Poverty, income volatility, job instability, and lack of social mobility are real problems in the US. While most Americans manage to climb the socioeconomic ladder to achieve a decent version of the American Dream, some get stuck on the lower rungs. They need help. In previous posts, I proposed a Targeted Basic Income (TBI) that would effectively address these societal ills without diminishing labor market participation or labor productivity. Plus, we’d still have lower taxes than Canadians because most of the TBI would be paid for out of existing programs (bye-bye Pell Grants).

Brief description: my TBI would provide $1000/month up to six years total (minimum one month at a time) for adults enrolled at least part-time in postsecondary training and education programs, from ESL classes to apprenticeships to graduate school. The benefit would not be means-tested, so recipients could work without jeopardizing their TBI payments. For more details, click on:

How to Pay for a Targeted Basic Income - Responsibly!

A Targeted Basic Income Is Better Than A Universal Basic Income

An Affordable Basic Income That Alleviates Poverty and Promotes Social Mobility

Here are additional TBI benefits:

  1. There would be no stigma associated with receiving a TBI because it would be available to all US citizens and some non-citizens (same as with Pell Grants) between the age of 18-62.

  2. It would reduce domestic violence as abused partners would be less financially dependent on an abuser and so would be freer to leave or at the very least make credible threats to leave unless the abuse stops. 

  3. The cost of postsecondary education/training would still be minimal for low-income students attending public colleges and adult training programs, given the availability of tuition waivers and state education grants. Note: in California, low- and middle-income undergraduates typically pay little if any tuition at public colleges, after factoring in grants, waivers, and scholarships.

  4. Other safety net programs would still be available for anyone meeting their eligibility requirements, including Supplemental Security Income(SSI), Social Security Disability Income (SSDI), State Disability Insurance (in those states where it is offered), Temporary Assistance for Needy Families (TANF), Earned Income Tax Credit (EITC), the Supplemental Nutrition Assistance Program (i.e., food stamps), and Unemployment Insurance (UI).  

  5. A TBI would not be means-tested so recipients could work without reducing the benefit. Note that part-time work (20 hours or less a week) is associated with higher college GPA and completion rates. 

  6. A TBI would not increase work in the non-taxed informal sector because there is no income penalty – thus, much less incentive to hide earnings. In fact, there would be an incentive to work in the formal sector, for one’s earnings to count towards unemployment benefits (just in case). 

  7. A TBI would be great for stay-at-home parents with young children. They could build skills via online courses or conveniently scheduled classes while taking a break from full-time work to tend to the kids. 

  8. By keeping the recipient engaged in productive activity and providing a sense of progress, a TBI would counter the decline in self-confidence that often accompanies long-term unemployment. As a former job counselor, I can’t tell you how psychologically debilitating long-term unemployment can be. 

  9. Lower-status jobs (think fast-food or retail) would carry less stigma because many workers would also be receiving a TBI and their main identity would be “student with a future”. There goes another barrier to work. 

  10. A TBI would increase labor market participation of older adults by giving them the opportunity to update their skills.

What’s not to like?

Links and References: 

https://nces.ed.gov/programs/coe/indicator_cua.asp

https://www.byu.edu/hr/sites/default/files/effects_of_student_employment.pdf

https://www.virgin.com/entrepreneur/being-busy-could-make-you-more-productive-according-research

https://www.ncbi.nlm.nih.gov/pubmed/26963764  How being busy can increase motivation and reduce task completion time.

http://web.peralta.edu/admissions/fees/

https://edsource.org/2018/getting-free-college-tuition-in-california-a-quick-guide/599039

https://www.csac.ca.gov/sites/main/files/file-attachments/g-30_2018_cal_grant_comparison.pdf

https://onlinelibrary.wiley.com/doi/abs/10.1111/ecin.12413 Lin-Chi Hsu. The timing of welfare payments and intimate partner violence. Economic Inquiry, 55(2):1017–1031, 2017.