California city to enroll 600 families of color in 'guaranteed income' trial

The Californian city of Oakland will launch one of the United States's largest "guaranteed income" pilot schemes, selecting 600 families of color to each receive $500 per month with no strings attached, officials said.

Part of a nationwide network of trials championing direct cash payments as a simple and efficient way to tackle poverty, the scheme will randomly select participating families from eligible applicants. They must be low-income Oakland households who are members of a racial minority with at least one child.

"We are focused on families of color, people of color, because there is such a racial wealth gap in Oakland -- white incomes are three times that of the median Black income," Oakland Mayor Libby Schaaf told CBS on Wednesday.

"We know that poverty is complex, but this is a simple solution, and we believe it's time has come to become federal policy," she added.

The scheme will launch by summer -- to run for 18 months -- and immigration status will not be taken into account.

Beneficiaries will be able to spend the money -- which is not taxable, and comes from private donations -- however they wish.

Critics of "guaranteed income" oppose the idea that the money may be used on items like alcohol or tobacco or worry that it could disincentivize work.

But Schaaf pointed to a recent trial in nearby Stockton, California, where 125 disadvantaged families received $500 per month for two years, and which saw full-time employment rise among participants.

Most of the allowance was spent on basic needs such as food, gas, electricity and car expenses, and beneficiaries also reported reduced levels of anxiety and depression.

"People need money. This is the best way to get people out of poverty," said Schaaf, who noted that families of color have been hit hardest by the pandemic.

"Poverty is not a personal failure, it is a policy failure," she added.