The idea of a minimum guaranteed income (MGI) dates back to Thomas Paine and the 18th century and has been promoted by such diverse people as Martin Luther King, Jr, President Nixon, economist Milton Friedman, and recent presidential candidate Andrew Yang. Nancy Pelosi has suggested that such a program should exist, at least till the end of the current pandemic, and two thirds of the House Democratic Caucus agrees. The idea of the payment, also called a Basic Income Grant, is that all Americans should achieve a certain level of financial stability and it proposes monthly payments to individuals and families could accomplish this. The manner in which the program would be run has been the subject of serious debate. Some proponents want a payment to all Americans with a tax structure in which the payment would be paid back to the government if a certain income level was attained. Others suggest that it should be income qualified; some suggesting it should only be paid to those under the poverty line while others suggest it can be a subsidy to people or families earning considerably more (100,000 for individuals and higher for families).
Supporters of the MGI suggest that it would have multiple benefits: It eliminates extreme poverty; reduces government bureaucracy; subsidizes wages so that people can do work they want, regardless of the wages; it can help young couples start a family; pay for persons caretaking relatives; increase mental health by reducing stress; improve the economy by stabilizing it, especially in times of contraction; increase high school graduation; and compensate for jobs lost to automation (the single largest threat to jobs). Opponents object saying that it is a disincentive to work; is a “handout” to the poor; will cause inflation; will not eliminate poverty; and could provide payments to all draining funds from the poor. So far, in places where such programs have been tried, no negative effects have been reported.
Finland instituted monthly payments to 2000 randomly selected persons, 25-58 years of age, in 2017-18; no one was allowed to opt out. Payments were not means tested and there were no conditions imposed. In comparison to a large control group, the group receiving the payments worked more days than the control group and reported better financial security, mental health, and cognitive function. Employment increased for families with children and for non-Finnish speakers.
In 2013 Switzerland had an unconditional basic income in its election and it was not supported, people feared negative outcomes. In the 1970s a village in Canada instituted a GMI and positive impacts were reported. Families received the equivalent of $16,000. Some of the grant was lost with wages but not dollar for dollar. Village families increased their long term savings; teenage boys stayed in school (instead of working to augment family income); women took longer maternity leaves; overall well-being improved with less hospitalizations, especially for mental health; small businesses were improved upon; children saw dentists; and more flexibility in work and caring for family was reported.
Some cities such as Stockton and Santa Monica CA have experimented with GMI and some Silicon valley philanthropists are promoting the idea, particularly as a response to the increases in unemployment due to automation.
Stockton is a city with a diverse population and an average household income of about $46,000. Participants in the GMI were drawn randomly from volunteers whose household income was under the city’s average. No one spent money on frivolous purchases. Money was used for emergences like car repairs and healthcare; 40% went to food, 25% to sales and merchandise, 12% to utilities. The study was accomplished eight months into the 18 months of the project. No research has yet been published on the whole experiment.
The recent crisis in the economy instigated by the corona virus not only has brought discussion of the GMI to the forefront, it has caused the illumination of the many areas of inequality in the US from housing, to healthcare, to income, to access to emergency resources. There is some reason to be optimistic that a Democratic president will attend to these disparities.
- https://www.stocktondemonstration.org/ Site reporting on Stockton’s program
- https://www.forbes.com/sites/andrewsolender/2020/04/24/pushing-universal-basic-income-andrew-yang-supporters-get-congresspassubi-trending/#36d070e5d30c Yang’s proposal