Experimenting with a Universal Basic Income

How should governments address the trend of jobs being eliminated by technological advancements? If close to half of current occupations are projected to be displaced by automation, as put forward in the last blog post, how will families secure the income to provide themselves with even the basics for living, let alone the “Internet of Things” that technology promises?

The concept of a universal basic income (UBI), distributed to all citizens, is gaining support, especially from the technology sector which is rapidly replacing jobs of all skill levels. Although technology is creating unimaginable new jobs, it is not too much of a stretch to foresee a growing cohort of unemployed workers.

The basic income would be adequate to provide essentials. It would satisfy the immediate needs for the unemployed, and could encourage some who are employed to reduce work hours in order to pursue unfulfilled dreams. In support of an entrepreneurial spirit, a basic income could enable the creation of small businesses, or on-line start-ups, to grow to profitability. The basic income will establish equality of opportunity for those inclined to take advantage of it, while some people will be content to get by with their minimum monthly payments. Others may split a job between two people and work part-time, or volunteer, or take courses of interest.

There have been a number of studies of UBI proposals. Findings indicate that given the choice to work or not, people will work but often choose to do a different kind of work. They can accept a lower pay for doing preferred work by having the UBI make up the difference. One famous UBI experiment began in 1973 in Canada during the administration of Pierre Trudeau, encompassing the whole town of Dauphin in Manitoba province. In addition to increased productivity, the Dauphin experiment found a decrease of 8% in the number of people hospitalized, mental health improved, and more teenagers completed high school. On January 1st Finland began a two-year trial with 2,000 unemployed citizens receiving a basic monthly income of $587 as an experiment for cutting red tape, reducing poverty, and boosting employment.

These social welfare improvements are relevant to the UBI discussion because the concept is usually accompanied by a scheme to at least partially pay the costs of the system through savings in numerous social welfare programs. One source finds that in the U.S. there are currently 79 means-tested social welfare programs, not including Medicare or Medicaid.

A pilot study in Oakland, California is to begin soon under the sponsorship of Silicon Valley’s influential incubator, Y Combinator. It will begin with 1,000 families receiving between $1,000 and $2,000 a month. The goal will be to see how people’s lives change when they have a safety net preventing them from falling into poverty. A successful pilot will be followed by a much broader study involving thousands of citizens throughout the U.S., who will receive a regular monthly paycheck for five years.

As one Silicon Valley executive pointed out, this plan is not about income equality. If anything, income inequality may increase drastically as some recipients continue working at high-paying jobs or entrepreneurial positions. What the plan does address is equality of opportunity, giving everyone a chance to receive income while pursuing a home business, or community service, or lifelong learning.

Recent post