Universal Basic Income (UBI) proposals vary but typically involve unconditional cash payments paid at regular intervals to all adult residents within a country, regardless of income, wealth, or work-status. UBI supporters argue a UBI is the best way to provide relief from a host of economic ills, including poverty, erratic income, job instability, and lack of social mobility.
Let's look at these problems one at a time, specifically as they manifest in the US:
Poverty: It's important to distinguish chronic and transient poverty, because they have different causes and prognoses. Transient poverty is more common during early adulthood and tends to follow a specific event, such as job loss, often resolved by another event, e.g., new job. Chronic poverty is usually the result of an ongoing disadvantage, such as illiteracy or limited skills. (Kimberlin, 2013). Depending on the study and after controlling for government benefits and tax credits, between 2-3% of Americans experience chronic poverty (Kimberlin, 2016).
Volatility of Income: Volatility can be the good or the bad sort. The good sort includes things like getting a sales commission and worker-requested flextime. The bad kind of volatility is mostly due to irregular working hours - a problem that is especially acute in low-paying service jobs like cook, janitor, waiter/waitress, maid, hairdresser, cashiers, and retail sales clerk.
Job Instability: Changing technology is expected to disrupt jobs and careers. Workers who don't update their skills to meet changing labor market demands will be the most at risk for losing their jobs (Arntz, Gregory and Zierahn, 2016)
Lack of Social Mobility: The 11.6% of Americans over 25 without a high school diploma are less mobile and most likely to remain stuck in the lower income quintiles. Ditto high school graduates who lack basic job skills. Overall, however, socially mobility is alive and well in the US. For example, based on individual and household income trajectories over the last half century, over two-thirds of Americans can expect to reach the top quintile of the income distribution at some point in their lives, especially during peak earning years of 45-54. (Hirschl & Rank 2015).
As the above descriptions hopefully made clear, the challenges of poverty, income volatility, job instability, and lack of social mobility share one thing in common: they are mostly issues affecting specific US subgroups with specific problems. As such, they need solutions that target those subgroups and problems- not some giant fix like a Universal Basic Income.
Besides being overly broad, a UBI in the US would cost an arm and a leg - actually, it would cost the entire body if the cash payments were the oft-proposed $1000 a month. Such a UBI would bankrupt the US government, destroy the economy, and cause labor market participation rates to plummet, thereby reducing the tax base that's supposed to fund the whole thing. It's called a death spiral.*
May I propose a modest alternative: the Adult Student Basic Income (ASBI). The ASBI would provide a basic income (say, $1,000/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. Like the UBI, the ASBI benefit would not be means-tested, so recipients could work without jeopardizing their payments. The ASBI would also effectively combat poverty, income volatility, job instability, and lack of social mobility by subsidizing incomes while recipients increase their earning potential. Unlike the UBI, the ASBI is time-limited and would not subsidize a permanent way of life. And while the ASBI is conditional, the required adult education and training is not so onerous as to preclude working at the same time. Plus, it’s affordable.
Next: Doing the numbers.
* This post isn’t meant to provide a thorough critique of the Universal Basic Income. For that, see:
Revisiting The Universal Basic Income: The Debate Continues, Part I
Revisiting The Universal Basic Income: The Debate Continues, Part II
Revisiting The Universal Basic Income: The Debate Continues, Part III
Revisiting The Universal Basic Income: The Debate Continues, Part IV
Revisiting The Universal Basic Income: The Debate Continues, Part V
Revisiting The Universal Basic Income: The Debate Continues, Part VI
Revisiting The Universal Basic Income: The Debate Continues, Part VII
Revisiting The Universal Basic Income: The Debate Continues, Part VIII
Revisiting The Universal Basic Income: The Debate Continues, Part IX
Revisiting The Universal Basic Income: The Debate Continues, Part X
Revisiting The Universal Basic Income: The Debate Continues, Part XI
Universal Basic Income: Effect on Labor Market Participation, Part I
Universal Basic Income: Effect on Labor Market Participation, Part II
Universal Basic Income: Effect on Full-Time Workers
Universal Basic Income: Lessons from Disability Benefit Programs, Part II
Universal Basic Income: Lessons from Disability Benefit Programs, Part I
Universal Basic Income and Part-Time Workers
References:
Arntz, M., T. Gregory and U. Zierahn (2016), “The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis”, OECD Social, Employment and Migration Working Papers, No. 189, OECD Publishing, Paris. http://dx.doi.org/10.1787/5jlz9h56dvq7-en
Hirschl TA, Rank MR (2015) The Life Course Dynamics of Affluence. PLOS ONE 10(1): e0116370. https://doi.org/10.1371/journal.pone.0116370 https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0116370
Kimberlin, Sara 2013. “Examining the Impact of Government Benefits on Chronic and Transient Poverty in the United States, 1998–2008.” Working Paper presented at the Association for Public Policy Analysis and Management.
Kimberlin, Sara "The Influence of Government Benefits and Taxes on Rates of Chronic and Transient Poverty in the United States," Social Service Review 90, no. 2 (June 2016): 185-234. https://doi.org/10.1086/687306