What would you do if someone gave you $1,000 every month, no strings attached? Would you keep working the same job? Would you work less, making more time for other activities in your life? Would you go back to school?
You could be asking yourself these questions under a universal basic income program.
Universal basic income is an economic proposal in which the government would make a regular monthly payment of the same amount to every citizen. These programs can vary greatly, but most proposals today aim to replace all or some of the current complex and hard-to-navigate network of public assistance programs.
Instead, universal basic income programs would provide economic security through a single regular payment that remains the same regardless of income levels. As automation replaces a rapidly increasing number of jobs, these programs might be a way to ensure that those who are unable to find employment are not left behind.
Universal basic income is far from a new idea. The program has been proposed by figures that come from across the political spectrum and throughout history. Thomas Pain supported proposals similar to universal basic income in the 18th century, Martin Luther King in the 1960’s, and presidential hopeful Andrew Yang during his 2020 presidential election campaign. Today, the concept is gaining traction in response to the economic hardships created by the COVID-19 pandemic.
Supporters believe that people will use the economic security of a universal basic income program to better themselves and climb the social ladder. Andrew Yang had this to say about his proposed universal basic income program in 2020: “The Freedom Dividend would provide money to cover the basics for Americans while enabling us to look for a better job, start our businesses, go back to school, take care of our loved ones or work towards our next opportunity.”
Opponents of universal basic income, on the other hand, believe that these programs will cause inflation and discourage people from working. One of the most common criticisms of universal basic income programs is their cost. These programs vary dramatically in detail, like how much to give each person. Yet, the majority call for a significant increase in spending over the current network of welfare programs.
Gaps and Complexity in Public Assistance Programs
Today, there are over 80 means-tested public assistance programs in America. The size and complexity of this network of programs can make it hard to navigate. Applicants need to research what programs are right for them, meet deadlines, fill out and mail paperwork, and provide various types of identification and tax forms. The complexity of this system means many people don’t receive the aid that they are entitled to.
The process also tends to be expensive. Proponents of universal basic income programs believe the system could save money on administrative costs. Under the current means-tested welfare system, determining the need and appropriate amount of aid for each person takes significant time and resources. Having such a vast network of public assistance programs means that bureaucratic costs are high and individuals are often required to go through multiple application processes.
These programs must develop and update a procedure for processing applications, distributing funds, and combating fraud. By reducing this bureaucracy, it’s possible that a universal basic income program could save money.
Another potential advantage to a universal basic income program is that it could help close gaps in the current system and provide better economic security for those in need. For some people, it can be hard to access the aid that they need. For example, it can be challenging for some to apply for disability and other public assistance programs without proper access to healthcare because they cannot provide documentation of their disability.
Means-testing public assistance programs are intended to ensure that aid goes to those who need it most, but it can also exclude people in genuine need. There are millions of non-disabled adults without children who live below the poverty line in the US without government aid.
The Loss of Economic Security due to Automation
While some are calling for universal basic income to reduce poverty or wealth inequality, others believe it is necessary to solve the problem of unemployment due to automation. As the capability of our technology continues to grow exponentially, more and more jobs are automated.
Automation hasn’t been a major problem in the past because, as new technologies replaced one job, they would create another, often better, job. This balance between job creation and elimination could be shifting though. New technologies will undoubtedly continue to create demand for labor. But what’s less certain is if this demand will keep up with the pace at which jobs are being automated.
We need to look no further than transportation for an example of an industry whose workers are at risk of losing employment to automation. According to a Center for Global Policy Solutions report, 2.86% of all workers in the US work in driving positions. The same report predicts that, in the event of a rapid transition to automated vehicles, 4 million jobs would be lost.
Automation has traditionally replaced repetitive, low-skill, and low-income jobs like factory assembly line work, with higher-paying and more skilled labor, but that could be changing. Today, there is growing concern over automation as it begins to replace increasingly skilled jobs.
In recent years, technologies have been developed that are already competing for skilled positions in accounting, advertising, and even journalism and editing. That’s right, even the articles you read online can be written by a computer now.
In the future, as technology continually makes our work more efficient, we may reach a point where there is not enough work to go around. A universal basic income program might be a way to provide people with economic security when facing this situation. But things don’t need to get that bad before we start thinking about such a program.
Workers are already losing jobs to automation today. Even if more jobs are created, transitioning workers from one career to another unrelated one is not easy. Many workers will struggle to maintain economic security and will need to enroll in public assistance programs.
It’s not just individuals that are at risk from automation, though. If too many people are unemployed, businesses suffer as well. Without disposable income, people can’t afford the products and services a company sells – which will eventually threaten their long-term success.
On the other hand, if introduced, a universal basic income program could provide individuals with more expendable income, allowing them to spend more. This would accelerate the growth of businesses and potentially create a more favorable market for starting small businesses.
While universal basic income has the potential to provide economic support for those left unemployed due to automation, some believe it also has the potential to exacerbate the problem.
According to economist Nate Brady, “If we’re looking at universal basic income as a solution to automation, it might actually be the cause of more automation.” Brady explained that if universal basic income programs cause people to work less, then the price of labor will go up. When labor becomes more expensive, businesses have a greater incentive to automate, leading to greater unemployment.
Launching a universal basic income program, therefore, can easily become a double-edged sword.
The Pros and Cons of Universal Basic Income Programs
Supporters of universal basic income programs challenge many common assumptions about what will happen when people enroll in public assistance programs. For this reason, the topic can be controversial, and not everyone is convinced that these programs will have their intended effects.
Much of this controversy revolves around whether people will work less under a universal basic income program. Resolving this controversy is difficult since these programs vary greatly. How much is paid to each person and the degree to which the program replaces existing public assistance programs changes from one proposal to another.
That said, it seems likely that some individuals would take the opportunity provided by a universal basic income program to reduce the amount they work. The potentially more important question, though, is why are these people working less and what are they doing with that time?
Universal basic income programs are often criticized for giving people “free money” that will discourage work and self-sufficiency. Opponents of these programs believe that too many people will choose to live off public assistance programs alone.
This has been the common-sense position on the issue for a long time, but recent studies suggest otherwise. For example, a two-year-long program in Stockton, California, gave 125 residents $500 each month, no strings attached. While it’s little surprise that this money significantly improved the lives of those who received it, what is interesting is that their full-time employment rose by 12%.
This rise in full-time employment suggests that individuals use their newfound economic security to look for better work. Many things can prevent someone from finding a better job, but the money from a universal basic income program could give people the means to overcome their obstacles. These obstacles can include not being able to afford transportation, clothing, or childcare which could be necessary for an individual to go to a new job or job interview.
Sometimes, the best choice for an individual’s career is to go back to school or take a job that pays less for the moment but promises room for growth. But if an individual can’t afford to make these choices, they can get stuck in a job that’s going nowhere.
Not everyone is convinced that experiments like the one in Stockton, California, will be representative of a scaled-up program, though.
Economist Nate Brady is concerned that if the universal basic income is too high, enough people will leave their jobs that the price of labor will increase.
“The producer’s cost of labor is going to go up – a cost which is going to get passed on to the consumer and ultimately increase the cost of living. This is going to cause a spiral that makes the universal basic income need to go up. So, it’s an unstable thing. It’s a feedback loop,” shares Brady.
If Brady is correct and a universal basic income program leads to a higher cost of living, we might end up stuck in a cycle of rising inflation.
Guaranteed Basic Income Programs in Chicago and Los Angeles
Chicago and Los Angeles have voted to introduce a yearlong guaranteed basic income program to reduce poverty and provide much-needed data. A guaranteed basic income differs from a universal basic income program in that it is not offered to everyone universally. Instead, it is given out to just a portion of the population that is in need.
Chicago’s program will provide monthly payments of $500 to 5,000 people for one year. Los Angeles will provide 3,200 people with monthly payments of $1,000 each month for one year. These programs will be some of the largest of their kind in America. Because of this, many are eager to see the results of these guaranteed basic income programs.
But not everyone thinks that these pilot programs will provide valuable data about how a national federally-funded universal basic income would operate.
Economist Nate Brady says that the problem with drawing conclusions from these programs is that the money comes from outside of the community receiving aid. For example, Chicago’s guaranteed basic income program is funded by federal pandemic relief aid money. What this means, according to Brady, is that the cost of the program is being spread out across the country. Because of this, Brady believes that these pilot programs will fail to provide data about the “unintended consequences” of a universal basic income program.
That said, it might still be possible for Chicago and Los Angeles’s public assistance programs to provide data about how people spend their monthly payments. These programs could potentially offer insight into how employment levels change in response to a guaranteed basic income.
Aside from their usefulness as an example, Chicago and Los Angeles are both in desperate need of a solution to their problems with poverty. According to census data, 18.4% of those living in Chicago are experiencing poverty. That figure drops slightly to 18% in Los Angeles, but both cities are well above the national average of 11%.
The Future of Work and Universal Basic Income Programs
Despite uncertainty about the effects of a large-scale universal basic income program, the idea is gaining attention. During the 2020 election, democratic candidate Andrew Yang emphasized establishing a universal income program throughout his campaign. While ultimately he was unsuccessful in his campaign, he did bring universal basic income programs to the national conversation.
Since then, COVID-19 has significantly shaped that conversation. During the pandemic, millions of Americans found themselves out of work and relying on a portion of the 3.4 trillion spent by the federal government in response to the pandemic. For many, widely available stimulus checks kept them out of poverty and, in some cases, even provided an unexpected relief. These checks provided millions of individuals with a taste of the economic stability that just a few hundred dollars a month could bring.
On the other hand, during the pandemic, many Americans were shown just how problematic the current patchwork of public assistance programs could be. 13 states across the country chose not to get rid of work requirement conditions for the Temporary Assistance for Needy Families programs (TANF). TANF is the primary public assistance program providing cash payments to the very poor, and this means that the amount of aid that an individual received could depend on where they lived.
After having their lives and jobs turned upside down by the pandemic, many are rethinking their relationship with work. Despite relatively high levels of unemployment, people are quitting predominantly low-income jobs in what is being called “the great resignation.”
Because the great resignation is contrary to what is typically expected in the current economy, this trend may represent changing attitudes about work. These resignations could prove that workers are putting a higher value on their time, work-life balance, flexibility, and happiness.
Between unemployment from growing automation, recent experiences with public assistance programs, and changing attitudes about work, maybe it’s not so surprising that universal basic income programs are gaining popularity.
With or Without Universal Basic Income
It might be time we rethink why we work in the first place. In the future, if technology continues to replace jobs and make our lives easier, we may move into an era where it’s no longer necessary for everyone to work. It will likely always require some amount of human labor to supply society’s needs.
But at some point, we may be able to do this with just a fraction of the population. Without enough work to go around, we will need to rethink the idea that someone needs to work a productive job to enjoy the wealth created by society.
Whether we introduce a universal basic income program in the more immediate future or not, we need to fix our current problems with public assistance programs, poverty, and automation. While the economic incentive to solve these problems is substantial for individuals and businesses, moral motivations should be even stronger.
If we believe that every person has a right to the basic economic security needed for survival, then we need to set aside the belief that work is the only thing that entitles us to the means of doing so.