How Might Universal Basic Income Work?

Over half a century later, one in eight Americans, thirty eight million people are still living below the poverty line, according to the Census Bureau. Millions more jobs are threatened by automation and artificial intelligence. Yet mL ka's notion of guaranteed income of writing a monthly check to every American adult, no questions asked, remains a radical idea in many economic

and political circles. We spoke with Stacia Martin West, a professor of social work at the University of Tennessee and co principal investigator with Amy Castor Baker of the University of Pennsylvania of the Stockton Economic Power Demonstration or SEED, one of the only active programs testing guaranteed income, also known as universal basic income on real Americans under the SEED program, and twenty five residents of Stockton, California were

given a guaranteed income of five hundred dollars a month for eighteen months to see how this cash payment affected their lives. Researchers hoped to release SEEDS first round of findings in March. As Martin West explains, universal basic income holds tremendous promise for alleviating not only the financial burden of poverty, but also the damaging ripple effects of economic

and security on health and family. Yet she admits that the very idea of a federal program paying poor Americans hundreds or even thousands of dollars a month faces tremendous political opposition, not only for its cost, but because of the pervasive, if unproven belief that free government handouts discourage people from working and foster dependence on the state if

you're poor. In the United States, there already exists a safety net of both state and federal programs designed to help struggling individuals and families, but all of those programs are means tested, which means that they come with certain strings attached. To receive snap food benefits or housing assistance. For example, you need to prove that your income is below a certain threshold. To collect unemployment benefits, you need

to show that you're actively looking for work. To collect Social Security retirement benefits, you have to have worked for a minimum number of years. And that's why universal basic income is such a radical departure from the existing welfare programs. There's no means testing or proof required to qualify. Under a UNI first basic income plan, every single American adult would receive a check maybe five hundred bucks, maybe a thousand,

every month with absolutely no strings attached. Proponents of the idea sometimes think the money should be totally unconditional, leaving it up to the individual or family to decide how best to use it. In some countries, universal basic income grants are sometimes linked to recipients getting medical checkups or sending their kids to school. But if it's unconditional, recipients of universal basic income could use the extra money to pay for groceries, cover rent or mortgage, or buy clothes

for the kids. They could also choose to enroll in an online class or job skills program, take time off to raise a baby or care for a sick parent, or invested in starting up a new business. Part of the idea that's right there in the name is basic income.

Even at a thousand dollars a month or more, universal basic income would not fully replace earnings from a job, but it would provide a much needed cushion for the underpaid, overstressed workers who have never had the luxury of financial security. Martin West said, universal basic income is basic, and that it meets your basic needs, and it's guaranteed income, and that you know that it's coming. Andrew Yang popularized the notion of universal basic income to some extent during his

presidential run. Yang pitched his thousand dollar a month freedom dividend as a way of protecting American workers from the impending robot takeover of millions of jobs over the next decade. While Martin West understands the concerns about automation and AI in the future, she feels there are plenty of other urgent reasons to implement a universal basic income plan today. She gave the example of the millions of Americans who work physically taxing gig jobs with unpredictable pay and hours

and no benefits. She said, there are people dying from capitalism now. The inability to predict what your next paycheck is going to be from week to week or month to month has pretty devastating impacts on a person's stress levels and manifests, and poor health outcomes like cardiovascular health decline, increased rates of diabetes, and more. Stockton resident Thomas Vargas was one of those chosen to receive a five hundred

dollar check every month through the Seed program. His shifts at a warehouse job were unpredictable, so Vargas had to work odd jobs late into the night to support a family he hardly had a chance to see. With the extra five hundred dollars, he was able to skip a shift at the warehouse and interview for a new job with better pay and fixed hours, freeing him to spend more time with his family. Proponents argue that this is

one of the secondary effects of guaranteed income. A cushion of five hundred or a thousand dollars makes workers feel less desperate to take any job that comes along, even if the pay is bad and the working conditions are lousy. Martin West explained, nobody cares more about labor supply than these big companies that tend to not treat their employees very well. If you have employees saying I can do better than this, and now I have this bargaining power,

then you may see improved working conditions by far. One of the biggest benefits of universal basic income is that it would provide a steady paycheck to people currently doing critical work for free, namely stay at home parents and other unpaid caregivers, who are far more likely to be women. The biggest criticism of universal basic income is how much

it would cost. Under Yang's Freedom Dividend plan, each of America's two d and thirty six million adults would receive twelve thousand dollars a year, for a total of two point eight twillion dollars, which is more than half of the federal budget. Yang's plan allows older Americans the option of keeping their current Social Security and Medicare benefits, while other universal basic income proposals vow to replay the entire

welfare state with one guaranteed monthly check. Even though some of the money could be offset by doing away with other entitlement programs, the federal government would have to raise taxes substantially to pay for universal basic income program. Some of those taxes would target the wealthiest one percent and the very technology companies that are making human workers obsolete, but regular Americans would get hit too. For example, Yang and others propose a value added tax of ten on

all manufactured goods. Yang also thinks that his freedom dividend would produce more economic growth, therefore increasing the tax base, but of course we have no way of knowing whether that's how it would actually shake out. The supporters of universal basic income agree that a nationwide guaranteed income program would be enormously expensive, but they disagree that it's not worth the investment. Martin West said, like all the decisions this country makes, it really comes down to what is

our priority. If our priority is to let people waste away in poverty, have ill health, have their work not be valued, then we won't prioritize a guaranteed income as part of our national budget. But if we do, in fact honor the social contract that we have in the United States, that means we should likely look at something like a universal basic income, which leads to the second and arguably more difficult obstacle to creating a national universal

basic income program. The belief deeply held by many Americans that a guaranteed income is another form of government handout that encourages people not to work. There have only been a few real world studies so far on universal basic income. For instance, people involved in a trial in Finland reported less stress and the greater feelings of well being compared to people who didn't receive the extra cash, but they were not more likely to seek out employment, even though

they wouldn't lose the benefit if they did. The truth is that we won't know if universal basic income plans work until there's more data from experiments like Seed and a half dozen more pilot programs being launched by a group called Mayors for a Guaranteed Income. We'll have to see how they turn out. Today's episode was written by Dave Ruse and produced by Tyler Clang. For more on this amounts of other topics, visit how Stuff work dot com.

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