MONEY | BASIC INCOME | UBI | POVERTY RELIEF
The Surprising Growing Appeal of Universal Basic Income in the U.S.
How it could help many — including freelancers and other gig economy workers
Universal basic income (UBI) is a basic concept: A government gives citizens money on a regular basis to help them pay for shelter, clothing, and food for themselves and their dependents. It’s also complex, however, in its possible applications and potential pros and cons — especially since it resurrects age-old, often racially charged, arguments against welfare and other forms of public assistance.
Yet, UBI is growing in popularity not only among progressive Democrats in the U.S. but among Republicans. To understand why — and consider whether UBI is something that may become a reality in the U.S. in the near future — it helps to start with the very basics of basic income.
Basic Income Lab at Stanford
Established in 2017, the Basic Income Lab at Stanford University provides a helpful resource for those who may not have a background in economics but still want to understand how basic income works. According to the Basic Income Lab website, basic income is:
- Periodic (paid in monthly or other regular payments)
- Paid in cash
- Universal (paid to every citizen)
- Individual (paid to each resident of a household rather than to a household)
- Unconditional (paid without requiring proof of employment, unemployment, etc.)
When basic income is defined as being universal, the moniker UBI applies.
Many decades in the making
The history of UBI as a proposed way to combat poverty in the U.S. is interesting and much longer and more diverse than one might expect. Late twentieth-century proponents included not only Martin Luther King, Jr. but Richard Nixon. In 2016, UBI became a talking point when it was promoted by the likes of Andrew Stern, former president of the Service Employees International Union, and Robert Reich, who served as Secretary of Labor in the Clinton administration.
During his campaign to be the Democratic nominee for the 2020 presidential election, entrepreneur Andrew Yang brought the potential positive impact of UBI to the attention of the general public. Since then, organizations like the Washington, D.C.-based nonprofit Economic Security Project, which advocates for UBI, have supported or launched numerous related initiatives. The recently announced Mayors for a Guaranteed Income program is currently a network of 16 mayors of cities across the country, from Stockton, California, where the program was co-founded by Mayor Michael Tubbs, to Madison WI, Shreveport LA, Pittsburgh PA, Newark NJ and Atlanta. The goal of such programs is to help impoverished citizens and their families get the financial assistance they need, especially as the rising cost of living, layoffs due to increased automation and the current pandemic’s impact, and other influences beyond their control make it increasingly difficult to escape poverty.
Why universal matters
Some may wonder why a basic income program would give money to citizens who don’t seem to need it and argue that such assistance should be given only to those whose income is lower than a certain cut-off amount such as the poverty line. According to Juliana Bidadanure, founder of the Stanford Basic Income Lab, the problem with identifying and helping only those who need it lies in the tendency for those who don’t receive such assistance to discriminate against the poor.
In “COVID-19 may make universal basic income more palatable. That’s a good thing,” Los Angeles Times columnist Michael Hiltzick discusses how the need for universal basic income has become evident as the federal government has struggled to provide assistance during the economic turmoil caused by the COVID-19 pandemic. “The most important effect the coronavirus crisis may have on public opinion of UBI is the prevailing rationale,” Hiltzick states. “In the past, UBI has been seen largely as a remedy for automation-related job losses. … The coronavirus crisis has shifted the thinking more toward the idea as a response to the inadequacy of America’s economic safety net.”
As those in the middle class who’ve lost jobs or had their hours and income cut discovered by mid-2020, receiving cash assistance from the government can help keep workers afloat when tough times hit. And that goes for workers at all rungs of the economic ladder. Hiltzick suggests this may be one reason why UBI has gained so much traction. As one Fellow of the Stanford Basic Income Lab is quoted in the piece “Stanford lab explores experiments in universal basic income” on the Stanford University website, “The UBI policy has potential to be supported by people holding different political ideologies and values, and that is fascinating. It could bring different people together, which is very difficult in today’s political climate.”
According to the article “Universal basic income gains momentum in America,” the Economist cites a Stanford study that showed UBI support among conservatives “rose from 28% before COVID-19 to 45%” by April, when a whopping 88% of liberals also supported the concept. The article goes on to quote Andrew Yang as reporting that while the overall approval rating for UBI in the U.S. at the start of his campaign was around 25%, it had increased to 66% by the end of his run in February 2020. The Economist then quotes Yang as saying, “‘The energy around universal basic income has skyrocketed, and it’s going to remain elevated until a bill passes.’”
How basic income might work
Andrew Yang’s proposed version of UBI would give every adult in the U.S. a guaranteed “Freedom Dividend” of $1,000 a month — regardless of their income level. That means all U.S. adults, whether they are employed or not, would benefit. As an example, Indeed.com reports that typical freelance writers in the U.S. earn around $21 per hour, which equates to an annual salary of $43,680. With an extra $12,000 per year, that average salary would jump to $55,680, an increase of about 27 percent.
In “Meet the Cash Squad,” Economic Security Project co-chair Natalie Foster details how four Democrats in Congress — Sen. Kamala Harris (CA), Rep. Rashida Tlaib (MI), Rep. Bonnie Watson Coleman (NJ), and Rep. Gwen Moore (WI) — have their own versions of federal basic income legislation. As Foster puts it, “These women are moving forward real legislation that advances cash policies to meaningfully build an economic floor for millions of Americans struggling to make ends meet.”
These four federal proposals are not UBI initiatives because they would not be universally applied, but three of them would benefit many people who work in the gig economy, including many freelance writers, due to their application of an annual income cut-off of $50,000 for individuals:
The LIFT (Livable Incomes for Families Today) the Middle Class Act promoted by Sen. Kamala Harris would provide relief of up to $500 per week per family in the form of a refundable tax credit of up to $6,000 per family with a total annual household income of $100,000 or less. For single filers with a total annual income of $50,000 or less, the refundable tax credit of up to $3,000 would equate to $250 per month. The refund could be accessed monthly or at the end of each year, and immigration status would not be a consideration with regard to eligibility. (The average salary for a single freelance writer with this assistance would be around $46,680, an increase of about 6.9 percent.)
The BOOST (Building Our Opportunities to Survive and Thrive) Act promoted by Rep. Rashida Tlaib is described by Natalie Foster as the first proposed basic income legislation “not tied to work.” “With this approach,” Foster explains, “even people with zero income, like people caring for elderly parents or young kids, or someone recently released from prison, qualify for the cash transfer policy.” The amounts that would be provided through BOOST are very similar to those offered by the LIFT the Middle Class Act. The only difference, according to the BOOST website, is that “filers with no income” would be eligible. (The average salary for a single freelance writer with this assistance would be around $46,680, an increase of about 6.9 percent.)
The Earned Income Tax Credit (EITC) Modernization Act promoted by Rep. Bonnie Watson Coleman builds on the current earned income tax credit, which provides a refundable credit to U.S. citizens with annual incomes below $3,600. The current amount of relief is based on filing status and number of children and ranges from $15,570 for most single filers with no children to $55,952 for joint filers with three or more children. The EITC Modernization Act would expand eligibility to certain caregivers and college students. (This initiative would not benefit average freelance writers due to its very low annual income requirement.)
The Worker Relief and Credit Reform (WRCR) Act promoted by Rep. Gwen Moore would effectively “replace the existing EITC” altogether. According to the Cost-of-Living Refund blog, which is run by the Economic Security Project, the WRCR Act would increase the amount of the EITC to $4,000 for single filers and $8,000 for married filers and expand eligibility to individuals making up to $50,000 and families earning up to $90,000. It would also include “unpaid family caregivers and low-income students” and “workers 18 or older,” and it would allow recipients to receive the credit in monthly payments. (The average salary for a single freelance writer with this assistance would be around $47,680, an increase of about 9.3 percent.)
But wait, there’s more
In “Understanding Five Major Tax Credit Proposals,” the non-partisan tax policy nonprofit Institute on Taxation and Economic Policy (ITEP) compares Senator Harris’s LIFT the Middle Class Act with four other proposed policies not mentioned above:
It also provides the following details about all five of these plans:
The Cost-of-Living Refund Act promoted by Sen. Sherrod Brown (D-OH) and Rep. Ro Khanna (D-CA) “would expand the EITC for low- and moderate-income working people.” “The maximum EITC would nearly double for working families with children. Working people without children would receive an EITC that is nearly six times the size of the small EITC that they are allowed under current law.”
The American Family Act promoted by Sen. Michael Bennet (D-CO) and Rep. Rosa DeLauro (D-CT) “would expand the Child Tax Credit (CTC) for low- and middle-income families,” increasing it from “$2,000 under current law to $3,000 for each child age six and older and to $3,600 for each child younger than age six.” It would also remove “limits on the refundable part of the credit so that low- and moderate-income families with children could receive the entire credit.”
The Working Families Tax Relief Act also promoted by Sen. Sherrod Brown (D-OH) “would expand the EITC and the CTC for low- and middle-income families.” “The maximum EITC for families with children would increase by up to 25 percent in some situations. Working people without children would receive an EITC that is four times the size of the small EITC that they are allowed under current law. The CTC would be $2,000 for each child age six and older and $3,000 for each child younger than age six.” Like the American Family Act, it would also “remove limits on the refundable part of the credit so that low- and moderate-income families with children could receive the entire credit.”
The LIFT the Middle Class Act promoted by Sen. Kamala Harris (D-CA) “would create a new tax credit of up to $3,000 for single people and up to $6,000 for married couples, which would be an addition to existing tax credits. Eligible taxpayers would be allowed a credit equal to the maximum amount or their earnings, whichever is less. Income limits would prevent well-off households from receiving the credit.” As noted earlier, this proposed legislation would be limited to households with annual incomes of less than $100,000 and individuals with annual incomes of less than $50,000.
The Rise Credit promoted by Sen. Cory Booker (D-NJ) “would replace the existing EITC.” Generally, the credit would provide “$4,000 for single people and $8,000 for married couples.” Adjustments would be made in certain circumstances, but those who care for young children and certain students “would receive the maximum credit.” “Income limits would prevent well-off households from receiving the credit.”
According to The Economist, “The proposal [Andrew] Yang ran on would have cost $2.8trn annually, which is about what the federal government spends each year on Social Security (pensions), Medicare (health care for the elderly) and Medicaid (health care for the poor) combined.”
The chart above from the ITEP provides the following estimates of total annual costs for the five pieces of legislation it features, listed here from least to most expensive:
- Working Families Tax Relief Act: $97.3 billion
- American Family Act: $105.2 billion
- Cost-of-Living Refund Act: $158.5 billion
- Rise Credit: $250.5 billion
- LIFT the Middle Class Act: $270.9 billion
Keep in mind that these initiatives would not provide universal assistance while the Yang proposal with an annual cost of $2.8 trillion would provide universal assistance. Also note that the five basic income legislative offerings described above are much less expensive than the relief the federal government provided in the first half of 2020 through the Coronavirus, Aid, Relief, and Economic Security (CARES) Act, which has cost over $2 trillion. According to the J.P. Morgan report, “A Breakdown of the CARES Act,” that total includes approximately $1.2 trillion in “business-focused provisions” and $1 trillion in “household and other provisions,” the latter of which includes $600 billion in individual assistance such as stimulus checks, extra unemployment benefits, and individual tax breaks.
Unlike the Yang proposal, CARES Act individual assistance was not universal since stimulus checks were only sent to citizens who had reported that they’d earned less than $150,000 in income in 2019 if married and filing jointly; $112,500 if filing as a head of a household; and $75,000 if a single filer. The cost of federal COVID-19-related assistance to individuals — and the fact it may get much higher than the current $600 billion — have led some to wonder how much the government might have saved if an effective UBI program had been in place before the pandemic hit.
The future of basic income
For better or for worse, and there are many who argue for both sides, the concept of basic income has become a formerly taboo subject that is now openly discussed. The number of current federal as well as local initiatives across the country provide evidence that the time has come for some form of basic income, whether it’s universal or not. For those who qualify for such assistance, it can’t come soon enough.
Many articles that explore the myriad issues around basic income can be found online. Other Medium writers who’ve tackled this subject include Jordan Hall (“An exciting new idea in Basic Income”), Dennis Pachernegg (“Germany just got a universal basic income, and nobody noticed.”), Annie Lowrey (“What a $1,000 Per Month Universal Basic Income Would Look Like”), Katy Preen (“The moral case for Universal Basic Income”), Alex Goik (“Is Universal Basic Income as Radical as You Think?”), Tannya D. Jajal (“Will Universal Basic Income Change the Meaning of ‘Success’?”), and Max Ghenis (“How universal basic income would affect the black-white poverty and wealth gaps”).
What you can do
If you’d like to see more attention given to this topic by legislators, contact your local, state, and federal representatives. Contact information can be found via this usa.gov page. The more your elected officials hear that their constituents want to see action taken on a certain topic, the more likely they are to at least take steps to make that happen.
I write fiction, poetry, and nonfiction when I’m not working as a copy editor. Author of the novel One Sister’s Song.