Why Universal Basic Income Would Be Good for the Economy

A new survey from Hill-HarrisX has found that bipartisan support for a universal basic income (UBI) has risen. According to the survey, 55% of registered voters are in favor of a UBI system — up 12% from the 2019 survey.

  • Democratic and young voters saw the largest increases in support. 36% of Republican voters are in favor, along with 71% of Democratic voters and 56% of Independent voters.
  • The survey was conducted in August 2020, the same month that saw weekly unemployment claims spike to over one million.

Universal basic income is an economic policy that guarantees every adult a certain level of fixed income from the government. Like a social security payment, except for everyone who doesn’t meet a certain annual income amount. The cornerstones to UBI are that it is paid on a recurring basis, in cash payments, paid to the individual (not household), is universal (no specific population) and unconditional.

Essentially, it aims to create a wage floor that can help raise people from poverty. The specific payment amount, where that money comes from and how it varies by state, are all variables that would depend on the legislation and who implemented it.

Why does anyone oppose Universal Basic Income?

Those who oppose universal basic income usually have objections regarding its execution. The most popular point of dissent is funding. To give each American adult $1,000 a month would cost a couple trillion ($2.8 trillion according to Andrew Yang’s plan.) It’s unclear where that money would come from and how it may affect taxpayers.

Detractors also theorize that a guaranteed income would eliminate motivation to work and contribute to society. It may also encourage more people to immigrate to the U.S. to take advantage of the guaranteed income.

There’s also the case that raising the minimum level of poverty doesn’t eliminate the structural inequalities in work and education that limit opportunities for minorities and lower classes. The Ivy League grad with a steep inheritance can still afford to take an unpaid internship in Manhattan over a first generation college graduate from a low-income family.

The moral necessity of UBI

Supporters of universal basic income rally around the human right to quality of life. Every person deserves the basic necessities to not only survive but feel stability. A UBI would seek to alleviate inhumane contradictions, like the 1.5 million public school students experiencing homelessness in one of the most developed countries in the world.

Providing a guaranteed income could help people break the cycle of generational poverty. And pilot studies of this system have shown that people make vital choices — like covering grocery and healthcare expenses with the money they’re given.

UBI supporters, like Yang, also point to the monetary balance and value a UBI can place on things our culture values. It would help fund young and struggling artists and provide stability to gig workers. It would provide an income for stay-at-home or part time mothers, giving a monetary fund to family labor and care.

Trials and errors

Each iteration and proposal for UBI has been different. Switzerland was the first country to put a UBI system to a nationwide vote, but 78% of voters were against it. Finland piloted UBI for two-years with the goal of improving unemployment but decided not to continue the program after finding it did not help decrease unemployment.

Germany recently launched a three-year UBI experiment where 120 citizens will receive basic income every month, funded by donations. And closest to home, the city of Stockton in California has been running a UBI pilot program — 125 low-income residents receive $500 each month. So far, data indicates the money is being spent to cover basic cost of living bills and obligations.

Too long, didn’t read?

Implementing universal basic income is complicated. But a system like this could have eased the economic tension that business closures and layoffs due to the pandemic have caused. On the other hand, if adopted, UBI could cost almost the equivalent of the government’s entire federal budget and burden taxpayers. And who knows, maybe UBI fan Elon Musk will donate one of his billions.

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Danika Miller

Personal Finance Reporter

Danika Miller is a personal finance reporter at The Simple Dollar who specializes in banking, savings, budgeting, home insurance, and auto insurance. Her reporting has also been featured at CreditCards.com, Reviews.com, and elsewhere.