Universal basic income could redress the high cost of underemployment in Chicago

Photo by Yingxu Jane Hao

President Barack Obama has spoken favorably about it.  So has Facebook leader Mark Zuckerberg. So the path seemed smoothed for Ald. Ameya Pawar when he introduced a resolution this summer calling on the City Council to consider a universal basic income plan for Chicagoans.

The idea of a universal basic income (UBI) has been around for decades, but in recent years it has spilled out from think tanks and universities into the real world. UBI’s have been piloted in California, Finland and elsewhere, and come in all shapes and sizes. They are linked by the same core claim that providing modest no-strings-attached cash payments will relieve poverty, stimulate the economy, and provide basic economic stability to millions of low-income workers whose livelihoods are threatened by automation.

Pawar’s plan, which will have to pass a City Council vote and win approval by the mayor before it goes anywhere, proposes a pilot that would provide 1,000 Chicago families $500 per month.

Chicago is an ideal laboratory, says Pawar, a one-time candidate for governor, because the city is grappling with disappearing work, economic inequality, and unresponsive politics—factors that will eventually affect all big cities. “We are at the intersection of race and class and geography,” Pawar told Chicago Tonight, “and we’re not doing anything about it.”

Or perhaps more to the point, the things we’re doing aren’t working. Despite a nine-year-old bull market, sky high corporate profits and a record low national unemployment rate, about 40 percent of Chicago’s black 20-to-24-year-olds are still out of work and out of school, compared with just seven percent of white 20-to-24 year-olds. Median wages for black workers fell 17 percent from 2000 and 2015, and Chicago’s poverty rate exceeds the national average.

It was surprising then to see critics attack Pawar’s proposal, which is admittedly still short on detail, as too expensive and in the end, misguided. One editorial called instead for stepping up business deregulation and investment in the private sector—in other words growing our way out of the economic doldrums that have trapped so many low-income Chicagoans and people of color.

Photo by April Alonso

Ald. Ameya Pawar, 47th Ward

But those policies are exactly what helped get us into this mess. One of the clearest lessons of this brave new world of automation and globalized economies is that salaries for wage workers get pushed down by increased competition. Witness the fierce opposition in Chicago and all around the country by companies trying to keep a lid on the minimum wage. This is happening as profits soar for investors and a small handful of executives at the top of companies. When companies and states do raise wages they commonly reduce or remove benefits, leaving workers without savings and healthcare.

What many of Pawar’s critics don’t see—or more likely see but choose to ignore—is that wage labor, the once well-paying jobs in manufacturing and auto work, often no longer provide a living wage. It’s why single mothers work three shifts cleaning hotels to make ends meet, and people with bachelor’s degrees drive for Uber all night. The private sector is leaving these workers behind, and no amount of deregulation, red-tape cutting or public investment (on top of the billions of dollars in tax breaks and incentives taxpayers already lavished on private companies) will bring well-paying jobs back. The disappearance of good jobs is not simply a flaw, it is permanent feature of this new economy.

Other critics complained that Pawar’s plan has not identified a funding source, and ask who would pay? The pilot alone would cost $6 million a year, and the city is already in deep debt. They make a good point, but they also miss a larger one. While several existing pilots have been launched with philanthropic money (the Economic Security Project led by Facebook founder Chris Hughes helped fund a UBI trial in Stockton, California this year), financing large-scale plans can be accomplished without taxpayers picking up the bill.

That idea rests on Chicagoans recognizing that the city is rich in civic assets that really belong to its people, not to City Hall or to private interests. The state of Alaska, for instance, shares profits from oil and gas it draws from the ground with its citizens. Every man, woman and child receives an annual check of about $2,000. The idea is if you are an Alaskan, then you are entitled to a share of Alaska’s resources.

Chicago does not have oil and gas, of course, but it does have plenty of other assets: parkland, huge numbers of city-owned buildings and other real estate, and a vast and diversified business economy of banking, aerospace, healthcare, agriculture, pharmaceuticals, insurance and more.

Instead of giving away parkland, the city could fund a UBI plan by leasing land to users, and being more transparent in monetizing public assets. (The city’s disastrous parking meter deal could have easily paid for a UBI plan by itself.) Good corporate citizens could make annual grants to a UBI fund in recognition of the infrastructure, market and security provided to them at low cost by the people of Chicago. Such a fund could accumulate billions of dollars in a very short period of time, without anybody’s taxes going up.

Or if the city really got serious about revitalizing the working economy, instead of nickel-and-diming the poor, it could take a fraction of the $200 million it collects annually through parking tickets and reinvest it in a basic income plan that could directly help workers and communities. Then it could discontinue revenue-raising on the backs of low-income people.

UBI should not replace work or capitalism, but rather help them function more efficiently and fairly. Pawar’s idea deserves a deeper look.