Money for Nothing and Your Checks for Free: Why the Basic Income Makes More Sense Than You Think

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Money for Nothing and Your Checks for Free: Why the Basic Income Makes More Sense Than You Think (/) Log in (/login) Register (/register) News Money For Nothing and Your Checks for Free: Why the Basic Income Makes More Sense Than You Think Joel Anderson (/user/joelanderson) Follow | Tuesday, 10 May 2016 13:06 (EST) (mailto:?subject=Checkout this on Equities.com: Money For Nothing and Your Checks for Free: Why the Basic Income Makes More Sense Than You Think&body=Money For Nothing and Your Checks for Free: Why the Basic Income Makes More Sense Than You Think%0D%0A"A Universal Basic Income could elevate everyone out of poverty, but it's a completely crazy idea. Or is it..."%0D%0A%0D%0Ahttps://www.equities.com/news/money-for-nothing-and-your-checks-for-free-why-the-basic-income-makes-more-sense-than-you-think) I’m a liberal. Hardcore liberal, actually. I spent a decent amount of my late teens and even early 20s firmly believing that utopian socialism and the elimination of currency were real, viable ideas. But, as the old adage goes, “Anyone under 30 who’s not a socialist has no heart; anyone over 30 who’s a socialist has no head,” and I am now over 30. More notably, I spent the better part of my 20s slowly coming around to how free-market economies, chaotic and lacking in empathy as they may be about it, ultimately do more to improve the lives of the people living in them than any other approach. Which is why I’m pretty intrigued by an idea that seems to combine both the ideals of my youth with the more sensible (knock on wood) beliefs I’ve arrived at today: the universal basic income (UBI). The core idea is pretty simple: every adult citizen in the nation receives a stipend from the government that would elevate them above the poverty level and ensure that, no matter how dire their employment situation, they can at least be ensured of basic necessities like food and lodging. On its surface, this is an entirely untenable idea for many. People have been negatively painting social welfare programs as “handouts” for years, and any way you slice it, this is precisely that: a handout. However, increasingly, there are a number of studies and pilot programs around the world that suggest that, of all the options for dealing with poverty, just giving people money is the best way to go. So, here’s a good long look at why the UBI is an idea that may finally be getting its due. In three acts. Act I: Why on Earth Would We Do Something so Crazy? The basic idea here would be to offer up an amount money that means people aren’t struggling to get housing, food, and other basic needs, but aren’t living in enough comfort that they aren’t motivated to work. So, $15,600 a year would be 133% the federal poverty rate of $11,700, which is the point at which Obamacare subsidies kick in and a person is moved off of the Medicaid expansion (unless you live in one of the states where your Governor is an asshat). One can, and should, fiddle with that number to find a truly optimal level, but this seems as good a starting point as any. So, what would that really mean? Well, a lot of things. Most of which, frankly, can’t accurately be predicted by hypotheticals alone. However, let’s start with the labor market. Poverty is Leverage Employers Can Use to Drive Wages Lower On a basic level, our labor market is not efficient. Any negotiation that begins from a place where one party needs to make a deal while the other can easily walk away isn’t going to end with an equitable result. As such, American workers are at a disadvantage. As long as they’re faced with the potential for poverty if they don’t have a job, employers possess an extra degree of leverage. Obviously, that doesn’t describe ALL American workers. If you have special skills or are a member of a powerful union, you’re not negotiating from the same place of weakness. You may even have leverage over your employers in that you’re difficult to replace. Unfortunately, there’s a pretty wide swath of the American workforce that isn’t so lucky. Currently, more than 40% of American workers (http://fortune.com/2015/04/13/who-makes-15- per-hour/) make less than $15 an hour, with about 30% of workers falling into the category of “near minimum wage” (http://www.pewresearch.org/fact-tank/2014/11/05/making-more-than- minimum-wage-but-less-than-10-10-an-hour/) and about 15 million workers (http://money.cnn.com/2015/02/23/news/economy/15-million-american-workers-earn-10- dollars-or-less-an-hour/) making less than $10 an hour. That’s a figure that gets even more concerning when you consider that the underemployment rate, one that includes part-time workers who would prefer more hours, is at or near 15% (http://www.statista.com/statistics/205240/us-underemployment-rate/). Of course, it can, and frequently does, get a lot worse. If you’re at or below the poverty level, $30,000 a year (a 40-hour a week job at $15 an hour), is probably going to sound pretty sweet. If you’re trying to negotiate up your hourly wage from $15 an hour, anyone living in poverty is a person your employer could hypothetically replace you with at or below your current wage. Not to mention, someone who’s a constant reminder that it’s a lot better to be working than not. So how many Americans are living in poverty? That would be 46.7 million (https://www.census.gov/hhes/www/poverty/about/overview/), or just under 15% of the total population. If about one in seven people are living in circumstances that would lead them to need additional employment at almost any level of compensation, it’s going to create a specific downward pressure on wages for almost anyone working a low-skill job. With a basic floor for every American’s earnings, this imbalance is hypothetically corrected. Workers who don’t have to worry about where their family’s next meal will come from won’t get forced into accepting a bad job out of necessity. Wages and Benefits as Incentives Rather than Essentials In many ways, a UBI could be pro-business as well. A society with a UBI could do away with the minimum wage and allow the labor market to operate entirely on the basis of supply and demand. While completely necessary today, a society that sets a floor for income independent of employment wouldn’t actually need laws dictating a floor for wages. Wages and benefits would be offered purely as incentives to make work attractive. As an employer, you could know that, if someone’s willing to do a job for $4 an hour, it’s a sign that it’s easy work and $4 an hour is about right. If you have to pay $20 an hour and a health care plan before anyone will accept a position, you can be sure that’s money well spent to attract talent to a more-difficult-to-fill position. Either way, employers wouldn’t have to worry about where their employee’s next meal is coming from, a responsibility they have historically proven pretty uncomfortable with. A UBI might be a very positive separation of business interests from social welfare, a clear shift from our current amorphous, undefined relationship between corporations and their workers. Any business that obeys the law and pays their taxes could be free to operate in whatever fashion was most profitable without having to worry about whether or not they’re paying a “living wage.” And that’s important, because the direction of business in this country is increasingly one that’s not going to fill the needs of a broad segment of the American people. The Inevitable Economic Shift Another serious weight on the American labor market derives from the fact that we’re in the midst of a shift from a manufacturing-based economy to a service-based one (http://www.businessinsider.com/charting-the-incredible-shift-from-manufacturing-to-services- in-america-2011-9). Manufacturing jobs that used to be the bedrock of the American middle class have disappeared, gone to better technology and globalization (https://www.equities.com/news/trump-sanders-and-the-free-trade-phantom). We’re increasingly living in a society that’s divided between a well-educated professional class and a growing number of people scrambling to make ends meet with low-wage, low-skill jobs. This has led to a lot of anger and soul searching in America, as we struggle to understand this new identity. Many have lashed out at free trade agreements, politicians (https://www.equities.com/news/trump-sanders-and-the-free-trade-phantom) or corporations as scapegoats (https://www.equities.com/news/trump-sanders-and-the-free-trade-phantom), but the reality is that this is part of a broader economic movement that’s way too big to stop. America and its European counterparts have reached a post-industrial era of tremendous wealth and prosperity, but one without solutions for sharing that prosperity with the middle and lower class. And it’s an issue that seems destined to only get worse. Continued advancements in robotics and better information technology (http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf) are poised to diminish the role played by American workers (http://www.nbcnews.com/id/42183592/ns/business-careers/t/nine-jobs-humans-may-lose- robots/#.Vwv__6QrKUk) even further in the coming years (http://www.wired.com/brandlab/2015/04/rise-machines-future-lots-robots-jobs-humans/).
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