Nonprofit aiming to provide pay boost

An Oakland nonprofit group founded by Y Combinator’s Sam Altman is raising funds to launch what could become the nation’s largest basic-income research project.

In a detailed proposal unveiled late Wednesday, Y Combinator Research said it wants to give 1,000 low- and moderate-income people $1,000 a month with no strings attached for three to five years and compare them to a control group of 2,000 people who get $50 a month.

The nonprofit, Y Combinator Research, is separate from Altman’s Y Combinator startup accelerator, which has backed Airbnb and Dropbox among many other companies.

Elizabeth Rhodes, the project’s research director, said the project will start next year if it can secure $60 million from individuals, foundations and other donors.

The concept of universal basic income refers to a cash payment from government to all individuals with no work, income or other requirements and no restrictions on how the money can be spent.

It’s attracting interest as a way to reduce income inequality, compensate for jobs replaced by robotics and artificial intelligence, or replace more complicated and demeaning types of welfare. Silicon Valley CEOs, including Facebook’s Mark Zuckerberg and Tesla’s Elon Musk, have

said the concept has merit.

Last fall, the group started a very small pilot project in Oakland as a way to gather information for this larger research project. It enrolled only six people who received $1,500 a month, although it plans to continue enrolling people through year’s end.

For the larger project, participants will be chosen at random — with racial, gender, ethnic and income quotas to achieve representative samples — from census tracts in two states. One most likely will be California, Rhodes said.

The group will conduct ongoing surveys and interviews to collect objective and subjective data. It hopes to find out, for example, whether the payments change how people spend their time, their physical and mental health and their “consumption and savings behavior,” Rhodes said. It will not look at what exactly they spend their money on, but will probe what types of savings they might increase.

In the broadest version of universal basic income, every man, woman and child gets a regular monthly stipend. The money would come from new or higher taxes or reducing existing benefit programs. Higher income people could end up worse off, paying more in taxes than their basic income payment.

The group’s basic-income project is not called “universal” because it will only enroll people ages 21 to 40 who make less than their area’s median income. Rhodes explained that funds are limited, and the group wanted to concentrate them on lower-income households where the impact of getting $1,000 a month would be larger and more measurable than it would be for a highincome household.

Of course, that also limits how the findings would apply to a true universal income project.

Another limitation is the coordination with current welfare benefits. The group does not want the extra $1,000 a month to jeopardize participants’ existing government benefits. It will not enroll anyone receiving Section 8 housing vouchers or other benefits such as Social Security disability or supplemental security income. It is working with the federal and state government to “secure waivers” to make sure that participants don’t lose other means-tested benefits such as Medicaid or the earned income tax credit, Rhodes said. The study “will account for (the preservation of existing benefits) in the analysis,” she added.

One thing the group learned from its small Oakland pilot is that soliciting people door-todoor in low-income neighborhoods — even for free money — yielded “a low uptake rate.” For the larger project, it will mail potential participants a letter describing the study and soliciting a response.

Another lesson is the need to keep participants’ identity confidential. In Oakland, one woman said she didn’t want her family to know she was getting the money, Rhodes said.

And because it found that many participants don’t have bank accounts, they will get their monthly payments via direct deposit to a GoBank account in their name that can also be used to pay bills and write checks. GoBank is an online bank that does not charge overdraft fees. It will waive its small monthly fee for study participants.

Rhodes said the researchers running the project are not basic-income proponents.

“We are interested skeptics,” she said.