Panel debates Universal Basic Income
First we have to confront our biases, then we have to trust those in need to know what’s best for themselves
By Ted Cox
CHICAGO — What’s so wrong with giving money to people who need it?
That was the basic question to start off “The Big Bet: Investing in People to End Poverty,” a panel discussion held Wednesday evening at the Metropolitan Planning Council in downtown Chicago.
“If people don’t have enough money to pay their bills, the easiest way to solve that is to give them money,” said Ameya Pawar, former Chicago alderman, who acted as moderator in the discussion. “And yet we can’t have a rational conversation about that because we always devolve into what will they do with the money? Will they spend the money properly — or whatever.”
“It’s funny that people with money think that people without don’t know what to do with it,” said Lauren Burns-Coady, strategic director of the Jain Family Institute Guaranteed Income Initiative, “but people with money also don’t know what to do without money.”
“When you give people money, won’t they stop working?” Ebony Scott, Chicago director of the Family Independence Initiative, said. “What we find is the answer is absolutely not.”
“When you give people money, won’t they stop working? What we find is the answer is absolutely not.”
Ebony Scott (One Illinois/Ted Cox)
What’s beyond debate is that it’s a problem society has to confront, as Pawar pointed out, having represented Chicago’s 47th Ward including the well-to-do North Center and Lincoln Square neighborhoods.
“As an alderman, former alderman, who represented a community that was more and more upper-middle-class, by the time I left the office I can tell you toward the end how many more interactions I had with people who were in double-income households, both professionals, living check to check, because of a confluence of issues like student loans, housing,” Pawar said. “If you’re seeing this in two-income households, imagine what it’s like for a single mom,” he added, “and imagine what cash might do for her and the transformative impact it might have for her and for her family.”
He pointed out that “67, 68 percent of Americans don’t have $1,000 in the bank to cover emergencies. That means all the way up into the middle class.”
“We really need to recognize that people need more help,” said Burns-Coady. “They’re completely falling through the cracks.”
“We really need to recognize that people need more help. They’re completely falling through the cracks.”
Lauren Burns-Coady (One Illinois/Ted Cox)
Thus Universal Basic Income, which Burns-Coady defined as “a big umbrella concept that captures a lot of different kinds of cash-based policies,” but all growing out of “unconditional” cash transfers.
Before leaving office this year, Pawar proposed a UBI pilot program for Chicago last year that resulted in a task force assigned to study the issue. That produced findings that dovetailed with potentially expanding the Earned Income Tax Credit to single taxpayers and those with higher incomes.
All agreed Wednesday they’re not new ideas. In the ‘60s, at opposite ends of the political spectrum, Rev. Martin Luther King advocated a guaranteed-income program, and University of Chicago economist Milton Friedman backed what he called a “negative income tax,” which became the EITC. As current U. of C. economist Allen Sanderson explained it last year in a debate on the minimum wage with Pawar, “Given the choice between giving people things and giving people money, economists would rather give them money.”
So what happened?
Scott said that, instead of simply giving people money, it got tied up in the top-down, bureaucratic approach of the War on Poverty, with so many conditions and restrictions on aid that it resulted in the “crippling of communities.”
“Is this going to empower people?” Burns-Coady said. “Or is this going to perpetuate the sort of learned helplessness in a system that doesn’t believe in you?”
That continues today, as Scott pointed out that Chicago’s Department of Family & Support Services has a $400 million annual budget, but bemoans, “We don’t know if it’s working or not.” As Scott put it, the agency can give abundant money to organizations offering to take kids to a museum, but can’t give $50 to a father to do the same with his children.
“The sector loves services,” Scott said. “It really is a mind-set issue.”
Then again, it’s a mind-set issue for everyone, as everyone tries to come to terms with the notion of just giving money to someone unconditionally.
“How does prejudice that we have manifest itself in policy?” Pawar said. “Reagan’s ‘welfare queen’ resulted in Clinton’s abomination of welfare reform.” Currently, he added, parents in need are forbidden to use food stamps to buy diapers or wipes, but they need to provide diapers and wipes to day-care services so they can go to work to try to pull themselves out of poverty and the need for food stamps — a Catch-22.
“How does prejudice that we have manifest itself in policy? Reagan’s ‘welfare queen’ resulted in Clinton’s abomination of welfare reform.”
Ameya Pawar (One Illinois/Ted Cox)
“Most of it was rooted in bias and racist opinions about communities and classist opinions about people who were not wealthy,” Scott said. “When you’re talking about black folks, the joke is always, ‘Well, they’re gonna go buy Jordans and Hennessy with it, right?’”
“Basically, it’s a trust issue,” Burns-Coady said. “How can we trust that people are going to know what to do with their money? And we just don’t see that as a question that is valid or relevant.” The “unconditional” part of the cash transfer is critical. “Cash assistance is about empowering the person or empowering the family to figure it out,” she added.
“At FII, we say we trust and we invest directly in families,” Scott said. “We trust that families know what they need. We trust that families have an understanding, a vision for where they want to go.
“We’re not telling anybody what to do with the funds at any time,” she added. “There was a time in this country when families were at the center and families and communities were trusted to be able to lift themselves up.”
They cited incidents where one person took the money and invested in a truck for landscaping, then a snowplow attachment so that he made $6,000 clearing parking lots last winter. Others used money to stay home with the kids so a spouse could finish school — and get a better job. Scott spoke of “how people leverage it to pursue entrepreneurship or an advancement in their skills or education so they can actually do more work.”
The issue of what constitutes “work” also came up, with Burns-Coady saying it typically doesn’t include labor in the home that goes unpaid. “It’s domestic work, it’s a side hustle, it’s gig work,” she said. “If it’s not paid, the stigma is it’s not valuable, but it’s incredibly valuable, crucial work.”
Scott said the FII’s surveys of families in the San Franciso Bay Area turned up how they shared child care, transportation, and food including cooking chores, with estimates that 250 families were trading the equivalent of more than $600,000 back and forth. “Social capital,” she said, “we call it the invisible economy.” And for even a Horatio Alger, pull-yourself-up-by-the-bootstraps type, doesn’t that sort of work deserve payment?
Pawar pointed out “how stress is a killer. It literally shortens people’s lives, and a big driver of that stress is economic instability,” whether on a national or a personal level.
“Is it going to increase well-being?” Burns-Coady said. “What does well-being mean in this context?”
Most of the UBI pilot programs tried have started small. Pawer’s original proposal was for $500 a month to go to 1,000 designated families — a minimal investment of $6 million a year. All said they’re monitoring a program in Stockton, Calif., that gives $500 a month to 100 people, and it’s about a third of the way through its initial 18-month time frame. Can such programs be scaled out to something larger and more extensive if the political will — and the money — is there? Pawar pointed out that newly elected Chicago Mayor Lori Lightfoot was the only candidate to in any way endorse some sort of UBI program.
“We absolutely believe we can scale it,” Scott said. “We love to say Chicago is a world-class city. So I think that we have a responsibility to lead this work and to be bold and to really experiment with this.”
Ameya Pawar is founder of One Illinois.