In prior posts, I have expressed many reservations about the Universal Basic Income (UBI), such as concerns about the negative effect on the motivation to work, labor market participation and tax receipts.* Of course details matter. A super modest UBI might take the edge off of poverty without disincentivizing work and have little effect on tax rates or revenues.  But what constitutes "super modest"? I previously calculated that $700 a month did the trick although basically anyone at a middle-class income or above would paid it all back in taxes and then some.

Then I thought about young adults, what with their not fully wired frontal lobes and tendency to discount future gains in favor of present pleasure -  at the exact same time their brains are primed for learning new skills. When energy and creativity are at their peak. A UBI might encourage a good number of young adults to delay the day of reckoning, extending the good times. In other words, a UBI, even a modest one of $700/month,  could make it even easier for many young adults to put off hard choices and hard work. Especially those who have no children (close to half of American men under 30).

The road to skill mastery tends to be long and rocky.  The process of achieving job competence or expertise often involves periods of self-doubt. One may fail in the effort. The potential pain of embarking on a career path feels real, the eventual gain - well, that's a long time off. You're only young once as they say. Lots of time left to pivot. 

In terms of the lifespan, this delay would result in later skill acquisition, later career commitment,  later peak earning power, and fewer high-earning years. Scaled up, the US would get: lower GDP, lower productivity and lower tax revenue.

But some people say: robots! None of the old rules apply!  People won't have to work anyway!

It's no coincidence that UBI advocates tend to embrace predictions about the upcoming Age of Robots. If robots are taking over, we don't have to worry about the effect of a UBI on labor market participation or tax receipts. In fact, the Age of Robots will make a UBI inevitable. It's the new paradigm:

Job Losses From Robots Could Make Universal Income a Reality

A Plan in Case Robots Take the Jobs: Give Everyone a Paycheck

Tech CEOs back basic income as AI job losses threaten industry

A Universal Basic Income For When the Robots Come

Universal Basic Income Is the Path to an Entirely New Economic System

To which I say: wishful thinking! And an excuse to be ignorant about economics! No one disagrees that technology can hurt some workers in the short term. Some jobs become obsolete but even more jobs are created. Thus has it always been. The issue is whether this time it is different. No sign of that.  Some evidence** to consider:

  • During the past 20 years over 24 million new US jobs have been created.
  • Between 2015-2025, an expected 2 million US manufacturing jobs are expected to go unfilled because employers can't find qualified workers, even though most employers are willing to pay more than the going market rate for skilled production workers.
  • Other countries, including Germany and South Korea, have added far more industrial robots per worker than the US over the same time period and yet have lost fewer manufacturing jobs than we have.
  • Labor productivity has fallen dramatically in the past decade, meaning that automation and other labor-saving technology have not been a value proposition for many employers.
  • Due to an aging population and low fertility rate, many economists anticipate a prolonged period of tight labor markets in the US and other developed counties over the next several decades.

--

*See prior posts under the Tag "Universal Basic Income" for more substantial comments.

** These points were enumerated in greater detail in Robots and Labor Shortages.