Guaranteed Basic Income: A Solution to Homelessness or Just a Band-Aid?
I. Introduction
The 2023 Point in Time (PIT) count, which is conducted annually by the United States Department of Housing and Urban Development, reported that approximately 9,065 people experienced homelessness in Colorado on a single night in January 2023 (Brown et al., 2023). Prior to 2022, Colorado was one of only three states that did not have a statewide strategy or funding source to address homelessness (Ritchie, 2020, p. 23). In 2022, Colorado voters passed Proposition 123 which established a State Affordable Housing Fund dedicated to funding homelessness prevention and housing affordability initiatives (Colorado Department of Local Affairs, 2023). Between 2020 through 2023, Colorado spent over $2 billion in addressing homelessness, concentrated largely in the Denver metro region (Brown et al., 2023).
Given the region's escalating housing costs, addressing a complex issue such as homelessness demands comprehensive, multifaceted solutions (Ritchie, 2020, p. 21). Mark Donovan, a Denver based entrepreneur, teamed up with researchers and local foundations to create an experiment called the Denver Basic Income Project (DBIP) in 2020. The DBIP became a freestanding 501(c)(3) organization on June 13, 2023. It is an experimental project that is testing delivering guaranteed basic income to people experiencing homelessness in Denver. It is the largest project of its kind in the United States to study the impact of guaranteed basic income on those experiencing homelessness. The program was designed with the idea that giving unhoused people regular cash payments would allow them to meet their most basic immediate needs on their own (Denver Basic Income Project, 2024).
Therefore, this case study will examine the following research questions: will unhoused people thrive and achieve long-term housing stability when given trust, hope, and a financial foundation? Furthermore, does guaranteed basic income divert attention and resources away from the central fact that people need affordable, permanent housing? In this essay, I will analyze the program’s effectiveness in reducing homelessness. This analysis will explore both the successes and limitations of the initiative. First, I aim to examine whether or not the DBIP can be considered a success. I will address whether the monthly income provided by the DBIP has helped unhoused people secure stable housing. Secondly, I will address the backlash over guaranteed basic income programs. I intend to highlight the potential drawbacks and limitations of the DBIP.
In this essay, I have drawn upon primary sources such as a 2023 organizational report by the Metro Denver Homeless Initiative and the City and County of Denver’s 2025 Budget Proposal. In addition to this, I have incorporated insights from relevant books, articles from Denver news outlets offering both support and opposition to the program, and the year-one findings of the Denver Basic Income Project, led by the University of Denver's Center for Housing and Homelessness Research. This report tracks a variety of metrics, including housing stability, employment, health and well-being, financial independence, and overall quality of life (Denver Basic Income Project, 2024). For the purpose of this essay, however, my focus will primarily be on housing stability.
While none of the participants were obligated to participate in the research for the year-one report, hundreds did. Researchers kept up with them through regular surveys including long-term questionnaires at enrollment, after six months of payment, and after ten months of payment. Participants received a cell phone that was paid for by the study so researchers could check in with them more easily. Approximately 631 of the 807 participants completed surveys at enrollment. However, only 396 did so in the final survey after ten months of payments (Rubino, 2024).
II. How the Denver Basic Income Project Chose Participants
The Denver Basic Income Project’s first year-long effort began in November 2022. The Homelessness Service Providing Organizations (HSPOs) was recruited to partner on the study, and individuals screened at HSPOs who met study sample criteria served as study participants (Ludden, 2024). To be eligible for enrollment, individuals must be eighteen years or older and accessing services from a homeless agency in the Denver area. Most of the participants were living in shelters, on friends’ couches, or in vehicles. In addition, the participants cannot have severe/unaddressed mental health or substance use needs which was measured with a standardized ‘BASIS-24’ questionnaire. The average age of participants was forty-four, with the youngest being eighteen and the oldest being eighty-six. Nearly 67% of the project’s participants identified as people of color and about under half of the participants identified as having a disability. Nearly 50% of participants identified as a woman, nonbinary, transgender, or gender non-conforming (Denver Basic Income Project, 2024). A limitation of the research study is that Denverites living on the streets who were not connected to community-based organizations were not included in the study (Tassy, 2024).
The participants were divided into one of three payment groups. Group A was given $1,000 each month for a total of $12,000 over twelve months. Group B received $6,500 during the first month and $500 each month for the following months for a total of $12,000 over twelve months. Group C, the control group, received $50 each month for a total of $600 over twelve months. The program does not dictate what the participants must do with the money and no one is required to share how they are using the money they are receiving; the program is based on trust (Colorado Sun, 2024).
III. Exploring the Impact of Direct Cash Assistance: Insights from the Denver Basic Income Project Research
In July 2024, the University of Denver’s Center for Housing and Homelessness Research released the findings from its year-long study. All payment groups showed significant improvements in housing outcomes, including a significant increase in home rent and ownership. The percentage of participants who were living in a house or apartment that they rented or owned at the 10-month check-in of the DBIP was 45% across all groups despite all starting unhoused. Approximately 44% of participants in Group A and 48% of participants in Group B reported having stable housing at the 10-month check in. In the control group, Group C, 43% of participants reported having stable housing at the 10-month check in. Among participants in the first and second groups, the number of nights spent in shelters decreased by half and fewer were sleeping outside (Denver Basic Income Project, 2024). Additionally, fewer participants were utilizing public health services, including “emergency room visits or other costly medical interventions, which are often funded by taxpayers” (Rubino, 2024). The research team estimated that the DBIP saved the City of Denver “over half a million public dollars that would have otherwise gone to shelter stays, hospital visits, jail time or other services” (Toomer, 2024).
During the first year, participants in the program reported using the money they received to meet their dire and basic needs. These needs included the following: transportation, hygiene, groceries, clothes, bills, rent or mortgage payments, debt, healthcare, and car repair (Denver Basic Income Project, 2024). Many participants in the larger payment groups reported either buying a house or purchasing a car (Arenas, 2024). Maria Sierra, the Community Engagement Manager of the DBIP, said, “They know what’s best for themselves and they do make the right decisions when they have access to a resource like direct cash to change their lives” (Rubino, 2024). The year-one report findings suggest that guaranteed basic income allows recipients to make choices that best suit their situations (Ludden, 2024).
IV. Transforming Lives: The Positive Impact and Promising Outcomes of the Denver Basic Income Project
In the book, In the Midst of Plenty, the main argument regarding homelessness is that it is not merely the result of a lack of resources or housing. Shinn and Khadduri highlight that addressing homelessness requires a shift in how society values and supports its most vulnerable members. Several factors can push individuals toward homelessness. The authors state how precipitating events can often propel an individual to experience homelessness. The precipitating events may be sudden and dramatic (Shinn et al., 2020). A woman named Dia Broncucia and her partner experienced two major precipitating events. Dia Broncucia was diagnosed with breast cancer a few years prior to her acceptance into the Denver Basic Income Project. She was living in a shelter in Denver for a year before she was selected as a participant of the DBIP. Her sudden chronic health condition depleted her savings and hindered her ability to maintain stable housing. In addition, while Dia was undergoing two dozen rounds of chemotherapy and radiation, her partner had lost his job (Kelly et al., 2024). Her partner’s sudden job loss represents the loss of economic stability. It is understandable how Dia and her partner were quickly pushed into homelessness due to the precipitating event they each faced. As evidenced, guaranteed basic income can act as a safety net during personal emergencies or economic downturns. It provides “immediate assistance when traditional support systems may fall short” (Ludden, 2024). The DBIP gives people the flexibility to make decisions that are best for their own lives. The program is built on the belief that people experiencing homelessness often face precipitating events and systemic barriers that make it difficult to get back on their feet, and that an unconditional cash payment can help provide the financial freedom to overcome those challenges.
Hunter Ambrose was another participant of the DBIP. Ambrose was randomly assigned to the control group right as she was losing her home at the time. Ambrose said the $50 that she received each month made a significant difference in her life. The money helped her with groceries for her three children, she was able to secure housing, and she published a book on growing up in the Los Angeles foster care system (Toomer, 2024). Direct, unrestricted cash transfers support basic needs beyond shelter by providing individuals with financial support and financial autonomy.
V. Controversy and Criticism: The Backlash Against Guaranteed Basic Income Programs
While guaranteed basic income has potential benefits for reducing homelessness, there are also many concerns and criticisms associated with it. An opinion piece by the Denver Gazette Editorial Board, Basic Income' Programs Do More Harm Than Good, argues that providing handouts through programs such as the Denver Basic Income Project could have negative consequences for both individuals and society as a whole. One significant concern is inflation: "If these experiments become widespread and common, they will dramatically increase inflation" (Denver Gazette Editorial Board, 2024) due to increased money circulation and spending. Additionally, the Editorial Board argues that large-scale guaranteed basic income programs would require significant increases in government spending, potentially leading to higher taxes, inflation, or public debt, which could harm the economy in the long run (Denver Gazette Editorial Board, 2024).
Another critical issue is that guaranteed basic income might encourage dependency on government handouts rather than fostering self-sufficiency. This perspective suggests that a guaranteed income without any conditions or expectations could reduce incentives to work because some people may not seek employment, leading to a decline in the workforce participation rate. The Editorial Board states, “If ‘free’ cash tied to no outcomes could improve lives, we could all quit working and live off minted paper. It won’t work, any place at any scale” (Denver Gazette Editorial Board, 2024). The Editorial Board believes that guaranteed basic income programs ultimately will not lead to long-term improvement in people's lives or society. They suggest that the concept is unrealistic and impractical.
VI. Paying the Price: The Funding Challenges of the Denver Basic Income Project
Notably, implementing guaranteed basic income on a large scale requires substantial funding. The first-year pilot program of the DBIP was funded through donations, philanthropy, and private grants. The $9.4 million project has received its largest investments from the City of Denver, Colorado Trust, and an anonymous foundation. The DBIP received $2 million in funding from the City of Denver in 2022 and 2023 to support the pilot program’s operations and research efforts (Brown, 2024). However, the DBIP has recently run into legislative hurdles with the City of Denver. In September 2024, funding for the DBIP was not included in Mayor Mike Johnston’s first draft of the 2025 budget proposal. The Mayor’s Office claims that the data in the project’s year-one report did not show a statistically significant reduction in homelessness between the groups that received large cash transfers compared to the control group to justify further funding (Denver7 News, 2024). The finance department spokesperson, Laura Swartz, stated, “The guaranteed income had no significant impact on the participants' ability to exit homelessness” (Hernandez, 2024). Additionally, Swartz mentioned that the city aims to prioritize funding programs such as its rapid rehousing model to assist in providing shelter for those living on the streets (Hernandez, 2024).
Supporters of the DBIP held a rally on September 18, 2024 at the state capitol and outside Denver's City and County Building. Denver City Council member Shontel Lewis, a consistent advocate for DBIP, said she will use her voice during the city budgeting process to ensure city dollars support. “To expect our neighbors, at their lowest point, to overcome hardships without support is to lack compassion and empathy,” Lewis said during the rally (Toomer, 2024). Despite several attempts to persuade Denver city officials to allocate additional money to the DBIP, on September 15, 2024, the program had to halt their efforts nine months into their second year of work. The program sent what they could to participants, with their limited funding that was available (Oldham, 2024).
On November 4, 2024, the Denver City Council rejected an attempt to continue funding for the DBIP. The Denver City Council voted 6-6 to set aside $2.5 million for the DBIP by amending Mayor Mike Johnston's budget proposal. The measure failed because the city charter requires a simple majority in order to pass. On November 12, 2024, the Denver City Council approved Mayor Mike Johnston's proposed 2025 budget unanimously. The DBIP was not allocated any funding (Grigsby, 2024).
VII. How Mayor Mike Johnston’s 2025 Budget Addresses Homelessness
Arguably, the DBIP has offered temporary relief to hundreds of unhoused people without creating sustainable solutions. In order to effectively reduce homelessness, there needs to be a focus on addressing the root causes of homelessness rather than only addressing the symptoms. On September 12, 2024, Mayor Mike Johnston's administration released the first draft of the 2025 budget, emphasizing a strong commitment to tackling homelessness and expanding affordable housing across Denver. The proposed budget allocates $60 million to create or preserve nearly 1,400 affordable homes, alongside investments in rapid rehousing and project-based vouchers aimed at supporting 3,000 households (City and County of Denver, 2024, p. 18). Recognizing the importance of prevention, the budget also dedicates $20 million to temporary rent and utility assistance (TRUA), prioritizing aid for households most at risk of eviction and potential homelessness (City and County of Denver, 2024, p. 19). Through these initiatives, Mayor Johnston aims to ensure that every Denver resident has the opportunity to secure stable housing and remain in their homes, reflecting a comprehensive approach to addressing the city's housing crisis.
VIII. Conclusion: Assessing the Effectiveness of the Denver Basic Income Project
In conclusion, the Denver Basic Income Project should be considered to be a moderate success. Nearly half of the participants in the study, regardless of which funding group they were assigned to, were able to secure stable housing after receiving monthly cash payments. Guaranteed basic income can empower unhoused individuals by providing them with financial autonomy. While the Denver Basic Income Project provides quick relief to unhoused individuals, it is ultimately a flawed approach to reducing homelessness. Many challenges with the DBIP persist. One challenge is the capacity of the existing Homelessness Service Providing Organizations system to take on an additional demand for Denverites experiencing homelessness. Another challenge is finding a sustainable source of funding. The sudden discontinuation in cash transfers for the participants of the DBIP in September 2024 raises questions about the sustainability of large-scale guaranteed basic income programs. Cash transfers are unlikely to result in lasting change unless accompanied by long-term funding and comprehensive support. Homelessness is a complex issue that requires a combination of the following: affordable housing, mental health services, addiction treatment, and job readiness programs. The data collected from the first-year pilot program of DBIP is likely to help shape future discussions around guaranteed basic income. More comprehensive studies and evaluations of large-scale guaranteed basic income programs will help to provide a clearer picture of their long-term impact and overall cost-effectiveness. Finally, the success of the Denver Basic Income Project will depend on continued research and broader societal support for guaranteed basic income programs.
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