On Monday, Compton, CA, Mayor Aja Brown announced The Compton Pledge. The pledge is a first-of-its-kind initiative and will distribute recurring, direct cash relief to around 800 low-income residents for two years, starting later this year. 

Fox Business reports: 

It’s the largest city-led guaranteed income program in the U.S. to date and comes amid a nationwide reckoning on racial injustice and inequality. According to the city, all funds are being raised privately in partnership with the Jain Family Institute, an applied research group, and the Fund for Guaranteed Income, a registered public charity launched to steward guaranteed income as a path to racial justice.

Those who were formerly incarcerated, as well as illegal immigrants, are eligible for the program and may receive regular cash payments worth at least hundreds of dollars. 

Many of the traditional arguments against a universal basic income involve the astronomical cost. While this trial works around this issue by using privately raised funds, this is not a long-term solution. Economists Hilary W. Hoynes and Jesse Rothstein estimate that providing $1,000 a month to every American over 18 years of age would cost the U.S. $3 trillion per year, almost doubling our current budget. Instead of astronomical spending plans, government policies should focus on strengthening programs that are proven to help people get out of poverty and gain independence. 

In addition, a guaranteed income would be an untargeted approach that would go to rich and poor alike. While the poor might live off of the UBI, the rich are provided with an extra source of income to multiply through investment, and the gap between the rich and the poor is only larger. The Compton Pledge combats this issue by only issuing cash payments to low-income individuals but the payment cutoff would be difficult to determine on a larger scale.

Finally, a guaranteed income will not motivate the unemployed to search for jobs. While the unemployment numbers have increased dramatically throughout the coronavirus lockdowns, the monthly jobs reports from the U.S. Bureau of Labor Statistics have shown that unemployment is continuing to drop. The September report showed that a million fewer workers were unemployed that month and the unemployment rate fell to its lowest post-pandemic level. 

It will be interesting to see how the Compton trial run goes over the next two years but individuals should not be overly excited about the plausibility of universal basic income.