fbpx

Sprinkles in Support

Almost half of U.S. adults are in favor of universal basic income (45%; Pew Research). In terms of age, people 18 to 29 are the most in favor of UBI (67%).

  • Proponents of UBI say it would reduce poverty and income inequality, grow the economy, improve the physical and mental health of recipients, and protect against the potential threat automation poses to the conventional workforce.

“Recent proposals to expand the child tax credit, which are supported by President Biden, Democrats in Congress, and Senator Mitt Romney, have been viewed as a type of universal basic income, at least for families with kids. The concept of universal basic income garnered national attention last year when presidential candidate Andrew Yang proposed a monthly payment of $1,000 for each adult. The idea has attracted support from voters and lawmakers across the political spectrum.

What makes universal basic income different from the existing programs we have today? Some observers think the major difference is that a pure universal basic income would be sent to everyone, regardless of income, unlike some of the benefits programs that use a means test to ensure the payments are sent only to households with lower incomes. But as I point out in a recent article, the lack of a means test for universal basic income is relatively less important when the idea is considered in the context of the taxes that would be levied to finance the benefits.

Instead, there are three distinctions between universal basic income and many existing programs. First, eligibility for universal basic income does not depend on characteristics other than income, like age and disability status. Second, universal basic income is paid out in cash rather than in the form of health care or other services. Third, it may subject recipients to less shame and other barriers to access than some existing programs. The choice to adopt or reject universal basic income should depend on the benefits and costs of those three main differences.

To see why the lack of a means test is not a radical departure, consider a monthly universal basic income of $1,000 funded by a tax of 10 percent. Someone with zero income receives it and pays no tax while enjoying the net federal transfer of $1,000. Someone with $10,000 of monthly income receives it and pays the tax of $1,000 with no net transfer. Someone with $50,000 of monthly income receives it and pays a tax of $5,000 for a net tax of $4,000. Universal basic income is like a “tax and transfer” system in which those with no income receive a transfer of $1,000 which is phased out or means tested away as income rises. There are still key differences between universal basic income and existing programs.”

Sita Slavov, The Hill

“The most important part of Mr. Yang’s 2020 guaranteed income plan was not the size of the checks but how he intended to pay for them. He promised to fund the program by implementing some new tax policies and “consolidating some welfare programs.” Anyone who wanted in would first have to make a choice: continue to get the bulk of the direct government benefits they currently received, or forfeit them and instead get $1,000 a month. Other than Social Security retirement, disability benefits (and potentially some other credits), no one could get both a Freedom Dividend and government assistance.

Mr. Yang’s vision hews close to libertarian and conservative thinkers. Charles Murray, for example, author of “The Bell Curve” and “Coming Apart,” backs a universal basic income but one that replaces all other government benefits entirely, including Social Security and Medicaid. This is also the program design favored by many of the technology C.E.O.s who have lately gotten on board.

But there is no way a basic income could ever come close to the vast array of assistance the government currently provides. For someone who gets minimal or no help from the government, a $1,000 check may sound like a great deal. It would also free them up from meeting what are very burdensome bureaucratic requirements for public benefits and allow them to decide where and when to spend the money. But it pales in comparison to the value of a housing voucher or a child care subsidy. It won’t cover health care or retirement. A basic income that takes these away, then, really just frays our social safety net until it’s too threadbare to support anyone. It’s a Trojan horse for dismantling public assistance altogether.

It’s a far different concept than what most progressives mean when they call for a guaranteed income. Dr. King argued for a basic income worth as much as the country’s median income, which today is more than $68,000 per household. In the models that have cropped up in cities across the country, mayors are testing sending regular checks to those under a certain income level without making them give up anything. The idea is that the money can take the edge off poverty. In Stockton, Calif., a rigorous analysis found that it reduced income volatility, allowed people to afford basic essentials, and increased mental well-being…

It may sound utopian, but a national guaranteed income could alleviate desperate poverty and give Americans the breathing room to make healthier, happier choices about their lives without harming our labor force or economy. A similar experiment in Finland concluded that recipients were in a better mental state but were no less likely to work. When the economist Ioana Marinescu reviewed evidence on the effects of guaranteed income-like experiments in the United States and Canada, she found that, at most, recipients modestly reduce their work — perhaps finding a bit more time in the day for family or leisure — but don’t drop out of the work force altogether. The same has been found in other countries as well.”

Bryce Covert, New York Times ($)

Sprinkles in Opposition

Recent polling found a slight majority of American adults are against universal basic income (54%; Pew Research). In terms of age, people 65 and older were most strongly against UBI (72%).

  • Opponents of UBI say it would remove the incentive to work, adversely affecting the economy and leading to a labor and skills shortage. They also highlight the financial toll of implementing UBI on a federal level.

“At the end of the day we should not lose focus on the simple fact that the most common path to upward economic mobility is through a job, and through the skills, social connections and existential capital a job helps build. UBI does nothing to orient individuals toward self-sufficiency and long-term flourishing.

Yes, some people would use the extra money to pursue the types of goals that lead to upward mobility. But these are more likely to be the types of individuals who would have succeeded on their own without UBI than the types of individuals who could use some guidance about how to improve their lives and the lives of their families.

Many of the financially successful adults who support UBI themselves already benefited from family, cultural and educational structures that support meaning-oriented goal-striving through self-discipline, work ethic, self-confidence and creative problem solving. UBI does not help make those structures more accessible to, and more valued by, poor Americans. Instead, by being a permanent, no-strings-attached form of government support, UBI may send the implicit message that there is little or no hope for some people to become financially independent, to reach a point in which they are supporting their own families and making meaningful contributions to society. In other words, UBI could inadvertently decrease the psychological capital needed to increase financial independence and upward mobility.

UBI seems like a simple way to make people’s lives easier and to defend against fears of a future without work. However, a life without work is not a recipe for human flourishing. Humans are at their best when they are creating, building, experimenting, innovating and focusing on ways they can make a difference in the world. We should be very cautious about taking actions that could undermine such ambitions.”

Clay Routledge & Gonzalo Schwartz, Newsweek

“Perhaps you’ve heard that a universal basic income is an idea whose time has come. Liberals are hyping the supposed success of UBI from a small experiment in Stockton, Calif. On closer scrutiny, it looks like a case study in politics influencing academic research.

The idea behind UBI is to provide a base level of unconditional cash to everyone. Milton Friedman once suggested that a quasi-UBI in the form of a negative income tax would be a more efficient way to alleviate poverty than the social welfare bureaucracy.

Yet now liberals want a UBI not to replace welfare programs, but to supplement them. Congress’s pandemic checks and potpourri of refundable tax credits, including $3,600 for each child under age 6, are essentially a UBI. Democrats want to make these handouts permanent, and in support they’re touting a recent study of a small privately funded experiment in Stockton. “Study: Employment rose among those in free money experiment,” an AP headline declared.

Not quite. The study randomly selected 125 Stockton residents from low-income neighborhoods and gave them $500 a month on a prepaid debit card. Another 200 residents served as the control group. Asian/Pacific Islanders and homeowners comprised a larger share of the debit-card recipients than of the control group, which could have biased the results.

The study’s small sample and reliance on self-reported outcomes are bigger problems. It’s difficult to assess a statistically significant effect on employment among such a small group over a one-year period—from Feb. 2019 to Feb. 2020—especially given high labor-market turnover among lower earners.

Full-time employment rose in both groups but was slightly lower among the free-cash recipients at the beginning and slightly higher at the end. Hence the study cagily concludes: “Unconditional cash enabled recipients to find full-time employment” (our emphasis)—not that it actually increased employment. Most media ignored this nuance.

Students of incentives might also point out that people receiving free cash might be more likely to claim they are working even if they’re not. In any case, the unconditional Stockton cash grants are temporary, and there’s a graver risk that recipients would drop out of the labor force if the grants were made permanent.”

Editorial Board, Wall Street Journal

“Federal stimulus checks that helped millions of Americans weather the initial months of the COVID-19 crisis have resurfaced calls for adopting universal basic income.

Countries as diverse as Canada, Finland and Namibia are exploring the idea—and the concept drew attention in the U.S. when presidential candidate Andrew Yang proposed giving $1,000 a month to every adult. But this renewed focus on adopting a government program to provide unconditional payments to every adult citizen misses the point.

It’s a short-term fix. Over the long haul, such a program won’t help workers affected by the accelerating changes roiling the U.S. labor market.

We need work.

American workers say that finding meaning in their jobs and careers is essential to happiness and life satisfaction—and it’s more important in the long term than money. According to a recent Gallup survey, “Enjoying their day-to-day work, having stable and predictable pay, and having a sense of purpose each rate more highly than level of pay among U.S. workers’ criteria for job quality—even among those in the bottom 20 percent of incomes.”

Our tax dollars would be better spent better readying American adults for human work of the future as automation, artificial intelligence, robots, and other smart machines take a larger role in the American workplace. People need incomes to support their families, sure. But work offers something they consistently say is more important—meaning, dignity, and a sense of larger purpose.”

Jamie Merisotis, Marketwatch