By: Myles Dudley
Universal basic income (UBI) is a policy proposal where the government gives citizens a set amount of money with no strings attached. The program has been proposed in different forms for a while but has been garnering significantly more attention in recent years than other pushes for it in the past. The proposal still has to battle many concerns including the cost of funding the program, its effect on the economy, and potential effects on the labor force. To keep this piece relatively brief, all the complexities associated with UBI are simplified.
Background
Universal basic income is not a new idea. Philosophers have been debating similar ideas since 1797 (Stanford 2019). The first modern push for UBI was led by Martin Luther King Jr, who championed the idea during the Civil Rights Movement, arguing that it would lead to the end of poverty (Brock 2020). Since then, the idea has been gaining and losing traction. One of the most recent supporters is former presidential candidate Andrew Yang, who proposed a national UBI program in the U.S. under the name of “Freedom Dividends.” Despite the different name, all UBI programs fundamentally share a purpose of providing citizens some guaranteed financial security.
Pilot Programs and Results
The city of Stockton, California tested a UBI program where they selected 125 people identified as low-income and gave them $500 a month for two years. At the conclusion of the program, participants said the extra money actually encouraged more of them to go find work — citing the money gave them time to apply for jobs, and helped pay for childcare and transportation. In addition, in the first year of the program employment among participants jumped 12%, and at the end of the program the participants’ overall health was raised (Conlon 2021). Positive results aren’t unique to this one experiment. For example, UBI programs in Canada, Finland, Kenya, and Germany have improved levels of mental health and physical health, consequently leading people to be happier and less stressed (Samuel, 2020).
In the U.S., there has been one more notable example of UBI in practice. Almost surprisingly, Alaska has had a program named the ‘Alaska Permanent Fund.’ Since 1982, Alaskan residents have received an average annual dividend of $1,606 which is funded by oil revenues in the state. The permanent fund has also seen the positive outcomes associated with a UBI program, poverty in Alaska has been reduced by 20% since the start of the program and has no effect on unemployment (Sundlee 2020). In addition, Alaska has an aging population and studies show that the annual dividend gave young couples an extra layer of financial security, encouraging those couples to have more children (Samuel 2020). As a result, the UBI program in Alaska has helped reverse the trend of the state’s aging population, encouraged people to keep working, and raised residents’ overall health (Conlon 2021).
In any case, it is evident that UBI programs are beneficial for mid-sized populations and their regional economies. While this may be true, UBI programs are only helpful to an extent, with significant data showing that a UBI program that completely eliminates poverty would be vastly too expensive to take up (Brock, 2020). This is why, to date, there has only been one national UBI program. In 2011, the country of Iran implemented the first national universal basic income program, and in comparison to existing welfare programs, the UBI program was relatively successful. The country gave monthly deposits of roughly 29% of the country’s median household income, which amounts to roughly an extra $1.50 per person each day (Geier, 2018). Since the program was implemented, it has encouraged larger amounts of younger people to go into school and actually put more people into the workforce in the country, slightly decreasing the amount of people in poverty in the country (Geier, 2018).
Final Thoughts
Ultimately, universal basic income programs are very promising, but it remains to be seen if they can sustain their popularity. Proponents of UBI tout the financial stability, better jobs, and increased health the programs are proven to create. On the other hand, opponents of the proposal cite the possibility of negatively impacting the labor force, inflation, and the cost of the program to not implement them in more places and instead to strengthen already existing welfare programs. It is important to note that negative effects on the labor force were not observed through the above case studies. However, it appears that what some see as a utopian idea, will not be implemented on larger national scales anytime soon.