Three Things To Know About Universal Basic Income | KERA News

Three Things To Know About Universal Basic Income

Sep 18, 2018

What would happen if all Americans were guaranteed a monthly income — whether or not they were employed?

Annie Lowrey is a contributing editor for The Atlantic and author of the book "Give People Money." She spoke with Krys Boyd on a recent episode of KERA's Think about how universal basic income — UBI for short — might change this country.

Listen to the full conversation here or an excerpt in the audio player below.

Interview Highlights

On the idea of universal basic income

The idea is just basically everybody in the United States or another country would get a pension payment, kind of like a Social Security payment. But it leads you to ask all sorts of questions about what we have, why we have it, and how things could be different. If we’re as wealthy a country as we are, do we deserve to have kind of a floor? Do we want to make sure there’s some level of poverty beneath which we’re not going to let people fall? Right now, the answer is no. We have a safety net with some pretty significantly large holes in it. But maybe in the future, the answer might be yes.

Usually when people talk about a UBI, they talk about something like $500 or $1,000 a month for adults. And then there’s a sister idea, which is a called a “guaranteed minimum income.” The idea is the government would basically boost your income up through the tax code if you ever fell below a poverty line, maybe the standard poverty line or one a bit higher or lower.

How benefits affect consumption habits

We have a lot of data from a lot of different sources that show when people receive this money through things like the earned income tax credit or through UBI-type pilots that were run in the United States and in Canada, what they show is when you get government money, you tend to increase your consumption, but what you’re consuming doesn’t change much.

For instance, families that use SNAP benefits, or food stamps, their grocery-purchasing habits look identical to the higher-income families that are not using those benefits; they eat the same stuff. Similarly, if you follow families from before they get a benefit to after they get it, they consume more. They consume more groceries, they might buy more things for their house, and they might buy things like bicycles or cars, or whatever it might be. But there’s no evidence that they spend more on vice goods — like cigarettes or alcohol or gambling.      

It’s hard because there’s still this feeling that money, if it’s coming from the taxpayer and society at large, shouldn’t be going to any of that. But we just don’t really see an aggregate level that people “misuse” it.

How universal basic income would empower workers

You imagine if I gave you $1,000 a month, then your employer could say, “Hey, you have that $1,000, so I’m going to cut your wages by $750 and I’m going to pocket that, and you’re still going to be better off. What does it matter?” But there’s also this idea that if you had $1,000 a month and somebody said, “Hey, I’d love for you to do this job, and it’s dangerous. You’re going to be handling toxic materials. And I want to pay you $8 an hour.” You would say, “Hey, I have $1,000 a month. Absolutely not. I’m going to go find a better job.” It would create that worker-centered power. Economists argue this would not be a form of back-door corporate subsidy, but instead would re-center the worker and give workers much more power across the board.  

Interview responses have been lightly edited for clarity.