The Case for a Universal Basic Income

Andy Stern, the former president of the Service Employees union, has kept himself busy being a senior fellow at Columbia University and wading into sticky political debates. His just-released book, Raising the Floor, goes deeper into one of these debates, the clash over the idea of a “Universal Basic Income.”

Stern considers a Universal Basic Income, or UBI, the answer to rising inequality and the joblessness he sees coming from accelerating automation. He gets a lot right in his analysis, but he totally whiffs on one key front. His UBI solution overlooks the continuing – and growing – danger of concentrated wealth at our society’s summit.

In Raising the Floor, Stern explores how emerging technologies will affect the jobs, work, and livelihoods of millions of working families. We’ll have no return, he argues, to the high wage manufacturing and service jobs of the post-World War II boom.

Our current “job-less, wage-less growth,” Stern contends, “marks a strategic inflection point that merits our immediate and serious attention.”

Much of Raising the Floor comes across as an economic travelogue, taking us by the powerful forces shaping our future. Stern pays particular attention to the 101 ways new technologies are engineering labor out of enterprises.

“What about workers?” he asks,

A just transition to tomorrow, Stern concludes, needs to revolve around a Universal Basic Income. He goes on to delve into variations on the UBI theme and ends up championing the broadly universal “no strings attached” cash-grant approach.

Stern’s take on this approach would phase in a $1,000 a month UBI for every adult between the age of 18 and 65.  A couple would get $24,000, enough to lift them up but not so much they would quit working.

“Most people will want to keep working,” he argues “because they aspire to a more comfortable lifestyle.”

People, in other words, would continue working because they want to be able to afford to do more than what $1,000 per month would allow.

A UBI, Stern believes, would give low-wage workers increased bargaining power with low-road employers and lead to higher wages. But would Stern’s approach be politically feasible? He thinks so — and he’s seeking allies for a new political coalition that would include Silicon Valley “disrupters,” libertarians, and liberal futurists.

Stern, in fact, rather enjoys the “strange bedfellows” convergence that’s coming together around the UBI idea. He reminds us that UBI supporters in the past have included everyone from Richard Nixon and John Kenneth Galbraith to Ralph Nader and Milton Friedman.

In pursuit of a UBI, Stern’s even willing “to cash out a large number of the anti-poverty programs my liberal and progressive colleagues support.”

The prospect of ditching food stamps, energy assistance, and other social programs has been attracting libertarian-leaning right-wing think tanks to the UBI notion for quite some time. Hard-core libertarians would like to go a giant step further and also eliminate Social Security, Medicaid, and Medicare. Stern balks at that extension.

Many progressive UBI supporters, unlike Stern, reject the idea that a Universal Basic Income can ever adequately replace any significant part of the existing ecosystem of support programs that serve to help “raise the floor.” They see the UBI instead as a smart addition to this ecosystem.

This ecosystem needs strengthening, not replacement. We need universal treatment on demand for addiction, for instance, and early health care intervention for learning disabilities and mental illness.

Affluent families already provide this “safety net” to their children. They don’t have to worry about losing economic ground. In the richest nation on earth, everyone else should face life with these sorts of protections.

Stern estimates his $1,000 a month UBI plan for every adult would cost between $1.75 trillion and $2.5 trillion per year. A Cato Institute report pegs UBI costs at somewhere between $2 trillion and $3 trillion.

The first $1 trillion of that, more conservative UBI advocates argue, should come through eliminating 126 state and federal social assistance programs that currently total about that much. Most of these programs serve low-income people.

By contrast, eliminating tax expenditures – think mortgage deductions and other government programs that benefit mostly higher-income people – would bring in about $1.2 trillion. Instituting a European style value-added tax could raise between $650 billion and $1.3 trillion.

Another innovative financing approach would be to tie UBI funding to “commons-based revenue” in the same style as the Alaska Permanent Fund, a program that has worked to widely share the benefits from the state’s oil income. This approach could both supplement declining wage income and address natural resource depletion.

Stern’s take on the UBI doesn’t address a variety of important questions. One example: What’s to stop employers from continuing to employee illegal or guest-worker immigrants for low-wage work?

With a UBI making low-wage work less attractive, the United States could come to resemble Dubai, a society where oil wealth has lifted most citizens while unprotected immigrants perform all the hard labor.

Raising the Floor also fails to address how a UBI might impact the grotesque concentration of wealth and power underlying current inequalities.

A properly designed UBI could link to revenue sources that chip away at these imbalances. Stern, sadly, doesn’t go down that road. Is he looking back over his shoulder at the Silicon Valley “disrupters” he sees as UBI allies?

Raising the Floor does offer a solid introduction to the UBI debate. We do have rocky times ahead as technology and robotics disrupt work for millions of workers. A universal guaranteed income could cushion the blow.

Chuck Collins is a senior scholar at the Institute for Policy Studies and a co-editor of Inequality.org. He’s the author of the recent book Born on Third Base.