Los Angeles and Chicago are rolling out guaranteed basic income programs that will provide direct cash assistance to thousands of struggling families.
By Alicia Victoria Lozano and Safia Samee Ali
As millions of people continue to feel the financial fallout of the coronavirus pandemic, two of the country’s biggest cities are committing millions of dollars to help struggling families.
Los Angeles and Chicago are rolling out guaranteed basic income pilot programs that will provide monthly payments to low-income residents for one year. Los Angeles’ program, dubbed BIG:LEAP, will give 3,200 people $1,000 a month, and Chicago’s initiative will provide 5,000 residents $500 a month.
Recipients will be picked at random.
Applications for Los Angeles’ initiative closed Friday; Chicago is still hammering details for its program. Both are set to launch next year.
The programs, which will be the largest of their kind, build on momentum generated by smaller initiatives like the two-year pilot in Stockton, California, which was found to increase participants’ full-time employment and decrease anxiety and depression. Basic income programs have also been tried in Finland, Kenya, Brazil and several other countries.
About 40 other U.S. cities have considered or implemented similar efforts, according to Mayors for a Guaranteed Income, including Minneapolis; Denver; Newark, New Jersey; Pittsburgh; San Francisco; New Orleans; and Compton, California.
In July, Los Angeles County supervisors approved a three-year pilot program for residents ages 18 to 24, and California is also looking into the potential of launching a statewide initiative.
Can it work on a bigger scale?
Previous attempts to provide direct cash assistance payments have largely yielded positive results, but economists question whether similar programs can be replicated on a large scale.
“The [federal] child tax credit, as well as the stimulus, showed that there are some holes and some people get left out of these sort of large government programs,” said the director of the Center for Guaranteed Income Research at the University of Pennsylvania, Stacia West, an assistant professor of social work at the University of Tennessee.
“Part of what we’re looking at is what disbursement mechanism works best for specific populations, and my feeling is that a one-size-fits-all approach is not going to work,” she said.
The idea of giving direct cash assistance to low-income residents has been tossed around for generations by economists, legislators and community leaders, and it has gained significant momentum during the pandemic.
According to census data, 18.4 percent of Chicago residents experience poverty, compared to 18 percent of Los Angeles residents, higher than the national average of 11 percent. The number of people living in poverty declined overall during the pandemic because of the massive stimulus relief measures enacted at the beginning of the crisis, the Census Bureau reported in September.
“We have so much need in this city,” said Abigail Marquez, the general manager of the Community Investment for Families Department, the lead administrator for Los Angeles’ program.
Stockton test case
Even before Covid-19 prompted a federal stimulus, basic income drew national attention when 2020 presidential candidate Andrew Yang proposed a so-called Freedom Dividend, which would have provided $1,000 to every U.S. adult for one year, in his platform.
“We know that the policy has to come at the federal level,” said former Stockton Mayor Michael Tubbs, who spearheaded the city’s program in 2019. “We also know that cities are laboratories of democracy, and oftentimes, particularly in this hyperpolarized time we live in, mayors have the ability to break through the noise and pilot policies.”
Key findings from the first year of Stockton’s program showed that guaranteed income reduced income instability, helped recipients find full-time jobs and enhanced mental and overall well-being, according to a report released this year.
“Having two of the three biggest cities in the country being so bold and have guaranteed income means so much,” Tubbs said. “It creates even more evidence and more people who are supportive of this idea.”
While Stockton’s program was funded by donors, Chicago and Los Angeles are investing money from their budgets for their initiatives. Chicago has committed $31 million, and Los Angeles will pay $38 million, including $11 million that was cut from the police budget after last summer’s uprisings following George Floyd’s death in Minneapolis.
Challenges to large-scale implementation
When translating the idea to larger cities, economists say, researchers will weigh two main concerns: the impact of losing benefits, like Section 8 vouchers or SNAP benefits, and how the money would be disbursed to those who qualify.
Los Angeles administrators are asking public agencies to waive restrictions to protect participants’ existing benefits, Marquez said.
Gary Painter, a public policy expert at the University of Southern California, said: “If you’re a single parent, for instance, it’s not clear what value these programs have beyond the social safety net programs that currently exist. At scale, we’re going to think hard about how this income source is treated by other programs, and I have not heard that discussion writ large.”
Another potential challenge for larger cities is to gain and maintain trust. West said many people who are eligible for government programs are accustomed to not being trusted, so a more person-centered approach is needed not only in disbursing the money but also in tracking data.
“Guaranteed income has to really separate itself from that paternalistic ‘you’re a number, you don’t matter, there’s something morally wrong with you’ and the internalized welfare stigma the individuals have,” she said.
While Chicago and Los Angeles are among a growing number of cities providing income assistance, the proposals did not come without pushback.
In Chicago, 20 members of the City Council’s Black caucus said that the program should be canceled and that funding should be diverted toward violence prevention and reparations for Black residents, the Chicago Tribune reported. Other legislators opposed the program because they felt that it would discourage residents from working.
“Classic economic models imply that if you have more money then you work less, but in the Stockton experiment it was the exact opposite. We saw them increase their labor force participation and [have] more success in the labor market,” said Stephen Ross, an economics professor at the University of Connecticut. “It will be interesting to see if the larger pilots show the same thing.”