THE deadline for applications for the nation’s largest universal basic income program in Chicago is TOMORROW.
Applications for the Chicago Resilient Communities Pilot close on May 13, which is this Friday.
Applications opened on April 25 and will close on Friday at 11.59pm CT.
To qualify, residents must live in the city of Chicago, be 18 years or older, have experienced economic hardship related to Covid-19, and have a household income at or below 250 percent of the federal poverty level.
To learn more about applying, families may visit chicago.gov/cashpilot.
Read our universal basic income live blog for the latest news and updates…
Robert Greenstein with the Center on Budget and Policy Priorities highlighted some apparent flaws with UBI.
Overall, Greenstein feels the major hang-up is funding the UBI payments.
While some people believe this investment could replace the current welfare state, Greenstein felt that universal payments to all citizens would redistribute income “upward” rather than focusing on lower-income groups who need the money.
UBI use study
According to research conducted as part of the Universal Basic Income initiative and cited by local media outlet Finger Lakes 1:
- 28 percent of funding went to food
- 28 percent of funding went to services
- 24 percent of funding went to sales and merchandise
Labor force may decrease with UBI
Earned income motivates people to work, succeed, collaborate with others, and learn new skills.
According to Charles Wyplosz, PhD, Professor of International Economics at the Graduate Institute in Geneva, “if we pay people, unconditionally, to do nothing… they will do nothing,” resulting in a less functional economy.
Programs similar to UBI
There are different and somewhat similar programs to those of universal basic income. Some examples are:
- Child benefits
- Conditional cash transfers
- Guaranteed minimum income
- Full and partial basic income
What has Elon Musk said about UBI?
Founder and CEO of Solar City, SpaceX, and Tesla Elon Musk told CNBC in 2017 that because of technological advancements, he thinks UBI might be on the horizon.
Employees all around the globe are losing employment to automation.
As technology progresses and we come closer to self-driving vehicles and artificial intelligence assistants, employment will be taken from a talented workforce.
He said: “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation.”
Which countries have UBI?
A universal basic income is being tested in a number of towns, states, and countries in addition to the United States.
Some of those are:
- Hong Kong
Likely cost of UBI in the US
In 2012, there were 163million people working in the United States, according to the Bureau of Labor Statistics.
To pay each of them $12,490 (the poverty line for one person in 2019) for that year would have cost $2.04trillion, according to The Balance.
While some of this cost may be reduced by eliminating redundant social programs and other types of consolidation, it would almost certainly increase the national debt, according to The Balance.
Negative Income Tax, part two
It was hoped that by making these negative tax payments, the government would be able to reach more individuals than present support programs, save costs and complexity, and remove the disincentive to work posed by a high tax rate.
In the 1960s and 1970s, a number of trials with negative income taxes were conducted, most notably in New Jersey.
The concept, however, never caught on, according to US News.
What is Negative Income Tax?
While Universal Basic Income has gained traction, a negative income tax is another proposal to help relieve poverty in the country.
It was proposed by Milton Friedman, a professor at the University of Chicago, in 1962, and advocated for the federal government to distribute cash to persons in lower-income groups through the income tax system.
Cons of UBI
According to ProCon.org, the top three cons of Universal Basic Income are:
- UBI deprives the poor of much-needed tailored assistance by taking money from them and giving it to everyone
- It’s too expensive
- UBI reduces the motivation to work, causing an economic downturn and a labor and skills deficit
Pros of UBI
According to ProCon.org, the top three pros of Universal Basic Income are:
- UBI enhances physical and mental health while reducing poverty and financial inequality
- UBI results in increased employment growth and a reduction in school dropout rates
- UBI provides a source of income for non-working parents and carers, empowering women in historically unpaid jobs
History of Universal Basic Income
In a literal sense, the UBI’s intellectual history dates back around half a century. However, throughout the last two centuries, the concept that the government should somehow subsidize everyone’s profits has resurfaced as a:
- Citizen’s dividend
- Social credit
- National dividend
- Demogrant (a grant based on a population’s demographics)
- Negative income tax
- Mincome (also called guaranteed minimum income)
Few of these plans fulfill the traditional concept of a basic income, and they are vastly different from one another. They do, however, have something in common.
Guaranteed income systems oriented to certain income levels cannot overcome the deficiencies in public assistance and other benefits that a universal, unconditional cash transfer system can.
Here are reasons why there should be UBI programs country-wide:
- If programs are exclusively targeted at low-income families and not the general community, they will deteriorate with time.
- Universal systems have the potential to assist everyone; but, because people’s circumstances fluctuate, it’s hard to tell who needs them based on a single number or moment in time.
- Means testing involves a significant amount of administrative time and money; UBI would be significantly more cost-effective.
How is UBI distributed?
One of the most contentious parts of the universal basic income is the possibility of individuals receiving money for no reason, according to GoBankingRates.com.
They write that because of the universal character of a UBI, many people who would get checks should not — multimillionaires or those who are able but unwilling to work, for instance.
However, without an eligibility-based application procedure, the program would be easier and less expensive to administer, perhaps saving enough money on administrative expenses to more than cover payments to persons who would otherwise be disqualified.
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