Cook County Board President Toni Preckwinkle announced that Cook County residents will pilot the nation’s largest taxpayer-funded guaranteed income experiment.
By Froylan Jimenez | OP ED
Chicago and Cook County governments each plan to give away $500 monthly to low-income residents with no strings attached. In its current form, this well-intentioned public policy, funded by our taxpayer dollars, is actually inequitable, lacks necessary accountability mechanisms for sustainability and is ultimately counterproductive to our local economies.
Chicago’s Resilient Communities Pilot will award $500 in cash assistance each month for one year to 5,000 low-income city residents, and Cook County’s Promise Guaranteed Income Pilot will provide 3,250 county residents with that monthly amount for two years. Both programs are using a lottery method to choose applicants who meet the adult residency requirements and a household income 250% below the poverty level. The guaranteed income’s purpose is to help low-income people emerge from poverty. Chicago is allocating $31.5 million and Cook County $42 million to these pilots.
While these attempts to fight poverty are admirable, their design misses the mark in what they hope to achieve: economic equity. According to the latest US Census numbers, there are well over 2 million people living in Chicago and over 5 million in Cook County. Those who face harsh poverty make up 20.6% and 13%, respectively, of these populations. Based on these numbers, only a very small percentage of eligible residents will receive help. Equity should not be offered only by chance. Since the recipients of the guaranteed income programs will all be randomly selected by lottery, the program will leave many qualified and well-deserving low-income residents without any assistance.
If the intention behind guaranteed income is equitable economic recovery, then there has to be a better way to help besides wishing low-income residents good luck.
Giving $500 monthly checks with absolutely no directives, expectations or supplementary training is a poor investment. Having some parameters such as proof of debt payments and participation in financial literacy courses and job mentorship is more likely to lead to a sustainable solution. Our elected officials are wishing for the best while they implement a poverty experiment with taxpayer dollars.
Other places that have undertaken guaranteed income trials, such as Compton, California, have used private funds. The Compton Pledge, for instance, is a philanthropic program that specifically targets low-income residents who are either single parents, pregnant women or foster children. We should consider similar approaches for vulnerable groups such as low-income veterans or low-income senior citizens. Such a privately funded guaranteed income program in our area would be less vague, less randomized, more accountable, more sustainable and, more importantly, no longer funded by tax dollars.
Safeguards are necessary to avoid the same monitoring errors seen in programs such as the county’s senior homestead tax exemption program, which has been abused and has cost taxpayers.
While guaranteed income programs and government checks may have the best of intentions, their results are questionable and may be flat-out counterproductive to economic recovery, adding large disincentives to workers and hurting small businesses. Our local economies cannot withstand any more heavy tax burdens and require that our elected officials make prudent decisions about how to best distribute precious tax revenue, especially in the light of inflation.
Economists such as Douglas Holtz-Eakin, former director of the Congressional Budget Office, indicate that increases in the Consumer Price Index can be attributed in part to inflation-fueling government checks. Small businesses have struggled throughout the pandemic to stay open and then have grappled to find workers. Consumers have seen higher prices as a consequence of more demand for products that are not available because of labor shortages.
The University of Chicago’s Inclusive Economy Lab is tasked with studying the guaranteed income pilots in Chicago and Cook County. It will examine the effects on recipients’ outcomes. I urge the researchers to include the economic impact $500 monthly government checks have on local businesses, employee shortages, wages, consumer choice, purchasing power, changes in pricing and relevant tax increases. In addition, it would be fiscally responsible to determine how much taxpayers would have to pay if these programs were extended on a permanent basis. Lastly, it is absolutely crucial to study how these same opportunities could be offered through a privately funded guaranteed income program.
A path to permanent economic change is not through temporary government checks. Launching a public guaranteed income program without a smarter approach to eligibility, use of supplemental guidelines, accountability measures and targeted academic research is evidence of a failure in leadership and results in the loss of valuable tax money.
Froylan Jimenez is a civics teacher and Chicago Teachers Union member.