The COVID-19 pandemic has left many across the world in economic turmoil. Can Chicago's new plan help alleviate the economic pains caused by the crisis?
The COVID-19 pandemic has had a devastating impact on not only public health, but also on the financial status of millions. Nearly one in eight adults with children in the United States reported food insecurity as of 2021. The pandemic has intensified racial disparities in food security, with 17% of Black adults reporting a lack of sufficient food compared to just 6% of white adults. Over one in four adults had trouble paying for housing expenses as of October 2021. The United States is facing an epidemic of financial instability. Chicago, one of the nation’s largest metropolitan centers and home to one of the highest unemployment rates in the country, has a plan to reduce the effects of this crisis in the form of guaranteed basic income.
The idea of guaranteed income has been around for centuries but is now starting to gain traction in the United States. Guaranteed income, unlike universal basic income, is offered to a select group of citizens rather than the entire adult population. Guaranteed income plans, once programs carried out solely through charities and other private organizations, are now becoming popular public policies. Cities like Los Angeles, Atlanta, and Denver are already testing guaranteed income pilot programs. Guaranteed income has gained much of its current popularity because of the COVID-19 pandemic, with many of these cities beginning their programs in 2020 and 2021. For example, Governor Gavin Newsom of California set aside $35 million in the state budget for localities to start guaranteed basic income pilot programs.
In Chicago, a guaranteed basic income program was passed by the City Council on October 27, 2021. The program is a one-year pilot, and it will provide 5,000 low-income Chicagoans with $500 cash payments every month. The program is aimed specifically at helping those most affected by the COVID-19 pandemic, and it is funded by the federal relief aid received from the American Rescue Plan. The plan will cost approximately $31 million out of the nearly $2 billion the city of Chicago received from pandemic relief.
The guaranteed income program will help low-income Chicagoans recover from pandemic losses, and the success of this program will hopefully help convince city officials in Chicago and across the country that guaranteed income programs should be viewed as part of a necessary social safety net. Many detractors have said that guaranteed income plans encourage recipients to forego jobs, including President Joe Biden. During the 2020 primary campaign, Biden made it clear he was opposed to basic income programs, writing “we must – build a future that puts work first.” However, the belief that guaranteed income programs will promote unemployment is erroneous, and this program will help low-income persons gain financial security. Finland’s trial run of a guaranteed income program found that employment increased within the group given a basic income, and their reported well-being was significantly higher than the control group. Despite claims that cash payments will allow people to buy unnecessary and outlandish items, research shows that most families receiving government cash payments in the past two years have spent them on essentials. A 2020 Gallup poll found that 35% of Americans spent their $1200 stimulus check on bills, 29% saved their checks, while 16% spent it on essentials like food and gas. A guaranteed income program in Compton, CA, called the Compton Pledge, has seen major success in helping people in the city. 37% of its recipients spend their payments on food, 22% spend it on clothing and home goods, and 11% spend it on utilities.
Guaranteed income is also helpful for stimulating the local economy. A 2017 report from the Roosevelt Institute found that not only can the federal government afford the cost of guaranteed income, but in the long run it will also help stimulate the economy. Programs like the one piloting in Chicago increase the amount of disposable income in households, therefore encouraging spending and helping businesses.
Guaranteed income has clear benefits for low-income families and will help thousands of Chicagoans. Expanding this program to a wider range of citizens nationally will help millions more to recover from the economic crises of the pandemic. The possibility of universal basic income is growing into a larger movement in the world of public policy and should be considered as an addition to existing social support programs.
Ella Lane is a first-year at American University studying political science. She is a staff writer for the Agora.
Image courtesy Urban Feel, Creative Commons