Guaranteeing More Equitable Incomes

A man and his daughter walk past a mural in Harvey, Illinois, outside Chicago. 

It’s no revelation that Americans are living in a time of extreme divisiveness in our national politics. One party controls most of the government, and yet action out of Washington is slow to be seen, much less felt, by the American people. At these times of intense polarization among federal leaders the adage “all politics is local” comes into sharp relief. 

While what’s happening in Congress or the White House can feel a million miles away, voters are concerned with what’s going on in their states, their cities, their communities, their neighborhoods. A wide swath of the American public sees the same thing: The costs of living and housing rise, yet their incomes don’t. This imbalance is felt even more acutely in communities of color, where there is a higher likelihood that residents work lower-paying jobs while already struggling with a wide income and wealth gap

That’s why we were inspired to develop pilot programs in our respective cities, Chicago and Jackson, Mississippi, to explore providing people with a guaranteed income–flexible cash benefits—that allow recipients to choose to pay the expenses that are most important to them. A guaranteed income differs from a universal basic income in that it’s not intended to cover a person’s basic needs, but rather offer a measure of financial stability through a more modest monthly stipend—in many proposals, around $500. While decades of research have proven the benefits of cash transfer programs, new undertakings can provide additional findings, including how such programs can work in the current economic and political environment and how results can be replicated across the country.

We both see it in the communities we live and lead in. Chicago has seen an evaporation of steady jobs that pay the bills and provide basic benefits as unions lose the power to protect workers. In Jackson, the state flag of Mississippi that incorporates the Confederate battle standard still flies over a city that’s more than 80 percent black and yet grapples with entrenched poverty that is easily traced back to slavery.

These communities feel the pressure of trying to make ends meet. Work hours can be erratic and salaries often aren’t enough to make ends meet. The stress of feeding your kids when the electricity bill is overdue means dinner could very well be in the dark. This crippling financial anxiety is felt across the country: 40 percent of Americans had trouble meeting their basic financial needs last year, and the communities we work in are no exception.

Our projects are designed to address these issues. The Jackson project focuses on poor, black moms and began disbursements of $1,000 a month for one year to 16 women just this week. Chicago’s plans and timeline for a pilot are currently being hashed out by a taskforce of economic experts and community leaders, with an end goal of developing a set of recommendations to implement a guaranteed income program for low and middle-income city residents.

The issues we’re aiming to address are unique to each city; but whether it’s a mom struggling to find the cash to buy materials for her daughter’s class project or an urban retail worker facing cuts to his hours at a big box store, the experiences are rooted in a lack of economic stability—the core problem that guaranteed income is designed to solve. It’s not a cure all or substitute for other critical needs such as access to healthcare or affordable housing, but it is a direct and effective way to provide the poor and middle class with a modicum of financial security at a time when Americans have trouble affording their basic needs.

Another related proposal has tremendous potential to reform the tax code to benefit the poor and working class instead of handing over more concessions to the wealthy and corporations. The Economic Security Project, a nonprofit that advocates for the power of cash and also funded the creation of both projects in Chicago and Jacksondeveloped a Working Families Tax Credit that would give $500 a month to poor and middle-class Americans by closing tax loopholes for the wealthy. 

A growing number of leaders are embracing similar tax reform proposals that would ensure the wealthy and corporations pay their fair share, while providing a boost to the poor and middle class. Senator Kamala Harris, a California Democrat, recently introduced legislation to provide the poor and middle class with monthly tax credits that applies to households making less than $100,000. Representative Bonnie Watson Coleman, a New Jersey Democrat, has proposed similar legislation to modernize the Earned Income Tax Credit, which is a tremendously powerful tool to pull people out of poverty in our cities and across the country. The bills all have an even greater, positive impact on people of color who are more likely to be experiencing poverty.

The energy around the idea of a guaranteed income is strengthening, but there are questions about how this kind of program can work on a larger scale. While philanthropy cannot sustain a guaranteed income pilot in every city that needs one, there are proposals at both the state and federal levels that could play a similar role in alleviating economic instability. Though many of these ideas aren’t formally designated as guaranteed income programs, they share the essential components—cash to those who need it most without strings attached, which offers financial stability and autonomy to recipients and empowers them to make the decisions that are best for them.

The details of these policies differ slightly, but they all share a core intention to reform the tax code to benefit poor and middle-class Americans. Millions of people would thrive under such a measure, and state and national leaders should make these reforms a central component of their legislative agendas. Rational and equitable tax reform to benefit more Americans is good for local communities and the country.

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