Jun 30, 2016

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Could the U.B.I. ‘raise the floor’ for everyone?

by | Jun 30, 2016

The idea of a “guaranteed income” that would provide all citizens with enough money to meet their basic needs has garnered attention throughout the world and even within the United States recently. While the concept may sound new or radical, it’s worth noting that President Richard Nixon proposed a similar plan in 1969, known as the Family Assistance Plan. Nixon’s proposal even passed through the U.S. House of Representatives before it was killed in the Senate Finance Committee.

Fast forwarding nearly 50 years, the concept is now commonly known as the “universal basic income” (or U.B.I.) and is considered a hot acronym among those interested in addressing peoples’ basic needs amid an ever-changing economy. In May, startup accelerator Y Combinator announced that they will run a pilot U.B.I. program for 100 families in Oakland, Calif. Other pilot programs will soon be tested in Kenya, Finland, and the Netherlands.

Earlier this year, Judith Shulevitz, a contributing opinion writer for The New York Times, raised the feminist argument that U.B.I. could be a way to reimburse mothers and other caregivers for work they currently do free of charge. Charles Murray of the conservative American Enterprise Institute also made the case for U.B.I. in a new book and in The Wall Street Journal. Murray said if done right, U.B.I. represents the best way for the U.S. to cope with a radically changing job market while transferring wealth with limited government interference.

Adding to this flurry of attention, prominent labor activist Andy Stern extolled the virtues of U.B.I. in his new book, “Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream.” Stern will discuss U.B.I. and issues relating to health care and the U.S. workforce at CCLP’s Pathways from Poverty Breakfast, Oct. 6 at the History Colorado Center. While CCLP has not endorsed U.B.I., we appreciate discussions that explore fresh approaches to forging pathways from poverty.

As the former president of SEIU and a fellow at Columbia University, Stern is widely regarded as a visionary problem solver in matters of poverty and inequality. In making the case for U.B.I., Stern states that the U.S. political and economic systems have gradually built an economy defined by low-wage jobs, long work hours, a declining workforce population, large-scale income inequality and increasing financial insecurity for a substantial number of Americans. Furthermore, Stern maintains that the current social safety net has fallen short of eradicating poverty from the U.S., while fostering a culture that dis-incentivizes work and often humiliates those who need assistance to make ends meet.

Stern’s support for U.B.I. stems from his fear that future innovations and technological advancements will displace many American workers. He is convinced that these advancements will further the automation of many jobs and industries in the U.S. Thus, he maintains that U.B.I. could ease the effects of automation on the American workforce – particularly, for lower- and middle-income Americans who are at a higher risk of job loss. The percentage of U.S. jobs threatened by automation is a contested figure: some studies claim that 47 percent of U.S. jobs are threatened by automation whereas other studies show that only 9 percent of jobs are threatened. Whatever the true figure might be, there is a growing consensus among experts that many industries are at risk for automation and new jobs to employ the displaced workers will not necessarily follow the technological advancements.

Stern maintains that the underpinnings of the ideals of the American Dream are no longer possible in the 21st century economy because the fundamental component of the American Dream — middle-income jobs that enable social mobility — is threatened by technology. If technological advancements displace nearly half of American workers as some predict, Stern fears that the original ideals of the American Dream will no longer necessarily ensure Americans a better life. Stern believes that society is obligated to help those displaced by technology maintain a basic standard of living while they pursue other opportunities, such as retraining, starting their own businesses or other worthy pursuits.

But Stern has faith that U.B.I. in the U.S. would provide minimal economic security to displaced workers and give individuals more bargaining power for negotiating. Individuals and families could move from one city to another to seek new opportunities with U.B.I. funds. Individuals could stay home with their children or take care of their dying parents. Finally, individuals would have the freedom to pursue more fulfilling occupations or creative endeavors rather than settling for low-wage jobs with long hours just to be able to pay the bills. “The freedom to choose the life that you want for yourself and for your family,” Stern declares, is “the new American Dream.”

Despite its appeal, U.B.I. would likely face daunting hurdles in the U.S., namely because of its cost and its seemingly “un-American” characteristics. Stern’s proposal calls for $12,000 a year for every American citizen above the age of 18 with an estimated annual cost of $1.75 trillion to $2.5 trillion. To put this number in perspective, the federal government in the fiscal year 2015 spent $3.7 trillion in total. He would pay for his U.B.I. plan by terminating many of the current public benefit programs (however, Social Security would be maintained). He’d also eliminate most or all of the tax deductions in the tax code, raise taxes, and reduce the federal government’s discretionary spending on the military, farm subsidies, and subsidies for oil and gas companies.

In his book, “In Our Hands: A Plan to Replace the Welfare State,” Murray proposes $13,000 a year —$3,000 of which must go towards health insurance — for every citizen over the age of 21. Unlike Stern’s proposal, Murray calls for a reduction in benefits once an individual begins making $30,000 a year or more. To fund U.B.I., Murray wants to eliminate Social Security, Medicaid, Medicare, all so-called “welfare” programs, agricultural assistance and “corporate welfare” – a system he claims would actually save the government more than a trillion dollars by 2028.

Whether U.B.I. would save or cost the federal government money remains to be seen, and given there’s no “serious” discussion of the U.B.I. among elected officials in the U.S., any talk about these numbers and the sustainability of the U.B.I. is purely academic at this point. Furthermore, implementation of U.B.I. on a national level would entail a fundamental alteration of the U.S. economy and its public policies — perhaps to a greater degree than automation of the workforce.

Advocates for U.B.I. can, however, point to past experiments that offered glimpses of its potential. In the mid-1970s, for example, Canada conducted a U.B.I. experiment in a small town. The results are intriguing — poverty was nearly eradicated and hospitalization rates went down while high school graduation rates went up. While there is concern that U.B.I. would provide a disincentive to work, the Canadian experiment revealed that only adolescents and new mothers worked fewer hours. From the perspective of childhood development, though, that could be considered a positive finding.

Recently, the government under Canadian Prime Minster Justin Trudeau included in its party platform a commitment to conduct another localized experiment with U.B.I. This past June, however, voters in Switzerland overwhelmingly rejected a proposal to introduce a guaranteed monthly income to all residents. Respondents to exit polls who voted on the referendum cited its potentially high costs, disincentives to work, and potential to bring migrants to Switzerland as reasons for voting no.

Despite the setback in Switzerland, U.B.I. remains an intriguing and game-changing idea that enjoys surprising support from many on the left and the right of the political spectrum. Whether or not it becomes a reality in the U.S., talking about U.B.I gives us an opportunity to imagine how we might transform the 20th century safety net into a 21st century safety mat that no one can slip through.

Kris Grant

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