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.