Chicago poised to create one of the nation’s largest ‘guaranteed basic income’ programs

Basic income programs are spreading across the country as critics raise concerns about job openings

By Mark Guarino

October 25, 2021 at 6:00 p.m. EDT

The Chicago City Council is poised to vote this week on what would be one of the nation’s largest basic income programs, giving 5,000 low-income households $500 per month each using federal funding from the pandemic stimulus package enacted this year.

Mayor Lori Lightfoot (D) has proposed the more than $31 million program as part of her 2022 budget, which the city council is scheduled to consider on Wednesday. The one-year pilot program, funded by the nearly $2 billion Chicago received from the Biden administration’s American Rescue Plan, is supported by most of city’s 50 aldermen. But it has received pushback from the 20-member Black Caucus, which has urged Lightfoot to redirect the money to violence prevention programs.

Lightfoot has said the pilot program is motivated by her own childhood memories of hardship while growing up in Ohio. “I knew what it felt like to live check to check. When you’re in need, every bit of income helps,” she wrote in a tweet unveiling the plan this month.

Basic income programs have been spreading across the country ever since Stockton, Calif., had started providing monthly stipends with no strings attached to 125 of its residents in 2019. Those stipends resulted in more full-time employment and improved mental and emotional well-being among recipients, according to preliminary findings reported earlier this year by researchers who helped design the program.

Michael Tubbs, who implemented the program as then-mayor of Stockton, noted that recipients’ largest expenditure was food, making up at least a third of spending each month, according to the report. “I had no idea so many people in my area were hungry,” Tubbs said.

Since Stockton’s program launched, about 40 other cities have considered or embarked on similar efforts to target economic insecurity within their boundaries, according to Mayors for a Guaranteed Income. These include Denver, Newark, Pittsburgh, San Francisco, New Orleans and Compton, Calif. One program in Los Angeles will provide 2,000 residents with a guaranteed income of $1,000 a month for a year.

The surge of interest in basic income has been fueled in part by the influx of money that cities have received from the coronavirus stimulus package along with the formation of Mayors for a Guaranteed Income, which is an advocacy coalition that Tubbs founded last year.

Critics worry that guaranteed income programs will discourage people from finding jobs and drain the labor force, a particular concern amid the record job openings in the country this year, said Michael Faulkender, who served as an assistant treasury secretary for economic policy during the Trump administration. Last week, the National Federation of Independent Business reported that 51 percent of small business owners have jobs they cannot fill, over double the average of 22 percent.

“There are still millions of low-skilled jobs out there, and you have small business owners who can’t find workers to join their companies,” said Faulkender, who teaches finance at the University of Maryland. Proposals like the one in Chicago feed the “process of reducing the willingness of people to participate in the workforce,” he said.

Opposition to federal entitlement programs, such as rent vouchers and food stamps, has been waged for decades, but advocates like Tubbs say that today, “the climate has changed.” Economic blows struck by recent natural disasters and the pandemic have proven that “the economy doesn’t work for a vast number of Americans,” Tubbs said.

The inequalities in Chicago are particularly stark. A 2019 report by an economic inequality task force created by the mayor’s office found that 500,000 Chicagoans — about 18 percent of the population — are living below or at the poverty level. Nearly half the city’s households do not have a basic safety net to help in emergencies or to prepare for future needs. A quarter of households have more debt than income.

Lightfoot says the effects of the despair can be seen in recent drops in life expectancy among the poorest and the current spikes in street violence throughout the city. Harish Patel, executive director of Economic Security For Illinois, an advocacy group that helped coordinate the report, says the coronavirus pandemic has made the disparities worse.

The 5,000 recipients, who must be adults and make less than $35,000 a year, will be chosen randomly for the program. Chicago Alderman Gilbert Villegas said the city plans to track the recipients’ expenditures during the first six months and then provide more targeted assistance, such as help with paying heating bills or for food. The costs of supporting the program, he said, “is well worth the investment” when weighed against daily costs of poverty in Chicago, such as gun violence and incarceration.

The Chicago basic income proposal dates back two years when a small group of aldermen led by Villegas proposed a resolution that would have established a $50 million basic income program. The subject is particularly important to Villegas, who considers himself “a product” of similar fiscal assistance. Following the death of his father when Villegas was 8 years old, his mother received $800 in monthly survivor benefits from Social Security until he and his younger brother turned 18. The federal funds supported child-care costs and gave her the freedom to work just one job, rather than two, so she could be at home with her sons more often.

“It allowed my mom to work with dignity and gave her the flexibility to work to better the neighborhood,” he said. The siblings later served in the Marines, which Villegas says they considered as payback for the assistance from the federal government. “These are the types of human infrastructure investments that we need to take a look at when we talk about investing in infrastructure,” he said of basic income programs.

Polling over many years has largely showed the American public does not support universal basic income. In April, the Pew Research Center survey found a third of Americans say it is “very important” for the United States to provide universal basic income while a fifth believe it is “somewhat important.” Forty-five percent said they are against.

But supporters say it is a matter of exposure. Brett Watson, an economics professor with the University of Alaska Institute for Social and Economic Research in Anchorage, noted that in his state, receiving a regular income from the government is already seen as “a birthright.”

Alaska has a nearly 40-year-old Permanent Fund Dividend that guarantees its residents an average of $1,600 in an annual lump payment. The fund consists of offshore oil lease royalties paid to the state.

Unlike many of the new basic income programs, it doesn’t target specific households and requires fewer conditions. The money, Watson said, is not seen as paternalistic or demeaning, unlike how social service benefits like food stamps or rent vouchers are traditionally perceived.

“There’s something appealing to people about the idea that it’s the people, more than the government, who should decide on how best to spend the money they are given,” he said of the Alaska basic income model. “For that reason alone, it is attractive on the national scale.”

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