Is it time for Guaranteed Basic Income in Chicago?
Mayor Lightfoot’s 2022 budget includes $31.5 million for a one-year cash assistance pilot. If approved next week, the city’s program would be the largest of its kind in the country.
Is it time for Guaranteed Basic Income in Chicago?
Mayor Lightfoot’s 2022 budget includes $31.5 million for a one-year cash assistance pilot. If approved next week, the city’s program would be the largest of its kind in the country.By Francesca Mathewes
This story is part of the Re-Imagine Chicago project, a collaboration between the University of Chicago’s Center for Effective Government and WBEZ’s Reset, investigating how city government, community investment, public safety and schools could work better.
Gilbert was 8 years old when his father died suddenly of a heart attack. His mother, Neomi, then a stay-at-home mom, was left as the sole caretaker of Gilbert and his 4-year-old brother. Neomi was facing the possibility of having to pick up multiple jobs, which would mean significantly less time with her sons after school and on the weekends, less time to help them with homework and fewer home-cooked meals. And for two young boys growing up in the Lathrop Homes housing project in the 1970s, that extra care, guidance and supervision was essential.
But Gilbert’s mother was granted a social security program called Survivors Death Benefits that provided her with a monthly stipend of $800 until his younger brother turned 18. Neomi eventually picked up an administrative position at the Chicago Department of Public Health, which, combined with the monthly stipend, allowed her to come home at 5 p.m and spend those extra hours with her children.
Today, Gilbert is Ald. Gilbert Villegas, of the 36th Ward on the Northwest Side — which includes parts of Dunning, Portage Park, Galewood, Belmont Cragin, Hermosa and Montclare. Inspired by his mother’s story, he has proposed a similar cash assistance program for Chicago.
“[The program] allowed her to afford child care. It allowed her — as we got older — to move to a little bit better neighborhood where she could afford her rent,” Villegas said, adding she was able to work one job instead of two.
Known as guaranteed basic income — an idea Villegas first brought to City Council in March and is now a part of Mayor Lori Lightfoot’s 2022 budget proposal — the pilot would use $31.5 million of the city’s federal pandemic relief money to give 5,000 families a monthly stipend of $500 for one year. And although cash-based assistance is not a new idea, it has never been tried on a large scale in Chicago.
The program still needs full approval as part of the mayor’s overall budget, which is expected to be voted on next week. Members of the Black Caucus, who believe reparations should come first, have urged Lightfoot to cancel the plan in favor of violence prevention. But if approved, this would be the largest cash assistance pilot of any city in the country, according to the mayor’s office.
GBI differs slightly from its more famous cousin — universal basic income, or UBI — an idea popularized by Andrew Yang, the 2020 presidential hopeful and recent New York City mayoral candidate. Yang called his proposal the “Freedom Dividend” and promised $1,000 a month to every adult American over the age of 18. Instead of giving the same amount of money to everyone, GBI directs payments toward a defined group of people — the goal is often closing racial wealth gaps.
The proposal in Chicago, for instance, is “focused on very low income residents who have been economically very hard-hit by the COVID-19 pandemic,” according to an email from Rose Tibayan, a spokesperson for the mayor’s budget office.
To date, Chicago leaders have focused on place-based investments, often offering incentives to developers in areas that city officials prioritize. But what if Chicago invested money in people rather than places? Could a guaranteed basic income program, such as Villegas’s, actually improve the lives of Chicagoans?
A comparison: Stockton, California
There have been and are currently numerous such pilots taking place in cities across the U.S. — from Anchorage to North Carolina.
Among the most notable is a two-year pilot in Stockton, Calif. In 2019, then-Mayor Michael Tubbs and other city officials were looking for more innovative ways to invest in communities and, ideally, lift people out of poverty. In a press release, Tubbs said that one of the goals of the pilot was to “give people the dignity to make their own choices,” and incentivize people to spend more time in their families and communities. About 17% of Stockton’s residents live in poverty — similar to Chicago’s 20%.
Starting in February 2020, the pilot gave 125 randomly selected people in neighborhoods at or below Stockton’s median household income level a no-strings-attached, $500 monthly stipend on a prepaid debit card. The pilot was initially slated to run for 18 months, but researchers and officials chose to extend it until January 2021 due to the pandemic.
Data showing who specifically benefited most from the pilot won’t be available until 2022, as it is still undergoing analysis by SEED, the group who organized the pilot. But, initial findings from the first year in Stockton show promise.
“What we have heard a lot is parents talking about just the ways in which the $500 per month allowed them to really show up as the parents that they want to be,” said Sukhi Samra, the director of the Stockton Economic Empowerment Demonstration (SEED).
Early data shows those who received the stipend were more likely to transition from part-time to full-time work — a 12% jump in those receiving the stipend vs. only 5% among those without the stipend. Anecdotally, Samra said the $500 enabled people to find more stable, high-paying employment, as recipients found it easier to take off work to attend another job interview without worrying about a loss in pay. This finding refutes a common talking point that basic income programs will disincentivize work, a point which Lightfoot herself made in her disapproval of Villegas’s proposal back in March, saying that she “[favored] jobs” over a UBI.
Those kinds of results could make a huge difference in Chicago, which gained jobs at a rate of 7.3% in the last year, compared to 9% nationwide. Much of the South and West sides remain highly unemployed. West Englewood, Riverdale and Fuller Park all have unemployment rates over 30%.
Samra said a common misconception of basic income programs is the fear that people will use the money to buy drugs, alcohol or make other “nonessential” purchases. But “when we look at the spending data from the SEED program, overwhelmingly, it’s on the basic necessities,” Samra said. “I think about 40% of monthly spending was on food.”
Participants spent the most at retail stores such as Costco, Target and Walmart, followed by spending on utilities and transportation, according to the study.
“People are using the money to really take care of themselves and their families,” Samra said. “To anyone who has ever experienced poverty or growing up in a house with economic insecurity, I don’t think the findings are surprising. People aren’t poor by their own choices, but rather because of the circumstances in which they’re born into or the circumstances and the choices that they’re given.”
Is this sustainable for the long haul?
The citywide GBI pilot would be first of its kind in Chicago — in addition to a similar Cook County UBI pilot proposed by Cook County Board President Toni Preckwinkle. But other community groups have long recognized the benefits of cash assistance. One such effort is Brave Space Alliance’s Trans Relief Fund, a microgrant program addressing systemic poverty facing transgender and queer Black and brown Chicagoans.
Started during the pandemic, the Trans Relief Fund has a simple application process: Transgender individuals who can demonstrate they live in Chicago receive $200, no questions asked.
“The thing that you can do the most to help somebody most immediately is to give them money,” said Stephanie Skora, associate executive director at Brave Space Alliance, which is located in Hyde Park.
“Members of our community need extra funds and financial help for all sorts of things in their life, whether that’s making their rent, paying their bills, keeping their telephone on, or paying for their food.”
But Trans Relief funds are one time only, and are no replacement for large-scale economic change, Skora said.
The biggest challenge in implementing a citywide program: Who’s going to pay for it? Even if the city were to fund a GBI pilot in 2022, it’s another thing entirely to fund a program with a price tag of $30 million year after year. That’s why some advocates believe a UBI or GBI program would be best funded at the federal level.
“When you look at any other sort of welfare program, any program that’s part of our social contract, it’s funded at the federal level — that’s simply where the dollars are at,” said Samra, of the Stockton pilot. The federal government also assists with other state-run programs such as Medicare and infrastructure. She added that the balancing act required of state and local budgets is what can make this sort of large scale funding difficult to achieve.
For example, Yang’s Freedom Dividend would have used a value added tax — in which a product is taxed at every point in the supply chain, creating revenue without hiking income taxes. Other programs have proposed a tax on the wealthy or on businesses producing carbon over a given threshold. A pilot program in Alaska used a natural resources tax on oil to fund the stipends. And of course, the largest federal “UBI pilot program” was the four COVID-19 stimulus checks issued from April 2020 to March 2021. But so far, no permanent federal proposal has been approved.
Villegas — and it seems the city of Chicago — doesn’t want to wait for a federal cash assistance program. His message? Use COVID-19 relief funds on hand for a pilot now and figure out a long-term plan once the city can see real results.
“We’ve passed the capital bill locally. We’ve raised the minimum wage here locally — we’re not going to sit around and wait for the federal government to help us out,” Villegas said.
Villegas is confident the program will save the city money by reducing reliance on food stamps, housing vouchers and other forms of social welfare while giving people more flexibility for choices of child care, pursuing higher education or working toward higher-paying jobs. The improvement to Chicagoans’ quality of life will secure long-term funding from philanthropists and corporations with support from the city budget, he said.
“I’m a recipient of a program like this, so I’m all in on it.” Villegas said. “I want to demonstrate that these types of programs work.”
Francesca Mathewes is a freelancer in Chicago and worked recently as an intern at Block Club Chicago. You can follow her @franimal10.
Mary Hall is the digital editor of the Re-Imagine Chicago project and produced this story for digital. Follow her @hall_marye.