Research Supports A UBI

During the pandemic, the Biden administration instituted a childcare tax credit. The credit provided families up to $300 per child and broadened eligibility rules. The result? Child poverty rates plummeted.

But as Robert Hubbell, among others, has reported     

Senator Joe Manchin joined with Republicans to kill the childcare tax credit because Manchin reportedly believed that caregivers were using the money to purchase illegal drugs. A new study by the US Census Bureau released on Tuesday reports that child poverty nearly doubled as a result of the termination of benefits by Manchin and the GOP.

An article written by a social worker addressed that widespread, distorted view of poverty and poor people. 

If my decades of work as a social worker taught me one great lesson, it’s this. Poverty is an entrenched system of political choices by self-serving lawmakers, not a personal failing of ordinary people…..

Not one person I’ve ever met wants to be poor, sick, disabled, struggling, or on the receiving end of public assistance programs. These programs are vital but often inadequate and difficult to access…

In 21st-century America, people have to be in extreme hardship to be eligible for help, even as they sometimes work multiple jobs. Not one mother relishes taking three buses in terrible weather to get to the Women, Infants, and Children (WIC) office to prove her worthiness to get help buying cereal for her toddler’s breakfast.

While the importance of hard work and individual talent to self-sufficiency shouldn’t be minimized, neither should it be exaggerated. When the focus is entirely upon the individual, when successes of any sort are attributed solely to individual effort, we fail to see the effects of social and legal structures that privilege some groups and impede others. When marginalized groups call attention to additional barriers they face, members of more privileged groups cling even more strongly to the fiction that only individual merit explains success and failure.

Anyone who has studied the issue, even superficially, knows that America’s social safety net is punitive and woefully inadequate. Too much of what we spend on the  patchwork of programs we sneeringly refer to as “welfare” supports a needlessly complicated bureaucracy, rather than the people who desperately need help. (The working poor are basically ineligible.)

Worse still, these various programs are incredibly and arrogantly paternalistic. Bureaucrats–many well-meaning–decide what “those people” need, and legislate accordingly. Don’t buy a steak with those food stamps! Don’t continue to live in that neighborhood–we’ll move you to one we’ve decided is more appropriate. 

If we just gave poor people money, and let them make their own decisions, it would be cheaper– and far more effective.

I have written before–and at length–about the multiple merits of a Universal Basic Income (UBI), and I hope at least a few of you will click through and read that expanded explanation, but today, I want to address the current “system” (note quotation marks) and the very expensive efforts to control what poor folks do with the benefits government provides.

A variety of UBI pilot projects have tested Manchin’s belief that idlers and other “unworthies” would simply use public money for booze or drugs. One such program has reached its halfway point, and its results mirror those of numerous other pilot projects.

Preliminary data is now available showing the effectiveness of guaranteed income as a means of combating poverty in Georgia – slightly more than half the women have saved some money, compared to none at the project’s outset; three times as many women have been able to afford childcare; and the share of women whose cellphone service was interrupted due to unpaid bills dropped from 60 to 40%.

These and other findings come as more than 100 projects centered on giving cash with no restrictions or requirements have started in the last several years, leading a group called Mayors for a Guaranteed Income to launch a nationwide speaking tour in recent weeks, screening a new documentary on these efforts called It’s Basic.

How did the recipients use these “no-strings-attached” funds? Most of the money went to utilities, food and rent. There were other positive effects; program researchers are measuring improved mental health, and researching whether participants are more likely to reach life goals with the help of guaranteed income. 

Even homeless people act responsibly when given money. Washington Post article reported on the results of a Canadian project that provided a lump sum of 7,500 Canadian dollars (about $5,540 today) to 50 people experiencing homelessness in Vancouver. Recipients spent fewer days homeless, increased their savings and put more money toward essentials compared with a control group of 65 people who received no cash transfer. It also saved the government money.

The study, which was published in the peer-reviewed PNAS journal this week, followed individuals for one year after they received the lump sum and reported no increase in spending on what researchers call “temptation goods,” defined as alcohol, drugs and cigarettes. By decreasing time spent in shelters, the intervention led to a decrease in public spending of 777 Canadian dollars (about $574) per person, the paper said.

Furthermore, a robust social safety net supports market economies. As Will Wilkinson, vice-president for policy at the libertarian Niskanen Center, argued in National Review, capitalists and socialists both misunderstand economic reality. The Left fails to appreciate the important role of capitalism and markets in producing abundance, and the Right refuses to acknowledge the indispensable role safety nets play in buffering the socially destructive consequences of insecurity.

Even capitalists would benefit from a simpler, more equitable and more reliable social safety net.


About That Social Safety Net…

It isn’t just the relatively recent transformation of the GOP base into a racist cult that  distinguishes  America’s political parties. There are plenty of actual policy preferences that divide today’s Republicans and Democrats.

One of the most significant is their approach to America’s social safety net (such as it is).

Heather Cox Richardson recently quoted Senator John Thune, the second ranking Senate Republican ,for his public confirmation of a Republican plan to hold the needed raise to the debt ceiling hostage– in order to force cuts to Social Security and Medicare.

Thune’s statement is consistent with positions advanced by Florida Senator Scott, whose widely-publicized “GOP agenda” included sunsetting both Social Security and Medicare. Richardson quoted research from 2019 showing that Social Security was a “major” source of income for 57% of Americans–and polling showing that 74% of Americans oppose reducing Social Security benefits. Further evidence of popular opinion: deep-Red areas voted for Medicare-For-All in the recent midterms.

Over the years, Republicans have adamantly opposed virtually all efforts to extend the social safety net–they screamed “socialism” when Medicare was adopted, they vowed to “replace” the Affordable Care Act, and the party’s attacks on Social Security have become increasing vocal. Thanks to gerrymandering, the GOP has been able to thwart proposed expansions of the country’s social safety net, and thanks to its increasing extremism, Party spokespersons have become ever more willing to publicly touch that “third rail” of American social policy.

As regular readers of this blog know, my own policy preferences are very different; research has convinced me that we could combat a number of  the social problems we face by instituting national health care and replacing most of our tattered and under-inclusive social supports with a Universal Basic Income. (My extended argument for the latter is here.)

Since I consulted the UBI research, there have been a number of pilot projects testing the concept. The Washington Post recently reported on several of them in a magazine article titled “Universal Basic Income has been Tested Repeatedly. It Works.” The article is lengthy, and it includes descriptions illustrating the ways in which specific individuals benefitted from participation in one of the pilot programs.

If you just learned about guaranteed income in the past few years, chances are it was from the presidential campaign of Andrew Yang, who got a lot of attention for his proposal that the government offer $1,000 monthly payments to all Americans. But versions of this concept had been circulating for decades among academics and progressive activists. And as the country shut down in the early days of the pandemic, the conditions appeared ripe to try something new, something radical. Pilot programs launched in Los Angeles, in New Orleans, in Denver, but also in historically less progressive cities like Birmingham, Ala.; Columbia, S.C.; and Gainesville, Fla. In March 2020, even a vast majority of congressional Republicans backed a $2 trillion stimulus bill that included unconditional cash payments for tens of millions of Americans. Since then, the Mayors for a Guaranteed Income coalition, which grew out of SEED, has swelled to more than 90 members and three dozen programs; a $15 million donation from Twitter co-founder Jack Dorsey helped fund many of the pilots.

Now, though, as the country emerges from the pandemic, the guaranteed income movement sits at a crossroads. The pilot programs have created scores of stories like Everett’s about how a small amount of money led to massive change in a recipient’s life. And a growing body of research based on the experiments shows that guaranteed income works — that it pulls people out of poverty, improves health outcomes, and makes it easier for people to find jobs and take care of their children. If empirical evidence ruled the world, guaranteed income would be available to every poor person in America, and many of those people would no longer be poor.

As the article concedes, however, empirical evidence is not what moves policymakers–not Republicans, certainly, nor certain Democrats beholden to fossil fuel magnates (yes, Joe Manchin, we are looking at you…)

At the end of 2021, an extension of the expanded child tax credit — which was seen by many advocates as a key steppingstone to guaranteed income — was blocked by a Democrat representing the state with the sixth-highest poverty rate in the country.

As the article notes, without a radical revision of our approach to a social safety net,  “America will continue to be home to one of the worst rates of income inequality of any rich nation in the world.”

Rather than recognizing the numerous social problems that are exacerbated by that inequality, today’s GOP remains fixated on eliminating the minimal security measures that do exist, in pursuit of still more tax cuts for the obscenely wealthy. 

And they are no longer pretending otherwise. 


This Is Encouraging

Regular readers of this blog are aware that I favor a UBI–a universal basic income. I’m certainly familiar with the arguments against it, and even more aware of the “devil in the details” that can make or break most policies. What I find encouraging is the slow but steady spread of pilot programs testing the concept.

The New York Times article at the link reports that at least twenty U.S. cities are currently conducting pilot programs meant to test the idea.

More than 48 guaranteed income programs have been started in cities nationwide since 2020, according to Mayors for a Guaranteed Income, a network of leaders supporting such efforts at the local, state and federal levels. Some efforts are publicly funded, and others have nongovernmental support. Jack Dorsey, the former chief executive of Twitter, donated $18 million to help the initiative.

At its essence, a Universal Basic Income (UBI) is a stipend  that would be sent to every U.S. adult citizen, with no strings attached– no requirement to work, or to spend the money on certain items and not others. It’s a cash grant sufficient to insure basic sustenance. (A number of proponents advocate $1000 per month).

Andy Stern, former President of the Service Employee’s International Union, points out that a UBI is simple to administer, treats all people equally, rewards hard work and entrepreneurship, and trusts the poor to make their own decisions about what to do with their money. “Because it only offers a floor, people are encouraged to make additional income through their own efforts… Welfare, on the other hand, discourages people from working because, if your income increases, you lose benefits.”

With a UBI, in contrast to welfare, there’s no phase-out, no marriage penalties, no people falsifying information–and no costly bureaucracy. My more extended arguments for a UBI can be accessed here and here.

For obvious reasons, the programs described in the Times article focus on impoverished Americans, rather than testing universal payments.

Damon Jones, an economics professor at the University of Chicago, who has studied such programs, noted that unrestricted cash — including stimulus payments — was used broadly by the federal government to stem the economic devastation of Covid-19.

“Policymakers were surprisingly open to this idea following the onset of the pandemic,” Mr. Jones said. Now the emergency aid programs have largely lapsed, ending what for some was a lifeline.

A number of conservatives argue against a UBI, asserting that it would dis-incentivize work and/or that it would make more sense to reform programs already in place–something easier said than done. But support for a universal income has not been limited to progressives. Milton Friedman famously proposed a “negative income tax,” and F.A. Hayek, the libertarian economist, wrote “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend.”

More recently, In 2016, Samuel Hammond of the libertarian Niskanen Center wrote about the “ideal” features of a UBI: its unconditional structure avoids creating poverty traps; it sets a minimum income floor, which raises worker bargaining power without wage or price controls; it decouples benefits from a particular workplace or jurisdiction; since it’s cash, it respects a diversity of needs and values; and it simplifies and streamlines bureaucracy, eliminating rent seeking and other sources of inefficiency.

One of the earliest of the pilot programs was in Stockton, California, and analysis of its results confirmed several of Hammond’s points.

Preliminary research from a pair of college professors, based on the first year of Stockton’s two-year program, found that giving families $500 each month reduced those households’ income fluctuations, enabling recipients to find full-time employment.

Researchers, for example, found that 28 percent of recipients had full-time employment when the program started in February 2019; a year later, the figure was 40 percent.

In one case, a participant had been studying to get his real estate license for more than a year — a pathway to more consistent, higher-paying work — but could not find time to study while piecing together an income doing gig jobs. The money from the pilot program, researchers found, gave him the time to study and get his license.

California–unsurprisingly–has most of the pilot programs currently underway, and the Times reports that Governor Newsom is an advocate of the UBI.

As I’ve previously noted, pilot projects to date have debunked predictions that poor folks would spend the money on drugs and liquor. Instead, most has gone for items like food, medicine, diapers and education.

It will be interesting to see the results of these current pilot programs–and assuming they continue to be positive, even more interesting to see how the nay-sayers respond.