Universal Basic Income gets a hearing

Chicago forms task force to study UBI and other programs to combat poverty

 University of Chicago economist Allen Sanderson and Alderman Ameya Pawar talk after their debate in May. (One Illinois/Ted Cox)

University of Chicago economist Allen Sanderson and Alderman Ameya Pawar talk after their debate in May. (One Illinois/Ted Cox)

By Ted Cox

Chicago is considering a radical plan to combat poverty by just giving people money.

It’s called Universal Basic Income, and it actually stems from proposals first made by free-market economists more than 40 years ago.

Chicago Mayor Rahm Emanuel announced Wednesday he was creating a Chicago Resilient Families Task Force to study potential ways to address poverty, including UBI.

It grows out of a resolution submitted by Alderman Ameya Pawar at the June City Council meeting calling on the city to form just such a task force to study poverty, including a possible Chicago-only expansion of the Earned Income Tax Credit, which basically returns paycheck tax deductions to low-income wage earners.

Emanuel, who announced last week he would not seek re-election next year, formally threw his support behind the task force this week.

“Chicago has the opportunity to lead the way in groundbreaking poverty-reduction programs, and this task force will help us lay the path toward that goal,” Emanuel said in a statement. “From my work on the EITC in the Clinton White House and Congress to the creation of a $13 minimum wage, I have dedicated my career to finding more ways to help families work their way out of poverty and strengthening their economic security.”

Pawar, who likewise has already announced he will not seek re-election, welcomed the announcement, saying the task force “will drive forward the conversation around guaranteed income and modernizing the Earned Income Tax Credit, two potentially transformative moves for lifting Chicagoans out of poverty.” He added, “This could allow financially struggling Chicagoans to begin to rise out of poverty, thereby also boosting local economic development in their own communities.”

According to the Mayor’s Office: “The task force will be led in partnership with the Economic Security Project, a national organization committed to advancing the debate on guaranteed income in the United States. The task force will also partner with the Social IMPACT Research Center at Heartland Alliance.”

It will be led by Pawar as well as Service Employees International Union Local 1 President Tom Balanoff and local community leader Celena Roldan.

“Universal Basic Income has the potential to raise the floor for all Chicagoans and could be one important component in the fight for economic justice for Chicago’s working families,” Balanoff said. “We need new, innovative social programs to ensure thousands of working people have the financial security they need to raise their families and support their communities. Chicago must lead the way.”

Given the choice between giving people things and giving people money, economists would rather give them money.
— University of Chicago economist Allen Sanderson

The task force will start with a clean slate, but Pawar’s original resolution suggested a UBI pilot program giving $500 a month to 1,000 low-income Chicago families. That would require a minimal initial investment of $500,000 a month, or $6 million a year.

The topic actually came up in a debate on the minimum wage in May between Pawar and University of Chicago economist Allen Sanderson, who said that, like the Earned Income Tax Credit, it grew out of Milton Friedman’s call for a “negative income tax” during the Nixon administration in the ‘70s.

Like other economists, Sanderson emphasized, “It has to be a support" above a base employment income. "It can't be the end-all and be-all," he added.

Pawar’s original resolution cited that many jobs are being threatened by automation, globalization, trade, and growing income inequality, and that economic thinking is moving toward the recognition that some form of basic income might be necessary both for people’s livelihoods and the overall health of the economy.

Compared with programs like food stamps, it would create a basic subsistence income, while encouraging all who receive it to augment that income to better their lives. As Sanderson put it: “Given the choice between giving people things and giving people money, economists would rather give them money.”

Of course, Chicago’s announcement was immediately derided as a tax giveaway by conservative political pundits like Bill O’Reilly.

But as Emanuel pointed out in his release, “The task force will produce a series of recommendations, including the potential for a non-city-funded guaranteed-income program pilot, and will list a set of prescriptive policies aimed at reducing poverty and supporting working-class Chicagoans.” That would potentially include quarterly repayments in the Earned Income Tax Credit and other ways of expanding that program to Chicagoans.

Emanuel touted how the city had worked to attack poverty by compelling earned sick leave for workers and raising its minimum wage by incremental steps to $13 next year — a proposal that also began with a task force including Pawar.

The Mayor’s Office cited how other cities have established innovative programming around poverty reduction, including a small guaranteed-income pilot in Stockton, Calif., and the Working Families Credit Program in San Francisco.

It’s been a week of triumphs for Pawar, as the same day the Illinois Commerce Commission revoked the license of the notorious Lincoln Towing, a Chicago firm made famous in the ‘70s by folk singer Steve Goodman’s sea chantey “Lincoln Park Pirates.” Spurred by complaints from constituents and other Chicagoans, Pawar has been working for years to hold Lincoln Towing accountable for unwarranted towing and abusive behavior toward car owners.

Ameya Pawar is founder and president of One Illinois.