Chicago Resilient Task Force Recommends Guaranteed Income Pilot Program

The Chicago Resilient Families Task Force, which includes as a member Harris Public Policy Associate Professor Damon Jones, has released a report which recommends an expansion and modernization of the Earned Income Tax Credit and a guaranteed income pilot in order to empower individual Chicagoans through increased economic security. The task force, which was created by the Chicago City Council last year, was funded by the Economic Security Project, with the Metropolitan Planning Council as fiscal sponsor.

“There are many families who find themselves in a state of economic precarity and a growing public debate regarding the best ways to address this,” Professor Jones said. “It was exciting and fascinating to serve on a committee comprised of various local stakeholders and also humbling to hear from members of the community about their economic struggles and how cash assistance could change their circumstances. The Task Force and the report took a deep dive into two potential solutions and also made space to center the voices of those actually in need.”

The task force met with experts on the mechanisms of poverty and listened to the stories of those in need to create Big Shoulders, Bold Solutions: Economic Security for Chicagoans, which documents the results of their research.

The task force suggests a pilot program of guaranteed income which would continue Chicago’s track record as a city willing to bring innovation to scale; they recommend this based on the data throughout the report that shows individuals do not abuse cash transfers. The benefits of this pilot for policy are:

• Quick results, since the transfer of cash to low-income families will provide immediate improvement to well-being
• Make change in the community by pursuing equality
• Create data which will fuel future progress in policies and pilot programs that deal with income and poverty
• Serve future studies and pilot programs through the evaluation of unconditional, unrestricted cash transfers using a control group
• The transfer of research into motion in a way that can be seen by others across the state, country, and world
• The chance to update the exclusionary narrative of poverty and to promote the real experiences of those who live within the cycle of poverty

In particular, the task force outlines the scope of an unconditional cash transfer pilot program with 1,000 participants. It also suggests ways to expand the Illinois Earned Income Tax Credit (EITC) and create a Chicago EITC.

Wage increases for workers in lower- and middle-income jobs do not match or exceed the rate of inflation, the report finds. As a result, wage inequality is now significantly larger than it was in 1985. In the last 30 years, the hourly wage of the median worker has increased 9.8%, but the top 10 percent and top 1 percent of workers have experienced wage gains of about 36%.

The report builds on Professor Jones’s recent research, with coauthor Ioana Marinescu, which demonstrates that unconditional cash transfer policies do not cause people to leave the workforce. These policy proposals, similar to the Stockton Economic Empowerment Demonstration (SEED) in Stockton, California and the Magnolia Mothers Trust in Jackson, Mississippi, include direct payments that ensure each resident has a baseline of income to provide for basic needs. While previous research has focused on the effects of these unconditional cash transfers at the micro level—i.e. winning the lottery—Professor Jones’s study examined their large-scale impact by looking at a government program that has supported Alaska residents for the past 25 years.

Contingent workers, or individuals who work in the ‘gig economy’ without set contracts for their employment, represent a growing share of the Chicago workforce. The report found that contingent workers:

• Make less money than standard full-time workers due to unreliable schedules and salaries
• Live in poverty and rely on public assistance at higher rates than the rest of the workforce
• Tend to be younger, Hispanic, have low family income and lack a high school degree
• Were laid off in the previous year at a rate more than three times higher than the rate at which standard full-time workers lost their jobs

The report also examines the status of un- and undervalued caregivers, many of whom are low-paid or unpaid, in the case of family members assisting loved ones. This work is mostly done by people of color, women, and immigrants—the same demographics that the task force found to be affected by predatory cycles of poverty.

The task force did find instances of progress in Chicago’s economy. The city’s incremental raise in minimum wage from $8.25 an hour in 2015 to $13 an hour in July has benefited 330,000 workers, representing about 25% of the city’s workforce, in low-paying occupations and industries. Another effective policy, according to the report, is the Chicago Sick Leave Ordinance, which entitles sick time to most people working in the City of Chicago or the Cook County Suburbs who have been on the job for 6 months or more with at least 80 hours worked within a 120-day period. This ordinance, which went into effect in July 2017, applies to people working either full-time or part-time at companies of any size.

The pilot program would provide a sample of 1,000 low-income Chicagoans with $1000 per month, a number based on the federal poverty guideline for a family of 1. The period of the program is 1.5 years, which is a sufficient length to see the effects of the supplement. Research methods may include quantitative surveys, qualitative interviews, and ethnographic studies. Existing benefits to participants will be preserved.