Basic Income: Security in a Crisis

The rapid spread of COVID-19 is a disaster that has unfortunately only just begun. The necessity of shutting down non-essential businesses has left millions of people jobless and wondering how they will get by. The most effective way to provide immediate relief is to put cash directly in people’s hands — in other words, an emergency universal basic income. Suddenly, in a time of crisis, policymakers across the political spectrum have realized that a universal basic income would provide financial support and security in a time when both are hard to come by.

We already needed UBI before COVID-19; the pandemic just exposed that need. This outbreak has been an indisputable disaster on a massive scale, but we mustn’t forget the many individual disasters that occur every day. Someone gets laid off, gets evicted, unexpectedly falls ill, or runs into anything else that suddenly throws life into chaos. A 2017 survey found that 71 percent of workers are in debt and that 78 percent live paycheck to paycheck at least some of the time. According to a 2017 study by the Federal Reserve, 40 percent of Americans would struggle to meet an unexpected $400 expense. UBI would protect people from financial ruin all the time, not just during major crises.

Our unemployment infrastructure was recently overloaded by 3.3 million claims nationwide in just one week and the crisis is only getting worse — how many of those people will get the help they need just to get by? The present crisis has underscored just how weak, fragile, and ill-prepared our welfare system really is. Looking at the millions of people who suddenly find themselves out of work with no way to pay for their living expenses, it is obvious that tying income exclusively to work and bureaucratic, means-tested welfare programs guarantee disaster. If you get laid off from work, your income suddenly drops to zero. Unemployment benefits may cushion the fall, but you have to navigate bureaucracy and wait for benefits, and there’s no guarantee they’ll arrive when you need them.

Even in normal circumstances, our welfare system isn’t working. Before the outbreak, there were over 38 million Americans living in poverty according to the official count (a more accurate measure would put that number even higher). Of those, 13 million were receiving no benefits whatsoever. Temporary Assistance for Needy Families (TANF) only reached 22 percent of families in poverty, and cross-state disparities in the use of funds was accountable for as much as 15 percent of the black-white child poverty gap. Housing assistance was only reaching 24 percent of those that qualified. The system is set up so that often even those who do qualify are trapped in poverty by welfare cliffs — design flaws that punish people for working by taking away benefits as recipients’ incomes rise. Simply put, our safety net is full of holes.

Why is UBI so much better in a crisis than traditional welfare? First, speed. If you want to put money in people’s hands, you put money in people’s hands. No wasting time on bureaucracy, forms, or figuring out who to give it to. Second, universality. Means-testing always excludes people in need; if you give it to everyone, you guarantee that everyone who needs help will get help. And last, but certainly not least, utility. Money is going to be useful for just about everyone. It also allows recipients to make their own decisions instead of being forced to obey the often ridiculous restrictions placed on non-cash programs (for example, you’re not allowed to buy hot food with food stamps).

Policymakers are proclaiming the importance of emergency UBI in this crisis, but they’re ignoring the incredible impact that UBI would have in normal circumstances. In addition to protecting those left behind by our patchwork welfare system, UBI would produce unprecedented economic growth by giving people money to spend. A cash transfer experiment in Kenya grew the local economy by $2.60 for every $1 invested. A 2017 study estimated that $1000 monthly to every adult would increase GDP by over 12 percent in 8 years — that would permanently raise GDP by $2.5 trillion. Additionally, UBI can be increased in times of economic crisis, like our current pandemic, to combat recessions by increasing consumer spending.

Right now, income is conditional either on work or on meeting arbitrary welfare requirements. This means people depend on the good graces of their employers, a fickle and complex welfare system, and general good luck just to survive. We need unconditional income to ensure that everyone has financial security no matter what and to provide an economic foundation that will lift millions out of poverty.

Matthew B. Gilbert ’21 is a Computer Science concentrator in Adams House. His column appears on alternate Thursdays.