Guaranteed income seen by some as necessary

The concept of “guaranteed income” goes by different names. Universal income. Basic income guarantee. Free money.

And, with a nod to a once-popular song, some people no doubt consider it money for nothing.

Sometimes, it depends on the scope of the program and the perspective of people assessing it.

At its essence, guaranteed income is giving people money on a regular basis, usually monthly, with no strings attached. Primarily, such programs, both privatelyand governmentfunded, are targeted at boosting the financial wherewithal of the poor, like the one launched in Oakland this week and in Stockton two years ago.

In its broadest application, guaranteed income is distributed to all people, regardless of need, with no means test or work requirement. Needless to say, the idea has long been the subject of great debate, which has been reignited amid the recent programs in California and plans for others elsewhere.

In the United States, guaranteed income has largely been focused on people at the lower end of the economic scale and, over the decades, versions have been championed by both Democrats and Republicans.

What’s happening in

Oakland and Stockton are privately-funded programs to give $500 each month to a small number of residents. The Stockton initiative, a temporary experiment, was extended last year because of the economic fallout of the coronavirus pandemic.

A massive and government-financed example can be found in the recent $1.9 billion federal stimulus package via the child tax credit. The New York Times notes the credit technically is an extension of an existing one, but in reality provides most parents guaranteed income of up to $300 per month per child.

The tax credit lasts for a year and costs $100 billion, but Democrats in Congress say they are determined to continue it.

Some advocates see guaranteed income as a means to deal with a big societal shift beyond the current goal of helping the poor. They believe the ongoing technology and automation revolution will dramatically reduce the number of available jobs, leaving many people out of work or underemployed.

The likes of Facebook co-founder Chris Hughes and billionaire entrepreneurs Elon Musk and Richard Branson say guaranteed income will be necessary for many people to survive in the United States and around the world.

Hughes says the time is now. He has said automation and globalization already have upended the employment market.

“The United States needs a new economic framework designed for resiliency in the face of disruption and change,” he wrote in a New York Times opinion column. “A guaranteed income — one that would provide $1,000 for every adult and $500 per child per month — should be its centerpiece.”

He added that a consensus among supporters would limit that to families making less than $100,000 annually.

Hughes would finance the plan by raising taxes on the top 1 percent of income earners. With a reported net worth of more than $500 million, Hughes is part of that crowd.

Such an approach is needed in an economy where “a small group of people are getting very, very wealthy while everyone else is struggling to make ends meet,” Hughes said in his book “Fair Shot: Rethinking Inequality and How We Earn.”

Hughes may have helped create that world, but now he’s trying to eliminate poverty in the United States.

Before the coronavirus pandemic, Democratic presidential candidate Andrew Yang proposed the federal government give every American adult a $1,000 monthly basic income.

Since he dropped out the race in early 2020, Yang has said not only is such a program even more essential now because of COVID-19, but suggests with so many people out of work and financially struggling, America is getting a glimpse of the post-pandemic future.

The Oakland and Stockton programs seek to assist low-income residents, but also are considered microlabs for how — or whether — guaranteed income might work in the future.

The Stockton Economic Empowerment Demonstration was launched in 2019 under then-Mayor Michael Tubbs for 125 people who lived in areas at or below the city’s median income, which was just over $46,000. Tech leaders, including Hughes, helped fund it.

In addition to creating a more expansive and costly government, perhaps the major criticisms of guaranteed income are that it would be a disincentive to work and make people reliant on the welfare state.

A study released earlier this year says that wasn’t the case with the Stockton program.

“After getting $500 per month for two years without rules on how to spend it, 125 people in California paid off debt, got full-time jobs and reported lower rates of anxiety and depression, according to a study ...” reported The Associated Press.

Tubbs and other supporters pointed to the independent study as affirmation, but even some who back the basic income concept threw cold water on the celebration.

Matt Zwolinski, director of the Center for Ethics, Economics and Public Policy at the University of San Diego, reviewed the study and said it’s unlikely people would drop out of the labor force if they know the money is temporary.

“Tubbs’ claim that this experiment proves that a basic income doesn’t negatively affect employment is overstated,” he told the AP.

President Richard Nixon wanted to provide guaranteed income in the late 1960s and early 1970s with what was called a negative income tax through which the government would pay poor people. A handful of pilot programs were established across the country, but it was never instituted nationwide.

The conclusions were mixed. Some reports said there was a modest reduction of work, while others said the unemployment was more dramatic than that.

Zwolinski has laid out arguments for what he calls a Basic Income Guarantee, saying it could be more simple and less costly to give people money unconditionally than to fund numerous social service programs aimed at the poor.

Therein lies the rub for organized labor and some others on the political left. They are concerned the price of guaranteed income could mean shrinking or elimination of other safety net programs, but also that it will devalue work and could create pressure to keep wages down.

Regardless of whether guaranteed income goes beyond the experimental stage, it has gained momentum in part by the increasing wealth gap in the United States, as Hughes mentioned. A Rand study quantified this with eye-popping numbers.

Between 1975 and 2018, the report estimated roughly $50 trillion of wealth was shifted from the bottom 90 percent to the top 1 percent.

When proposals such as guaranteed income or upper-end tax increases come around, they are sometimes criticized as efforts to redistribute the wealth.

They are. But that’s been the American way — in the opposite direction — for decades.