Using $31.5 million of federal relief funds, the city will give $500 a month to 5,000 families. Over 176,000 people applied, making the program more competitive than admission to Harvard University.
By J. Patrick Patterson and City Bureau
Art: David Alvarado for City Bureau
Five hundred dollars, no strings attached. That’s what the Chicago Resilient Communities Pilot –– one of the largest guaranteed income programs in the U.S. –– plans to deliver to 5,000 low-income Chicagoans every month for a whole year. More than half of participants are already receiving the cash infusion.
Despite unemployment decreasing from last year and the Chicago minimum wage increasing to $15.40 per hour for some workers, advocates of the program say it is necessary because many Chicagoans are still struggling to make ends meet. At the same time, inflation has hit a four-decade high and the spike in the cost of goods has experts worrying poverty will rise, further increasing income inequality.
One solution? Cash assistance. The concept gained momentum during the COVID-19 pandemic, especially after the federal government issued stimulus checks and Child Tax Credit payments to help Americans cope with the steep rise in unemployment and financial hardship. Experts say those payments, especially those for families, helped ease child poverty while they were in place.
Still, some economists worry guaranteed income programs will make inflation worse, further increasing the costs for food, gas and other essential items. Other economists dismiss that concern, arguing that current inflation is primarily driven by factors such as the war in Ukraine, supply chain disruptions and staggering corporate profits.
Chicago isn’t the only local government experimenting with cash assistance. The growing list also includes Minneapolis, St. Paul and Philadelphia. Cook County, which is running one of the largest publicly funded guaranteed income pilots in the country, has already committed to a permanent program after the pilot ends. The size of Chicago’s and Cook County’s programs could give researchers more of the evidence they need to determine if guaranteed income could work at the state and federal levels.
While it’s still too early to draw conclusions from Chicago’s program, here’s what we know now:
Who applied?
The Department of Family and Support Services (DFSS) received applications from all 77 community areas during a three-week application process. In total, the city received more than 35 applications for each of the available spots in the program.
The median income of applicants was $14,000, according to DFSS. Women were the overwhelming majority of applicants, as were Black Chicagoans who made up 68% of applicants. The majority of applicants said they were caregivers.
To Audra Wilson, president and CEO of the Shriver Center on Poverty Law, this was unsurprising given that Black women are often the last to recover from economic recessions and “are more likely to face higher unemployment rates, disproportionate amounts of child care and domestic work and other economic inequities that were made worse by the pandemic.”
According to a City Bureau analysis of applicant data, the majority of applications came from communities in the South and West sides, with the highest concentration of applicants –– about 5% –– in the Auburn Gresham area. Most applicants cited reduced hours of work, unemployment and leaving jobs for caregiving duties as reasons for applying for the program. More than 16,000 applicants said they were experiencing homelessness or housing insecurity.
City Bureau’s analysis found that among those applicants, Black Chicagoans were disproportionately impacted. Of those who said they were homeless, more than 80% identified as Black. Separately, 83% of the people who cited housing insecurity, meaning they moved frequently or have no stable home, identified as Black.
How is Chicago’s program administered?
DFSS and the Mayor’s Office selected two nonprofits to administer the program. GiveDirectly — an international nonprofit primarily operating in East Africa — is the program’s administrator. AidKit, a technology platform, is helping GiveDirectly deliver cash to residents.
DFSS began distributing payments to residents the last week of June. Recipients could choose to receive the money either through a bank deposit or a prepaid debit card, and this income will not be taxed.
How were participants chosen?
To be eligible, applicants had to report experiencing economic hardship from the pandemic and have a household income under $70,000 for a family of four. Applicants selected to participate in the pilot were chosen through a computer-generated randomization system. DFSS Commissioner Brandie Knazze said the system was designed so that low-income people living in areas most impacted by COVID-19 had a higher probability of being selected.
Harish Patel, director of Economic Security for Illinois and a manager of the Chicago Resilient Families Initiative Task Force that studied the scope of a guaranteed income pilot, said there are several benefits to choosing recipients randomly. A lottery system minimizes bias and corruption – two issues that could hurt trust in the program and damage long-term support. Randomization also allows researchers to draw conclusions about how the program affects low-income people from diverse backgrounds.
Who was chosen to participate in the program?
Knazze, the DFSS commissioner, said most selected participants were women and identified as parents or caregivers, closely mirroring the pool of applicants. More than half of the 5,000 participants are Black (67%) with nearly a quarter of participants identifying as Latinx (23%). White Chicagoans make up 16% of participants and Asian Chicagoans are the smallest racial category at 3% of participants.
In early July, DFSS distributed its first payments to 3,500 Chicagoans via direct deposits and prepaid debit cards. Others have received the money since then on a rolling basis. As of last week, DFSS was still working on enrolling a few hundred participants.
What do advocates for guaranteed income say?
So far, Chicago gets high marks from advocates for creating a program with few hoops to jump through. Administrative burdens, they argue, often shut some people from the aid. The application was available online in six languages and took around 30 minutes to complete. Applicants were not asked about their immigration status or criminal record. It asked about household size, demographics, education and other public benefits received. It also required proof of identity, income and residency through a mix of documents.
With the cost of living increasing and wages lagging behind inflation, some local experts believe that $500 per month will make a difference in the lives of Chicagoans experiencing deep poverty. While guaranteed income allows recipients to decide how and what to spend extra money on, experts say it is not the only solution – a broad social safety net and economic policies that help families make ends meet is also critical. “This pilot, as important as it is, is not the only tool to be able to solve poverty –– it is one of a series of actions that need to be taken to really alleviate poverty,” said Wilson, the Shriver Center’s president and CEO.
While advocates interviewed agree that $500 per month is limited, especially as prices rise, it still has the potential to help Chicagoans experiencing poverty.
“We hope that the pilot will allow people to catch their breath,” Commissioner Knazze said. “We want to be able to allow them to have economic stability and mobility, to see financial gains, either through saving or achieving a personal goal, maybe an educational goal or savings.”
Could the pilot become permanent?
It’s unclear if the city has long-term plans to implement a permanent guaranteed income program and how that would be funded. When asked, the Mayor’s Office said they are committed to partnering with the City Council to support residents using direct cash assistance in a future budget cycle. And DFSS Commissioner Knazze said results from the pilot will inform how the city runs its programs in the future.
About 3,000 of the 5,000 pilot recipients will participate in an optional study led by the University of Chicago’s Inclusive Economy Lab according to Carmelo Barbaro, the lab’s executive director, which will evaluate the impact of the program on participants’ financial health and general well-being. Researchers plan to use the results to provide recommendations for future programs.
Patel, the director of Economic Security for Illinois, said he hopes the pilot sheds light on the need for guaranteed income programs as an addition — not a replacement — of the social safety net. But, he said, the city and county could use the format of the cash-assistance program to make their existing network of programs better, simpler, with less paperwork and with fewer barriers for people.
The city expects to have some preliminary results in late 2023 or early 2024.
Longtime guaranteed income advocate Ameya Pawar believes that the Chicago pilot program will demonstrate the necessity and feasibility of a national program — something local advocates of guaranteed income agree on. His hope, he said, is that the Chicago demonstration along with the other demonstrations across the country will lead to a federal policy change.
J. Patrick Patterson is a 2022 Summer Civic Reporting Fellow, along with Francisco Saúl Ramírez Pinedo, who contributed to this report. Sarah Conway, City Bureau’s senior reporter covering jobs and the economy of survival in Chicago, also contributed. You can reach her with tips at sarah@citybureau.org.
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