Chicago Considering $6 Million Universal Basic Income Pilot

Citing the danger automation poses to low-income jobs, Chicago Alderman Ameya Pawar wants to hand cash to every man, woman and child in the city according to The Intercept – while the city’s broken pension system has already saddled every resident with $11,000 of debt.

Pointing to investments in autonomous vehicles by companies like Tesla, Amazon, and Uber, Pawar observed that long-haul trucking jobs, historically a source of middle-class employment, may become obsolete. More people out of work means more political polarization, says Pawar. ”We have to start talking about race and class and geography, but also start talking about the future of work as it relates to automation. All of this stuff is intertwined.” –The Intercept

A one-time hopeful for Illinois governor until he was outspent by two billionaires, Pawar has waxed eloquent over politicians who pit groups of poor people against each other to sow discord. 

“You know, the British pit Hindus and Muslims against one another,” Pawar told The Intercept at the time, drawing on his Indian-American heritage. “Pit people against one another based on class and geography, caste … this is no different. Chicago versus downstate. Downstate versus Chicago. Black, white, brown against one another. All poor people fighting over scraps.”

And with dwindling jobs due to automation, the Chicago Alderman is making the case that Universal Basic Income (UBI) is the only solution. 

Pawar thinks that one way to battle racial resentment is to address the economic precarity that politicians have used to stoke it. He has decided to endorse the universal basic income — an idea that has been picking up steam across the world.  –The Intercept

“From a race and class perspective, just know that 66 percent of long-haul truck drivers are middle-aged white men,” he observed. “So if you put them out of work without any investment in new jobs or in a social support system so that they transition from their job to another job, these race and class and geographical divides are going to grow.”

Proponents of Universal Basic Income want an alternative to the current system of distributing goods in-kind, as is the case with the Supplemental Nutritional Assistance Program (SNAP). They say that cash transfer programs (UBI) “sidestep the administrative costs of distributing in-kind goods,” reports The Intercept, while avoiding the stigma of food stamps. 

To that end, Pawar has rolled out a pilot proposal for UBI which would go to 1,000 households: 

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. –The Intercept

Pawar has convinced most Chicago lawmakers to co-sponsor the plan, and he is hoping that Mayor Rahm Emanuel will work with the Chicago City Council to implement it. 

My legislation calling for the creation of a Chicago #UniversalBasicIncome pilot has 36 co-sponsors! On to the Commitee on Workforce Development and Audit. Committee chair @40thWard is also a sponsor. More soon! #UBI pic.twitter.com/W7D5Hbx31E

— Ameya Pawar (@Ameya_Pawar_IL) June 27, 2018

“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.” –The Intercept

On Tuesday, Emanuel’s old boss, former President Obama advocated for Universal Basic Income while speaking at the 2018 Nelson Mandela lecture. 

Whoa Obama just endorsed a UBI.

“It’s not just money that a job provides. It provides dignity and structure and a sense of place and a sense of purpose. So we’re gonna have to consider new ways of thinking about these problems, like a universal income.” pic.twitter.com/3K2veB4R3a

— Jeremy Slevin (@jeremyslevin) July 17, 2018

If Pawar’s plan is implemented, Chicago will be the largest city to test a UBI scheme. UBI advocate and founder of the People’s Policy Project told The Intercept that he’s skeptical about large municipalities running successful UBI programs because of a large city’s limited capacity to collect revenue.  

“This looks like a UBI pilot program, which is a good idea, just to study its effects and produce data that can help guide other UBI efforts,” he told The Intercept.

“Our hope, that I know will be born out in this pilot, is that it will show that when we smooth out the EITC, and we provide a monthly basic income to 1,000 families, that they will be able to plan for expenses, they can make decisions about savings, they can make decisions about investing, they could make decisions about how they could deal with a financial emergency, just like all families do,” Pawar told The Intercept. “And once implemented, we’ll be able to hopefully scale it.”

That said, to Pawar – the question isn’t whether the United States can afford to implement UBI, rather, whether it can afford not to. 

“My response to Amazon, and Tesla, and Ford, and Uber … we need to start having a conversation about automation and a regulatory framework so that if jobs simply go away, what are we going to do with the workforce? … If [those companies are] reticent to pay their fair share in taxes and still want tax incentives and at the same time automate jobs, what do you think is going to happen?” Pawar asked.

“These divisions are going to grow and, in many ways, we’re sitting on a powder keg.”

To give Chicago’s entire population of 2.7 million a check for $500 per month would cost $1.35 Billion per month, or $16.2 billion per year. Considering the city’s $71 billion debt load – of which around $40 billion is pension debt, UBI would add nearly 23% per year to that ticking time bomb.

But hey, it’s a nice thought we’re sure will translate to lots of votes.