Chicago Is the Latest U.S. City to Consider Guaranteed Income for the Poor

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Chicago is the latest U.S. city to consider offering guaranteed income to poor residents as it seeks to even out the economic recovery for those who suffered a disproportionate hit from the Covid-19 shutdown.

City Alderman Gilbert Villegas proposed a pilot program Wednesday to provide $500 a month for a year to 5,000 low-income residents. The money -- issued on debit cards -- would act as a form of “disaster relief” spent in the local economy for rent, food, clothing and other necessities, Villegas said. If approved, the city would pay for the program with $30 million of its $1.9 billion in American Rescue Plan funds.

“Let’s take a look at this new money and really invest in the community,” Villegas said in an interview on Tuesday before introducing the ordinance.

Chicago, the third-largest U.S. city with almost 2.7 million residents, joins cities coast to coast in contemplating guaranteed income payments as a tool to help lower-income residents and those from Black and brown communities that are enduring the harshest impacts of Covid-19. Los Angeles Mayor Eric Garcetti has proposed a $24 million program in next year’s budget for 2,000 low-income families in the second-largest U.S. city.

Villegas said he’s studied similar proposals in several California cities including Stockton and St. Paul, Minnesota. Chicago’s program would be open to applicants with income at or below 300% of the federal poverty level who can demonstrate that they lost jobs or hours, lacked childcare or faced some other financial adversity due to Covid-19. Recipients may voluntarily share transactions to help the city study the effectiveness of the pilot program.

Research from the first half of a two-year program in Stockton, California that gave $500 a month to 125 families found recipients went on to find full-time jobs at more than twice the rate of non-recipients, according to a release from Mayors for a Guaranteed Income. They also suffered less stress and anxiety, the Mayors’ group said.

Stockton in 2012 became the largest city in the U.S. at the time to file for municipal bankruptcy after racking up unsustainable bond and pension debt.

Villegas said Chicago’s one-year pilot program could be funded by federal aid but could continue in future years through a combination of philanthropic and city revenue. The proposal has been referred to the city council’s Committee on Rules, which adds uncertainty for its trajectory. Villegas said he will keep pushing for it with other council members and community groups.

Mayor Lori Lightfoot said during a press conference after the council meeting that she hasn’t had a chance to study Villegas’s plan, but “this is something that I think a lot of folks are interested in.”

“Fundamentally what we need to do is make sure in my view that people have access to good paying jobs, that they can sustain themselves and their families,” she said in response to a reporter’s question about the ordinance. “I am happy to take a look at that proposal, but I haven’t had a chance to see it yet.”

Lightfoot’s administration is still trying to seek community input and decide how American Rescue Plan funds can be used with the greatest benefit to the city’s residents, she said. That plan may not be ready for the city council’s next meeting in May, Lightfoot said.

Chicago’s finance and budget officers have suggested the city should use nearly half the federal aid to pay back a $465 million line of credit from JPMorgan Chase & Co. and to cancel restructuring and refinancing plans worth an additional $500 million to close the 2021 deficit.

Villegas said addressing the plight of residents who have lost work hours as well as jobs and face eviction should be prioritized. Chicago’s unemployment rate currently is around 7.7%. The federal money, he said, should flow to Main Street not just Wall Street.

“It’s going to go into our local community,” Villegas said. “This is my attempt at what I feel is a necessary recovery plan.”

(Mayors for a Guaranteed Income has received donations from Bloomberg Philanthropies, the charitable arm of Michael Bloomberg, founder and majority owner of Bloomberg News’s parent company.)

©2021 Bloomberg L.P.

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