Chicago's city council voted Wednesday to approve one of the US's largest basic-income pilots.
The city will give 5,000 low-income households $500 per month for one year.
A similar program in Stockton, California, reduced participants' unemployment and improved their emotional wellbeing.
Chicago just became the latest city to offer residents monthly cash payments, no strings attached.
The city council voted Wednesday to approve one of the largest basic-income programs in US history - a pilot that will give 5,000 low-income households $500 per month for one year. Participants will be chosen at random, but individuals must earn less than $35,000 per year to qualify.
The council authorized nearly $32 million for the pilot as part of the city's 2022 budget. The program's funding comes from $2 billion in COVID-19 relief dollars allocated to Chicago through the Biden administration's American Rescue Plan.
The pilot specifically aims to relieve financial burdens on families hard-hit by COVID-19. Hundreds of thousands of Chicago residents lost their jobs during the first six months of the pandemic, and around 18% of Chicago residents live below the federal poverty line.
"Growing up, I knew what it felt like to live check to check," Chicago Mayor Lori Lightfoot wrote earlier this month on Twitter. "When you're in need, every bit of income helps."
Several other Democratic mayors similarly see cash stipends as a promising way to address poverty in their cities. More than 50 have joined the coalition Mayors for a Guaranteed Income, the members of which all pledge to start basic-income pilots in their cities. The founder of that coalition is the former mayor Stockton, California, Michael Tubbs. He launched one of the US's first guaranteed-income pilots in 2019, a program that gave 125 residents $500 per month for two years.
Other cities have followed his lead. Saint Paul, Minnesota, approved a basic-income pilot last year, in which 150 low-income families get $500 a month for up to 18 months. Oakland, California, is now accepting applications for its basic-income pilot, which gives $500 monthly payments to 600 low-income families for 18 months. In Compton, California, 800 residents are already receiving a guaranteed income of $300 to $600 a month for two years. And Richmond, Virginia, is distributing $500 per month to 18 working families.
Critics worry that basic income can't address large-scale poverty
Critics of basic income argue that free stipends would reduce the incentive for people to find jobs or encourage them to make frivolous purchases. Several studies, however, have suggested that cash benefits don't keep people from entering the workforce.
After Stockton's program ended in January, researchers found that it reduced unemployment and increased full-time employment among participants. Stipend recipients also reported improvements in their emotional wellbeing and decreases in anxiety or depression. Most of them spent their money on basic necessities like food and merchandise, including trips to Walmart or dollar stores.
Chicago Alderman Gilbert Villegas told The Washington Post that his city's pilot will monitor how participants spend their stipends for the first six months. Depending on the results, the city may direct the stipends toward specific uses, such as covering heating bills or food.
Still, some members of the Chicago City Council were hesitant to back the program. Members of the Chicago Aldermanic Black Caucus argued that the money could be better spent on violence prevention or a reparations program. Alderman Nick Sposato, meanwhile, told Politico earlier this month that basic income is "a socialist idea that doesn't consider the mainstream."
Critics of basic income also sometimes point to the mixed results seen in larger-scale attempts at cash-transfer programs. A 2018 report found that the Alaska Permanent Fund, which has been distributing cash to state residents since 1982, increased part-time work by 17%. But the cash transfers had no effect on overall employment numbers (the share of people who had jobs).
Finland's basic-income trial, meanwhile, also found that employment rates between stipend recipients and those in the control group were about even. But the results of that program, conducted from January 2017 to December 2018, were complicated by the fact that participants had to give up part of their standard conditional benefits - things like housing allowances and illness compensation - to receive the monthly stipends.
Proponents of basic income still think it has the potential to reduce poverty on a national level.
"I am so proud of all the pilots, but I'm ready for policy," Michael Tubbs told Insider in March. "I've got all the evidence I need."
Wed, October 27, 2021,
California Gov. Gavin Newsom. Los Angeles is launching a universal-basic income program, set to be the biggest in the US so far. Justin Sullivan/Getty Images
Los Angeles is launching a guaranteed income pilot program with $1,000 monthly payments.
Around 3,000 families will get the money for a year, and there are no rules for how they spend it.
A council member said it would be the largest guaranteed income program in the US' history.
Los Angeles is launching a guaranteed income pilot program, set to be the biggest in the US so far.
The scheme will give about 3,000 families in poverty $1,000 a month for a year, and there are no rules for how the families spend the money.
To be eligible, applicants need to live in the City of Los Angeles, be at least 18 years old, have an income at or below the federal poverty level, have at least one dependent minor or be pregnant, and have experienced either financial or medical hardships related to the COVID-19 pandemic.
The federal poverty level depends on the size of a household. For a four-person household, a family earning less than $26,500 would fall under the federal poverty line. Poverty affects two out of every 10 residents in the City of Los Angeles - most of them people of color, according to a website for the program.
The program is called the Basic Income Guaranteed: Los Angeles Economic Assistance Pilot (BIG LEAP).
It has nearly $40 million in funding, South LA Councilman Curren Price said at a City Council meeting Tuesday, where council members approved the program.
Price said that the program would be "the largest guaranteed income economic assistance pilot program in our nation's history," and called it a "life-changing initiative."
The city said that the program would consist of "unconditional, regular, and direct cash payments," with "no restrictions on how the money can be spent." The payments would supplement existing welfare programs, the city said.
The concept of a guaranteed level of income, often in the form of a universal basic income (UBI) dates back to at least the 16th century, when Spanish-born humanist Juan Luis Vives advocated for a system of unconditional welfare. Since then, Dr. Martin Luther King Jr. has declared his support for the concept, and it went on to become a cornerstone of Andrew Yang's run in the 2020 Democratic Party presidential primaries.
More economists and lawmakers, including a coalition of US mayors, have been calling for the introduction of UBI schemes as the pandemic both exacerbated and exposed huge income inequalities.
"The idea of a guaranteed pilot program is one my office has been following for some time, and it gained momentum as we witnessed our country examine the racial disparities and social injustices during the COVID pandemic," Price said on Tuesday.
Other cities across the US have trialed UBI programs.
Stockton, California, ran a UBI scheme for two years which gave 125 residents $500 per month. After just a year, full-time employment among the participants had increased, and depression and anxiety had decreased, according to the results of the scheme.
Price told the City Council that the "positive results" from the Stockton program made it clear that one in Los Angeles was needed, too.
"It's my hope that following the conclusion of this pilot program, that it'll be replicated at the state and federal level," Price said.
Los Angeles Mayor Eric Garcetti had said in his annual "state of the city" address in April that the city was looking at launching a $24 million UBI program to support the city's poor residents.
Applications open on Friday and close on November 7.
The recipients of the funding will be chosen at random from the eligible candidates by the Center for Guaranteed Income Research at the University of Pennsylvania, and will be contacted by the city in January.
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