This story was originally published by City Bureau. Printed with permission.
Five hundred dollars, no strings attached. That’s what the Chicago Resilient Communities Pilot, one of the largest guaranteed income programs in the United States, plans to provide 5,000 low-income Chicagoans every month for an entire year. More than half of the participants are already receiving the cash injection.
Despite lower unemployment from a year ago and an increase in Chicago’s minimum wage to $15.40 an hour for some workers, proponents of the program say it’s needed because many Chicagoans still struggling to make ends meet. At the same time, inflation has hit a four-decade high and the skyrocketing cost of goods has experts fearing a rise in poverty, further increasing income inequality.
A solution? Cash assistance. The concept gained momentum during the COVID-19 pandemic, particularly after the federal government issued stimulus checks and child tax credit payments to help Americans cope with the sharp rise unemployment and financial difficulties. Experts say these payments, especially those for families, contributed to reducing child poverty while they were in place.
Still, some economists worry that guaranteed income programs could make inflation worse, further raising the costs of food, gas and other essentials. Other economists dismiss this concern, saying that the current inflation is mainly due to factors such as the war in Ukraine, supply chain disruptions and amazing benefits for companies.
Chicago isn’t the only local government to experiment with cash assistance. The growing list also includes Minneapolis, St. Paul and philadelphia cream. Cook County, which operates one of largest state-funded guaranteed income pilots in the country, has already committed to a permanent program after the end of the pilot. The size of the Chicago and Cook County programs could give researchers more evidence they need to determine whether guaranteed income could work at the state and federal levels.
While it’s still too early to draw conclusions from the Chicago program, here’s what we know now.
The Department of Family and Support Services (DFSS) received applications from seventy-seven community areas during a three-week application process. In total, the City received more than thirty-five applications for each of the places available in the program.
The median income of applicants was $14,000, according to DFSS. Women made up the overwhelming majority of applicants, as did blacks in Chicago who made up sixty-eight percent of applicants. The majority of applicants reported being caregivers.
For Audra Wilson, president and CEO of the Shriver Center on Poverty Law, this was not surprising given that black women are often the last to recover from economic recessions and “are more likely to face higher rates. higher unemployment rates, disproportionate amounts of childcare and domestic work, and other economic inequalities that have been compounded by the pandemic.
According to an analysis of applicant data by the City Bureau, the majority of applications came from communities on the South and West Sides, with the highest concentration of applicants – around 5% – in the Auburn Gresham area. Most applicants cited reduced working hours, unemployment and leaving their jobs for care work as reasons for applying for the program. More than 16,000 applicants reported experiencing homelessness or housing insecurity.
The City Bureau’s analysis found that among these applicants, black Chicagoans were disproportionately affected. Of those who said they were homeless, more than 80% identified as black. Separately, 83% of people who cited housing insecurity, meaning they moved frequently or didn’t have stable housing, identified as black.
How is the Chicago program administered?
DFSS and the mayor’s office selected two nonprofit organizations to administer the program. GiveDirectly, an international non-profit organization operating primarily in East Africa, is the program administrator. AidKit, a technology platform, helps GiveDirectly deliver money to residents.
DFSS began distributing payments to residents the last week of June. Beneficiaries could choose to receive the money by bank deposit or prepaid debit card, and this income will not be taxed.
How were the participants chosen?
To be eligible, applicants had to report experiencing economic hardship due to the pandemic and have a family income of less than $70,000 for a family of four. The candidates selected to participate in the pilot project were chosen using a computer-generated randomization system. DFSS Commissioner Brandie Knazze said the system was designed so that low-income people living in areas hardest hit by COVID-19 have a higher likelihood of being selected.
Harish Patel, director of Economic Security for Illinois and a manager Chicago Resilient Families Initiative Task Force who studied the scope of a guaranteed income pilot project, said there were several advantages to choosing beneficiaries at random. A lottery system minimizes bias and corruption, two issues that could damage trust in the program and hurt long-term support. Randomization also allows researchers to draw conclusions about how the program affects low-income people from various backgrounds.
Who was chosen to participate in the program?
Knazze, the DFSS commissioner, said most of the selected participants were women and identified as parents or caregivers, closely mirroring the applicant pool. More than half of the 5,000 attendees are black (sixty-seven percent) and nearly a quarter of attendees identify as Latinx (twenty-three percent). White Chicagoans make up sixteen percent of attendees, and Asian Chicagoans are the smallest racial category at three percent of attendees.
In early July, DFSS distributed its first payments to 3,500 Chicagoans via direct deposits and prepaid debit cards. Others have received the money since then on an ongoing basis. As of last week, DFSS was still working on registering a few hundred participants.
What Are Guaranteed Income Advocates Saying?
So far, Chicago is getting high marks from advocates for creating a program with few hurdles to jump through. According to them, administrative burdens often prevent some people from accessing aid. The application was available online in six languages and took approximately thirty minutes to complete. Applicants were not asked about their immigration status or criminal record. He asked about household size, demographics, education and other public benefits received. It also required proof of identity, income and residency through a mix of documents.
With the cost of living rising and wages lagging behind inflation, some local experts believe $500 a month will make a difference in the lives of poverty-stricken Chicagoans. While guaranteed income lets recipients decide how and what to spend extra money on, experts say it’s not the only solution – a broad social safety net and economic policies that help families join both ends are equally essential.
“This pilot project, as important as it is, is not the only tool capable of solving poverty – it is part of a series of actions that must be taken to truly reduce poverty,” said Wilson, president. and director of the Shriver Center. CEO.
While advocates surveyed agree that $500 a month is limited, especially as prices rise, it still has the potential to help poor Chicagoans.
“We hope the pilot project will allow people to catch their breath,” Commissioner Knazze said. “We want to be able to allow them to have economic stability and mobility, to see financial gains, either by saving or by achieving a personal goal, perhaps an educational goal or savings.”
Could the pilot become permanent?
It is unclear whether the City has any long-term plans to implement a permanent guaranteed income program and how this would be funded. When asked, the mayor’s office said it was committed to partnering with city council to help residents use direct cash assistance in a future budget cycle. And DFSS Commissioner Knazze said the results of the pilot project will inform how the city runs its programs going forward.
Approximately 3,000 of the 5,000 pilot beneficiaries will participate in a voluntary study conducted by the University of Chicago Inclusive Economics Lab, according to Carmelo Barbaro, executive director of the laboratory, which will assess the impact of the program on the financial health and general well-being of participants. The researchers plan to use the results to provide recommendations for future programs.
Patel, the director of economic security for Illinois, said he hopes the pilot project highlights the need for guaranteed income programs to complement, not replace, the social safety net. But, he said, the city and county could use the cash assistance program format to make their existing network of programs better, simpler, with less paperwork and with fewer barriers for people. .
The City expects to have preliminary results in late 2023 or early 2024.
Ameya Pawar, a longtime guaranteed income advocate, believes the Chicago pilot program will demonstrate the need and feasibility of a national program, something local guaranteed income advocates agree on. His hope, he said, is that the Chicago protest along with the other protests across the country will lead to a shift in federal policy.
Sky Patterson is a 2022 Summer Civic Reporting Fellow, along with Francisco Saúl Ramírez Pinedo, who contributed to this report. Sarah Conway, the City Bureau’s senior reporter covering jobs and the survival economy in Chicago, also contributed. You can reach her with advice at [email protected].
This story was produced by City Bureau, a Chicago-based civic journalism lab. Learn more and get involved at www.citybureau.org.