to be able to show the data about what impact is this actually having on St. Louisans, and then how that impact then translates into, honestly, better options for the city."
