UPenn study: St. Paul’s guaranteed income pilot eased financial stress

A guaranteed income pilot program that launched in St. Paul during the COVID-19 pandemic increased households’ financial stability and improved recipients’ general well-being, a new study shows.

St. Paul’s People’s Prosperity Pilot (PPP) began in October 2020 in hopes of studying the effects of guaranteed income. In total, 150 households were selected to receive monthly unconditional payments of $500 over the course of 18 months. The families were chosen among enrollees in the CollegeBound St. Paul program — which deposits a $50 seed into a college savings account for St. Paul newborns — and had to earn 300% of the federal poverty level or less and attest that they were in some way affected by the COVID-19 pandemic.

Federal CARES Act funds, state grants and private philanthropy combined to pay for the pilot.

The University of Pennsylvania’s Center for Guaranteed Income Research surveyed participants at the beginning of the pilot and at six-month intervals afterward, including half a year after the pilot ended.

Overall, researchers found the monthly payments provided a cushion for houses experiencing financial constraints. During the course of the study, between 40-47% of participants could afford a $400 expense; six months after the pilot ended, that number fell to 27%.

“Pre-pandemic participants were already sustaining their families on constrained incomes marked by income volatility,” the study’s authors state. “However, while receiving the guaranteed income, participants on average experienced a stable sense of overall financial well-being and a reduction in income volatility, felt better prepared to withstand an unexpected financial emergency, and were able to save more money, despite the pandemic-related economic stressors.”

Additionally, the proportion of employed participants increased from 49% at the beginning of the study to 63% six months after the pilot, but researchers acknowledged that high unemployment during the height of the COVID-19 pandemic likely influenced this trend.

The full Penn study can be viewed below: