Article Correctness Is Author's Responsibility: A Free $1,000 That Isn’t Andrew Yang’s UBI

For many people, life is a series of small emergencies. And without the resources to solve them, they can turn into big ones, fast.

Based on interviews with more than 100 Americans about their financial histories, Rachel Schneider, an economics expert who co-wrote The Financial Diaries: How American Families Cope in a World of Uncertainty with Jonathan Morduch, found that families’ spending patterns month-to-month were lumpy and jagged, as they tried to address whatever size emergencies came up: the broken-down cars, the medical bills, the cancelled shifts. But budgets are tight. Forty percent of Americans can’t easily cover an unexpected $400 expense, the Federal Reserve Board estimates; another survey, by the personal finance website Bankrate, more conservatively found that 40 percent couldn’t cover a $1,000 expense.

Launched in July, a pilot project called the Workers Strength Fund aims to provide assistance before the emergencies get out of control. It is providing $1,000 in no-strings-attached grant funds to 500 gig workers in four cities—Dallas, Detroit, San Francisco, and New York City—when they need it, no matter why they need it. Designed as part of a “Design Sprint for Social Change” run by the Workers Lab, an organization that invests in labor experiments, the project is sponsored by the financial planning company Commonwealth,, the Rockefeller Foundation, and Prudential Financial.

“We know that people don’t have a cushion when something comes up, we know many people have experienced rising costs of living within stagnant wages, but we know less about how those two things fit together,” said Schneider, who served as the Workers Strength Fund’s Lead Product Adviser. ”And how they fit together is that there are some moments in somebody’s life where they just don’t have the money they need for something really important.”

A pre-pilot version of the project that ran from November 2018 to March 2019 in San Francisco and New York City, paired 29 workers with these funds. Potential participants were offered the chance to sign up for a waitlist to join the program while using the gig-worker job-searching platform Steady. The first 30 users on the list were invited to request funds and explain the reasons for their need in more than 100 characters.

One of the biggest challenges during the pre-pilot—which was meant to be a testing ground for this summer’s pilot—was getting people to ask for and accept the free money at all, says David Weil, the Dean of the Heller School for Social Policy and Management at Brandeis University and the Worker Strength Fund’s Lead Policy & Research Advisor. “People are, for good reason, skeptical. In part because I think a lot of the folks who we’d ultimately want to have this kind of benefit available to are those who have gotten burned by payday lenders,” he said.

Actually getting people the money was also difficult, because many had limited access to traditional financial institutions or were wary of sharing their bank account information with an unfamiliar company. Ultimately, most people preferred using PayPal, but the platform’s fraud-detection feature introduced delays.

Twenty-nine of the 30 participants requested money. Most of them made less than $20,000 a year working jobs at places like Uber, Doordash, Postmates, Etsy, and Instacart, according to a report published by the Workers Lab; and had an average age of 33. They typically asked for the full $1,000 at a time, and the majority used it to cover housing-related expenses like rent and utilities. “Several people used funds beyond the purpose of their original request, citing the cascading effect of emergencies,” reads the report: A broken-down car meant one recipient lost income and had to use some funds to pay his rent, too. That cascading effect also meant the impact of the short-term assistance waned after a few months. “Generally, people felt they had the ability to pay for necessities in the month after they received funds, but they were less confident about their ability to pay for necessities over the next 3-6 months,” the report read.

This time around, there isn’t any waitlist or lottery. Instead, a random group of Steady users in the four cities have been invited to participate in the experiment. They hope to run it until the end of the year.

In its emphasis on distributing free money, the Workers Strength Fund may seem like a twist on the Universal Basic Income model in which all people are given a baseline salary—an idea that has roots in the teachings of Martin Luther King, Jr., and one that presidential candidate Andrew Yang has made the centerpiece of his campaign. After experiments in Kenya and Finland, U.S. cities have begun piloting it, too: In Stockton, California, 130 people just started getting $500 a month for 18 months; in Jackson, Mississippi, 15 black mothers will get $1,000 every month for a year in a program sponsored by local organizations, private donors, and the Economic Security Project.

But the Workers Strength Fund pilot focuses on connecting those who need it with instantaneous emergency funds on a single-case basis, not on consistently raising the baseline incomes of everyone, as a Universal Basic Income would. That’s a major limitation of an experiment like this, says Jhumpa Bhattacharya, the Vice President of Programs and Strategy at the Insight Center for Community Economic Development. ”It’s not bad—if people want to do it, please give them $1000,” she said. “But I think our North Star, or our goal, should be something bigger than that …While we’re living in a capitalist society the reality is that you need [wealth] for dignity and choice; and so that’s what we want to move the conversation towards.”

She and other scholars have advocated for righting systemic wrongs through wealth-building, using something like the UBI-plus model, which applies guaranteed income through a racial and gender justice lens. Though the Workers Strength Fund decided it wouldn’t provide support to college students after the pre-pilot, there aren’t any gender, race-based, or income-based eligibility requirements, besides an agreement to share information that could help them assess the program’s impact.

It’s also funded not by the government, as many UBI models are; but by private philanthropy. Andrew Yang’s proposed administration is not coming down from on high and handing out dollar bills; instead, Google is.

Schneider and Weil agree that the Workers Strength Fund won’t solve the more critical problems of elevating the income floor and shrinking inequality, but they say that getting rid of bank account volatility is a distinct and important task. “More money on a regular basis is different than specific amounts of money for a specific moment in time,” says Schneider. “It may be that if you raise the floor overall, there will be fewer moments where people are short. But it doesn’t change the fact that there are moments in people’s lives that are out of control.”

The project has more in common with Employee Hardship Funds: pots of money employers set aside to assist their workers in case of emergency, because they believe it might lower turnover, or make workers more productive, happier, and healthier. In companies that don’t have specific funds, employees will often band together to help coworkers in need, Schneider says: Starting GoFundMe campaigns or crowdsourcing gift cards.

But the Workers Strength Fund is different because it doesn’t ask for receipts or repayment, and doesn’t have any compliance requirements—instead, they’re “experimenting with the idea of radical trust,” says Schneider. And ultimately, the dream of the program is that it can support a more comprehensive swath of workers, including gig workers, who don’t have company benefits to lean on.

With seed funding from big philanthropies, and on this small scale, they’re able to be so free-wheeling. But in order to actually replicate and grow this kind of universal grant system, Schneider doesn’t think philanthropic support will be enough. When the results of the pilot are analyzed next year, she’s hoping they can make the case to governments and other private players that it’s something they, too, should invest in.

The Worker’s Lab wouldn’t share how many people have accessed the benefit since the launch at the beginning of July, reiterating that the goal will be to reach 500 people. But besides data on how people use the money, and how often, Weil hopes they’ll be able to learn how the fund affected people who didn’t even dip into it, but felt more secure knowing it was there as it offers the psychological comfort of a $1000 emergency account.

“The burden of being worried about a crisis is significant,” he said. “People who are more preoccupied by those kinds of worries don’t make as good decisions in other areas of their life, because they are so burdened. And it has this kind of cloud effect—not only on decisions, but their own feeling of well-being.”