Why give people money?

Automation and AI have pushed down wages in all jobs, even jobs that automation cannot do. While there is no jobs crisis, we do have a good jobs crisis. Despite headline unemployment around 3.8%, there are millions of people working part-time who would rather have full-time jobs. There are millions more who are too discouraged to look for work. Many of them end up on disability.

There are millions of college grads overqualified for their jobs. And a growing number of gig and contract workers with no job security. And across numerous industries, wages are stagnant. Income inequality is growing. And today’s typical American worker earns around $44,500 a year, not much more than what the typical worker earned in 1979, adjusted for inflation.

80% of American adults live from paycheck to paycheck, and many of them don’t know how big their next paycheck will be.

There is no jobs crisis, but there is a good jobs crisis.

Technology isn’t the only cause of this, but technology is a bigger culprit than trade. The economy keeps growing, but most economic gains accrue to the investors, inventors, and owners of the machines and software that are replacing good jobs.

Economic change on this scale doesn’t happen without some turmoil, and that’s why Trump was elected in 2016. Historically, the shift from farms to factories involved decades of bloody labor conflict. The move from factories to offices caused more upheaval. What’s happening now is robots and automation pushing people out of steady work, and into lower-wage gig jobs.

It’s slowly pushing ordinary Americans into authoritarianism and xenophobia.

Giving people money

The most direct and efficient way to begin addressing this crisis is what’s known as a Universal Basic Income, or UBI. It’s championed by Andrew Yang who calls it the Freedom Dividend because it gives economic freedom to recipients.

A Freedom Dividend of $1000 a month would eliminate poverty for almost all of the 41 million Americans now living below the poverty line. It would also improve the bargaining power of millions of low-wage workers because if employers don’t increase wages and improve working conditions, those workers are now free to leave (without threat of starvation).

The Freedom Dividend will provide $1,000 per month to every American adult.

Since the Freedom Dividend will gradually replace existing specific programs for the poor, it will reduce government bureaucracy, minimize government interference in citizens’ lives, and allow people to avoid the stigma that accompanies government assistance. The Dividend will guarantee the material existence of everyone in our society and establish a baseline for what membership in that society means.

Some worry that it would spur millions to drop out of the labor force, induce laziness, or rob people of the structure and meaning that work provides. There is substantial research to rebut these claims. But the most obvious reason why this won’t be the case is that $12,000 a year doesn’t deliver a comfortable life anywhere in America, so there would still be plenty of incentive to work. And many of today’s jobs already provide very little in terms of fulfillment or creativity anyway.

What money does

The Freedom Dividend would give recipients a bit more time to pursue socially beneficial activities, like helping the elderly, attending to kids with special needs, or starting a new business. The Dividend would surely help compensate many people — especially women — for the unpaid labor they already contribute. 33% of stay-at-home mothers today live below the poverty line, compared with 14% in 1970.

To find out how we will pay for the UBI, click here.

There have been multiple studies on the effects of UBI. One showed that it reduced hospitalizations by 8.5%, and people’s mental health improved dramatically. Things like depression and anxiety plummeted. When people didn’t have to worry about making ends meet, they were under less mental stress. [1]

References:
What if the Government Gave Everyone a Paycheck?
[1] Zach Patton, August 2017, Governing.com

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