Chicago could be the next city to pilot test a Universal Basic Income

A Chicago alderman named Ameya Pawar is pushing for a Universal Basic Income pilot program which would distribute $500 a month to 1,000 families. The Intercept reports Pawar’s bill has support from a majority of Chicago lawmakers:

Pawar recently introduced a pilot for a UBI program in Chicago. Under his program, $500 a month would be delivered to 1,000 Chicago families — no strings attached. Additionally, the proposal would modify the Earned Income Tax Credit program for the same 1,000 families, so they’d receive payments on a monthly basis instead at the end of the year — a process known as “smoothing” that enables families to integrate the tax credit into their monthly budgets…

Pawar has convinced the majority of Chicago lawmakers to co-sponsor the plan, and he is hoping that the Chicago City Council will soon work with the mayor to implement it.

“Nearly 70 percent of Americans don’t have $1,000 in the bank for an emergency,” Pawar told The Intercept. “UBI could be an incredible benefit for people who are working and are having a tough time making ends meet or putting food on the table at the end of the month. … It’s time to start thinking about direct cash transfers to people so that they can start making plans about how they’re going to get by.”…

If Pawar’s program is implemented by Mayor Rahm Emanuel, Chicago would be the largest city in America to experiment with UBI. Matt Bruenig, the founder of the People’s Policy Project and a UBI advocate, is skeptical that a municipality can run a successful UBI because cities tend to have limited capacity to collect revenue. However, he does think that the pilot project has merit.

This isn’t the first pilot of this sort to be proposed. Back in February, I wrote about the Mayor of Stockton’s proposal for a similar pilot program which would deliver $500 a month to 100 families. The Stockton pilot is being funded by Facebook co-founder Chris Hughes.

Progressives from Mark Zuckerberg to Keith Ellison to, as of today, former President Obama:

Supporters of UBI often point to the Alaska Permanent Fund which delivers oil revenue to full-time residents of the state. But that’s not quite the same thing. For one thing, the most recent disbursement was only $1,100 a year or about $84 a month. That’s much lower than the amounts involved in these other pilot programs and not likely to make a major difference for most people. It’s a tiny supplemental income.

My problem with pilot programs like the one in Stockton and the new proposal in Chicago is that I’m not sure what it is we’re testing for. Usually, when you run an experiment, you have some idea what constitutes success and what constitutes failure. For instance, is the pilot a success if everyone who received the money says they felt less money stress? Is the program a success if the people receiving the money ate better or felt happier? All of these outcomes seem likely and yet that’s only looking at one side of an equation.

In the case of Stockton, the money is coming from a wealthy tech entrepreneur. There’s no drain on city or state coffers and no complaints from the person losing out on $1 million to fund this tiny pilot. In the case of Chicago, it’s not clear to me where the money would come from. Giving $500 a month to 1,000 families works out to about $6.5 million a year (assuming regular 4-week months instead of calendar months). That’s a lot of scratch and it’s not even a tiny dent in a city with 2.7 million people. If you scale this up to 100,000 families, you’re suddenly talking about two-thirds of a billion dollars per year and you still probably haven’t directly benefited more than 15 percent of the city’s residents.

Who is paying for all of that?

In order to really test this idea, I think we need to know who is paying and find out how they feel about it too. Do they feel more or less stressed with the massive tax hikes required to pay for this? Do they feel happier or less happy at working long hours to pay for someone else’s UBI? I think the answer to that portion of the experiment is going to be very different. In fact, I think many people would simply vote with their feet and move out of Chicago.

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