UBI, Better Than Youppi?

Beachbound provocateur Dave Fairbank comes into 2021 swinging, asking questions that may get more attention in a society that's not likely to see full employment for another year, at least. I don't know the answers, but we need more people willing to ask the questions and find small-scale ways to experiment.

As our elected officials haggled about whether to give citizens crumbs or an entire slice of bread during a once-a-century crisis, it’s revealing to look at how some other countries dealt with folks during the pandemic.

Congress and the Prez recently signed off on a stimulus bill that will provide $600 direct payments to people, along with $600 per child under age 17 and a $300 boost in unemployment benefits for up to 11 weeks. President Trump and Democratic leaders wanted $2,000 direct payments, but Mitch McConnell (R-Hades) essentially said NFW. Dems predictably caved over McConnell’s legislative machinations and rhetoric, and Trump just as predictably lost interest, since the proposal didn’t directly benefit him.

Meanwhile, Canada sent out monthly checks of $2,000 (approx. $1,500 U.S. dollars) for four months to people who lost their jobs during the pandemic, were sick, quarantined or taking care of loved ones, or were a working parent who had to stay home with children due to school or daycare closures. The government will subsidize 75 percent of the wages of certain workers through March. It will help low- and middle-income families with young children by providing $1,200 per child under the age of six.

Germany signed off on multiple packages of well over 1 trillion euros that include direct payments to small businesses and the self-employed of up to 15,000 euros (approx. $18,300 U.S.) to ward off bankruptcy. The government lowered the bar for companies to apply for aid under what’s called “short hours” or “short time” work – when private sector employees work fewer hours for lower pay, but the state makes up all or part of lost wages, which protects against unemployment during a recession or other crisis. Such measures are common in European countries.

In the United Kingdom, 10 million jobs are under furlough, and the government will pay employees up to 80 percent of their salaries – up to 2,500 pounds per month – through April. In Spain, the government imposed a moratorium on mortgage payments for those affected by COVID-19. It stopped evictions and guaranteed water, electricity and internet connections to vulnerable households. Self-employed workers receive government assistance.

In the U.S., the pandemic resulted in unimaginable suffering – tens, if not hundreds of thousands of unnecessary deaths, millions of people affected. It’s stretched and stressed our society in ways that will be felt for years.

Here’s hoping that the pandemic also prompts an examination of work and wages and value. Twenty-two million jobs were lost in the early months of the pandemic, according to a CNBC report, with restaurant, hospitality and service sectors especially hard hit. There are 10 million fewer jobs than there were, pre-pandemic, and many of the jobs that have returned are now part-time or downgraded. More than 26 million people are either out of work or saw their pay cut in the past year. Many workers deemed “essential” during the crisis – in factories, meat-packing plants, along various supply chains – were hardly compensated as such and were often at greater risk of exposure to the coronavirus.

Money is often the means for keeping score in this country. Money also has become conflated with virtue. Financial success suggests hard work and good decisions. Poverty or subsistence level existence implies that people must be indolent or made poor choices. It’s flawed thinking laid bare by massive unemployment across many sectors, shuttered businesses and record demand at food banks. But perpetuating those notions allows a segment of the population to ignore those who are struggling and justifies shrinking social safety nets. Among the most frequent arguments against government assistance is that people shouldn’t be rewarded for bad behavior and that it disincentivizes work. Several social experiments in recent years suggest otherwise.

In Canada, a Vancouver-based charity partnered with the University of British Columbia. They identified 50 people who had recently become homeless and gave them a one-time payment of $7,500, then tracked their spending over the next 12 months. Researchers found that recipients spent most of the money on food, rent and transportation. Spending on so-called “temptation goods” – drugs, alcohol, cigarettes – decreased by 39 percent. Recipients saved an average of $1,000. The payments saved the area homeless shelter system $8,100 per person over the course of the year, which totaled $405,000.

In Stockton, Calif., outgoing mayor Michael Tubbs championed a targeted universal basic income plan. In partnership with a basic income advocacy group launched by Facebook co-founder Chris Hughes, Tubbs implemented a program that gave $500 per month for 18 months to 125 households in low-income neighborhoods. Research found that recipients spent 25 percent more on food than average. The amount spent on recreation dropped to two percent, and alcohol and tobacco spending was less than one percent. Tubbs, who was elected mayor at age 26 in 2016, lost his bid for re-election in November, as opponents portrayed his UBI plan as a vanity project and claimed that he didn’t represent average citizens. However, while he was in office the U.S. Conference of Mayors lauded his plan and adopted a resolution that urges “cities, states and the federal government to explore the feasibility of a guaranteed income.”

Entrepreneur and former Democratic presidential candidate Andrew Yang campaigned on a platform that included universal basic income. He is in the process of implementing a plan in Hudson, N.Y., a small town two hours north of Manhattan, that will give 25 people $500 per month for five years and track their spending and lives.

Hygge!

Overseas, Finland conducted a project in which officials chose 2,000 unemployed people at random and gave each of them 560 euros per month (approx. $683 U.S.) for two years. One of the goals was to promote employment and to help launch recipients into the job market. By that metric, the project failed, since payments didn’t impact if people did or didn’t find employment relative to the general population. But researchers found that recipients were happier, experienced less stress and fewer health problems, so in total the program was rated a success.

Admittedly, I don’t know squadoosh about economics, and I can be persuaded by those in the audience and elsewhere who are more knowledgeable. As a country, we aren’t wired for the level of government assistance throughout Europe and elsewhere. Yes, our population is much larger than England, Germany, France, etc., and similar measures would be multipliers more costly. However, we’re also multipliers wealthier than others. I’m not sure what I think about regular government stipends to people or the idea of universal basic income, not that my conclusions are worth a fig. But everything should be on the table.

The pandemic provides a chance to re-examine what we do and how we do it. It won’t be easy. There are powerful forces that see this as an inconvenient interruption. They itch to return to the status quo ASAP so that they can resume Hoovering and counting money. If we chalk up all the pain and anxiety and extraordinary steps as a one-off and go back to business as usual, it will be yet another missed opportunity in this whole dismal chapter.