[Backstory: This is a draft of a story that didn’t work out for the magazine I wrote it for, so I decided to share it here on my website.]
The Universal Basic Income is now a 2020 campaign issue. Longshot candidate Andrew Yang, a New York businessman, is getting increasing press for his platform centered around a universal basic income plan. Senator Bernie Sanders also supports the policy, and Rep. Alexandra Ocasio-Cortez has included a kind of UBI in her proposed Green New Deal.
But UBI isn’t just some abstract, pie-in-the-sky idea; it’s already being tested and implemented in a bunch of places around the country. Small pilot programs and versions of a universal basic income—though not always with that name—have gained steam in a variety of cities and states, from Stockton to Chicago to Hawaii. The policy usually means dishing out cash, no strings attached, to everyone, on a monthly or annual basis, an influx that can keep many families above the poverty line. And while the idea is certainly being pushed mainly by progressives, it’s a rare policy with support among many on the left and right and in financially strapped as well as more well-off places.
“There’s a great deal of momentum in the movement right now,” says Karl Widerquist, a political economist at Georgetown University in Qatar and co-chair of the Basic Income Earth Network, which supports UBI. He attributes its increasing popularity over the past decade to factors including Occupy Wall Street, awareness of stagnating wages, growing inequality and increasing concerns about automation.
But even as the idea gains steam, these early programs are running into problems. Many are primarily funded by billionaires, which makes them unsustainable—and they face uncertain futures when only a few policy-makers are ready to put government money behind them.
The most robust cash-distribution program ever attempted in the U.S. comes out of Alaska. In the 1970s, Alaska opened the North Slope to oil drilling, and some of the oil revenue was invested in a fund the state called the Permanent Fund. Since 1982, the Permanent Fund has paid out a dividend between $1,000 and $2,000—depending on oil prices—to every resident every year, regardless of age. (More than 660,000 Alaskans received their 2018 check for $1,600 in October.) While that’s not an enormous sum, it means a lot to someone close to the poverty line, and it adds up in a household with kids.
“By creating a fund, they were able to keep that [oil revenue] money invested and keep it around for a long time,” says Damon Jones, a University of Chicago economist. “They’ve preserved it over time for future generations.”
The Alaska Permanent Fund has been around long enough to provide documented outcomes for those studying the policy. For example, a common political objection to such programs is that “free riders” will quit their jobs or work less once they get that extra paycheck. But a new study shows that the small number of free riders aren’t enough to drag the economy down. Jones and Ioana Marinescu, a University of Pennsylvania economist, find that the policy has had no significant effect on the Alaska job market, as employment levels there match that of other, similar states.
“We explain this by saying that there is a balancing out of people’s lesser desire to work and companies’ desire to hire in order to respond to added demand from Alaskans who are spending their cash,” Marinescu says. In other words, the economy remains pretty stable: If there are any people working less, any impact they might have is offset by people spending their extra money on goods and services, which means local businesses hire more.
Many economists, especially conservative ones like Milton Friedman and his followers, prefer UBI to other wealth redistribution programs because it gives people the freedom to spend their money however they want, and they see it as preferable to expensive social welfare programs, like food stamps and health care.
And the Alaskan experiment has shown that untethered cash grants can improve public health and safety. For one, babies in the state, especially those of less-educated mothers, have had higher birth weights since the policy was implemented in the 1970s.
Another UBI experiment saw a similar effect: About 20 years ago, the Eastern Band of Cherokee Indians in North Carolina started channeling casino money to all adult tribal members—about 16,000 people. They received two payments per year adding up to $4,000-$6,000 annually, and afterwards poverty and criminal activity went down while children’s health improved dramatically.
Though these experiments arguably accomplished what they were intended to do, whether the policy can be politically and economically sustainable in other places around the country still remains to be seen. Four out of five Alaskans say their program provides an important source of income for people in their community and improves their quality of life. But nationwide polls of eligible voters show that about 48 percent of them support a guaranteed basic income, with higher support from people under 50 and people of color.
And, of course, financing from oil and gas or from casinos isn’t a possibility in most other places, so the Alaskan and Cherokee systems can’t be replicated elsewhere.
Two of the newest pilot programs include Stockton and Oakland, California, whose populations add up to about Alaska’s. Starting later this year, about 100 Stockton volunteers selected by researchers will receive $500 a month for 18 months, and 1,000 Oakland participants will get $1,000 a month for a year. The experiments’ funders include Facebook co-founder Chris Hughes, eBay founder Pierre Omidyar and the startup company incubator Y Combinator led by Sam Altman. Other Silicon Valley heavyweights like Mark Zuckerberg and Elon Musk have voiced support for a basic income as well, at least in principle, partly because of the fear that artificial intelligence and robots will take over more people’s jobs.
Others look to an even wider scale. Democratic Representative Chris Lee passed legislation last year for Hawaii to form an economic security working group to study how UBI could work throughout the state. And Chicago’s City Council could soon implement a UBI pilot to provide $500 a month to 1,000 families, likely partly funded by philanthropists.
If either ultimately comes to fruition for all their residents, however, it would cost billions of dollars annually. And that likely means raising taxes.
“I think one of the promising avenues for financing basic income is to think about a carbon tax or more broadly a tax on pollution,” Marinescu argues.
But then it really becomes more of a political challenge rather than an economic one. The biggest carbon tax proposal on the 2018 midterm ballot, in Washington state, failed by a wide margin—56 percent to 44 percent. A bill in the House with bipartisan cosponsors (the Energy Innovation and Carbon Dividend Act) would create a small carbon tax and the money would be given to taxpayers in a dividend, but its support currently remains small. Until a federal carbon tax becomes a political reality, each city and state will have to come up with their own financing scheme for a basic income, and for many, that won’t be easy to solve.
But a guaranteed income isn’t the only big idea in town, and other similar measures have become part of the national debate. New Jersey Democratic Representative Bonnie Watson Coleman, introduced legislation last September to make caregivers and students pursuing higher education eligible to receive the Earned Income Tax Credit. And in October, Senator Kamala Harris announced the LIFT (Livable Incomes for Families Today) the Middle Class Act, which would basically expand the EITC. On the other hand, Senators Sanders and Kirsten Gillibrand have called for an even more ambitious universal job guarantee instead, which would mean employment as well as a livable income for everyone.
“I think this is a really interesting conversation because it pushes us to think really hard about our social contract,” says Rakeen Mabud, director of the nonprofit Roosevelt Institute’s 21st Century Economy and Economic Inclusion programs. “It forces us to think about those big ideas, push past assumptions we have about the poor and about what our government should be doing and get toward a vision of a good society.”