How Universal Basic Income Would Impact the Future of Work and Careers

While the concept of Universal Basic Income (UBI) has been around for many decades, I only recently stumbled upon it after following the 2020 Democratic Party presidential primaries. Filing with the FEC back in 2017, Andrew Yang's signature policy was the "Freedom Dividend", a monthly UBI of $1,000 paid to every American. He justified the immediate need for UBI in response to the rapid development of job automation and the increase in income inequality. While Yang started off as a political unknown and was considered a "dark horse" candidate, he rose to popularity by cultivating a movement of supporters online called "the yang gang". Even though he dropped out of the race back in February, Yang is still championing his movement by pushing for a $2,000 monthly UBI during this pandemic and performing experiments to validate the policy.

A timely conversation with Andrew Yang

I had the opportunity to speak with Yang about UBI's impact on employment for the latest episode of my 5 Questions podcast. One of the hidden benefits of UBI that isn’t talked about is the leverage it gives workers to make better employment-related decisions. For instance, if you have a toxic manager, you’re more likely to leave that job if you have a UBI safety net. And, even though we've heard the self-help advice, "follow your passion" a multitude of times, UBI can make that a reality because research shows that a financial safety net enables risk-taking. When you know you're guaranteed an income, you're much more likely to attempt to start a business or change jobs without the fear of not being able to provide for yourself or your family.

“UBI makes us much harder to push around. Right now there are these people that would leave their job in a heartbeat if they could meet their basic needs." - Andrew Yang

Yang went on to tell me that UBI would affect people in all types of positions. "I'm talking about everyone from the waitress in a diner whose boss is harassing them to someone who isn’t being presented with the opportunities that they want or have another dream they want to pursue," he said. As the founder of Venture for America, Yang cares deeply about small businesses in this country and recognizes that UBI can make the American dream a reality for everyone, not just for the rich and powerful. The current economic and political climate has continued to suppress those who are less fortunate, driving them deeper into poverty and causing them to lose hope about the future. Instead of trying to follow their passion, they are chronically worried about how they are going to eat every day. "We know that if you had $2,000 a month coming in that you didn’t have to worry about, then you would think bigger about the work you want to do," he said.

Yang's UBI experiments in New York and South Carolina

Even though Yang is no longer running for president, his UBI policy platform and movement has lived on with the launch of his non-profit, Humanity Forward. So far this year, Humanity Forward announced two separate UBI experiments in both Hudson, New York, and Columbia, South Carolina. First, in Hudson that has an estimated population of 6,144 people, Humanity Forward has partnered with The Spark of Hudson to launch a UBI pilot called HudsonUP, which will provide twenty residents with $500 per month for the next five years. Again, Yang reiterated that "receiving a form of UBI allows you to begin making meaningful, long-term plans." Second, in Columbia with a population of approximately 131,674, Humanity Forward is experimenting with UBI with two residents so far but seeks to expand soon as they gather applicants. And more recently, Twitter CEO and billionaire Jack Dorsey donated $5 million to Humanity Forward, endorsing UBI and giving away $250 to Americans harmed by the pandemic. All of these experiments, and additional donors, will continue to move Yang's UBI movement forward.

What is UBI and why it matters right now

A lot of people in my tech entrepreneur circles are both knowledgeable and enthusiastic about UBI, but outside of that bubble, it's rarely spoken about and often not fully understood. UBI is where a government provides a universal payment to every citizen regardless of their employment situation. If America gave all citizens a UBI payment of $1,000 each month, the total annual payment would be $12,000, cost $3 trillion a year for everyone combined, and would amount to about 75 percent of all federal expenditure budget items. While this cost may seem high, remember that the government had initially passed a $2 trillion covid relief bill that favored big businesses and billionaires, while leaving citizens behind.

Yang, and others, are advocating even harder for UBI right now because it poses a solution to our current economic recession and the suffering that so many families have endured. Our current system continues to inflict economic pain onto the most vulnerable and poorest in our society. First, over 40 million American's are unemployed and Federal Reserve Chair Jerome Powell said that the unemployment rate could exceed 25 percent during the hight of the crisis which is at a similar peak to the Great Depression.

Second, since healthcare coverage is tied to employment for 175 million Americans, millions of laid-off workers are losing healthcare as we speak, which prevents them from going to the hospital to get tested out of fear of the high costs of treatment. Third, 78 percent of American's are already been living paycheck to paycheck and 39.7 million are in poverty. With so many struggling American's it's no wonder why Yang's UBI movement is resonating and is viewed as a solution to the many victims of our financial hazard.

Where do American's stand on UBI

American's have been overall split on UBI over the past few years. A February 2018 Gallup poll of 3,000 adults found that 48 percent of Americans support it. A separate survey by USC conducted in early 2019 found that 37 percent supported it and those will household incomes below the median are more likely to support it. And finally, another study by Harris published about a month later found that 55 percent of people ages 18 to 34 support it, whereas only 21 percent of people over 65 support it. These mixed views are primarily driven by economic status because the people who are barely scraping by want and need it the most.

Other leaders championing UBI

Yang isn't alone in his view of UBI as a societal solution to our economic situation. Leaders in Silicon Valley see UBI as necessary to combat the automation their companies are investing in that will inevitably eliminate jobs and fear civic unrest. In 2016, famed early-stage startup accelerator Y Combinator conducted their own UBI pilot study with one hundred families in Oakland, California, giving each family between $1,000 and $2,000 each month for six months. Then, in 2017 Tesla CEO Elon Musk spoke at the World Government Summit in Dubai saying UBI is "going to be necessary" because "there will be fewer and fewer jobs that a robot cannot do better". That same year, during his Harvard University commencement address, Facebook CEO Mark Zuckerberg said, "We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas." More recently in April, venture capitalist Chamath Palihapitiya said that America should continue sending citizens checks during the pandemic. Chamath also stated that UBI will encourage consumer spending, which will keep businesses afloat.

UBI isn't anything new

The history of UBI dates back to the Great Depression in 1929 when economist Milton Friedman was starting to evangelize guaranteed minimum income to provide people with money for "nutritional needs". While it didn't get much traction, Friedman proposed a negative income tax, where citizens who fell below a certain income level received funds from the government instead of pay taxes. The negative income tax laid the groundwork for UBI, which started to catch on in 1960 with Martin Luther King Jr. calling for a guaranteed income as the most effective solution to abolish poverty. And, President Richard Nixon also drew inspiration from Friedman's ideas by presenting the "Family Assistance Plan" that he believed would have provided a basic income to poor families. Although the planned was scrapped, Switzerland picked up the idea of UBI in 2016 with their own experiment, which was opposed by 77 percent of their population.

American's have benefited from socialist programs, reforms, and UBI-like policies for many years, but may not recognize them as such based on current political partisanship. One of the most cherished programs is social security, which workers pay into throughout their lives and start to receive payments during their retirement age. A total of 169 million Americans pay social security taxes, 61 million collect monthly benefits and about 25% of all families receive a payment each month. Social security is a safety net for older Americans that aren't as productive as they used to be, are ill, or just want to retire. Much like UBI, social security is a guaranteed monthly payment to American's.

Another UBI program exists exclusively for Alaska residents, who receive up to $2,000 annually with barely any conditions. The money is derived from the state's oil wealth as part of the Permanent Fund Dividend Division. The fund was established in 1982 to ensure that future generations would benefit from oil profits by sharing in the wealth every year. Every citizen qualifies and more than $21 billion has been distributed since inception. And more recently, the American government passed the "CARES Act", which was a one-time UBI of up to $1,200 who qualify under the stimulus package. For millions of Americans, this check was their first taste of what UBI could mean for their families, yet knowing that it may not happen again.

The benefits and drawbacks of UBI

The reason why there is almost a complete split between American's on UBI is that there are benefits and drawbacks to the government program. The biggest benefits of the UBI social safety net include mental health improvements, bringing people out of poverty, addressing income inequality, promoting social inclusion, reducing homelessness, and stimulating entrepreneurship. As I spoke about earlier with Yang, UBI allows workers to make better employment decisions because it gives them the financial backing to quit a toxic manager, pursue a new career, or start a business. It's easier to follow your passion when there's money to lean on because many ideas fail. In this way, UBI would put pressure on employers to treat their workers better because they would lose leverage and have a harder time competing for talent when talent has more freedom through financial safety.

Although UBI poses some tremendous life-altering and society-improving benefits, there are several drawbacks that should be considered when evaluating it. These include potentially encouraging laziness, discouraging part-time work, higher taxes, and welfare for people like criminals.

Other countries are testing UBI

Switzerland's UBI experiment influenced other European countries like Finland. In 2017, the Finnish government offering a trial run of UBI with a guaranteed tax-free income of $590 a month to two thousand random citizens. The experiment was deemed a failure because UBI recipients were no more likely to get a job than those who didn't receive it. But, they did find that those receiving UBI were happier and more confident compared to those in the control group. Despite this failure, more citizens in European countries compared to America support UBI. A study found that across the EU14, 46 percent support it compared to 29 percent who don't.

During this pandemic, several countries have either implemented some form of UBI or are considering it because they view it as a solution to protect citizens from poverty and homelessness while maintaining their economies. Canada's Emergency Response Benefit (CERB) provides $2,000 monthly payments to seasonal workers, gig workers, students, and others deprived of income after they apply for it and are accepted. Spain is planning to roll out UBI to about a million of its poorest citizens during the pandemic. The government is offering job search incentives, like the ability to combine UBI with wages from a new job for a period of time, so they don't make the same mistake as Finland. Kenya is testing the largest UBI experiment with 20,000 random citizens, with the first group receiving the full UBI as a lump sum, the second group of those 18 years old or older receiving $22 each month for two years and the third group of adults receiving $22 each month for twelve years.

Some governments are pushing back against UBI. Even though Scotland's First Minister Nicola Sturgeon said UBI's "time has come", they are part of the UK which rejects the idea. “Universal basic income is an issue that’s being tested in other countries and hasn’t been taken forward," said UK Business Secretary Alok Sharma. Still, the more UBI is covered in the media, and the more countries that experiment with it, eventually there will be a stronger, more sustainable solution that may have mass adoption, but we don't know if that will happen, when it will happen and what the end result will be.

UBI and the future of work

The pandemic, which led to this recession, has forced leaders to come up with solutions. UBI is a potential old solution to a new problem that we face as a society. UBI really boils down to having a stronger social safety net so citizens can survive and thrive in the new world of work and have some resemblance and chance at creating their own American dream. Much like all workplace trends and movements, UBI has been most evangelized in Silicon Valley, yet has become a global conversation uplifted by Yang. As I mentioned, Zuckerberg believes in UBI as a remedy to our crisis and announced that his 45,000 employees will receive an additional $1,000 bonus during these tough times. Much like the CARES Act bill, this is only a one-time payment but similar to the bill, neither our government nor any company has performed this act during a pandemic. These examples show citizens what's possible and may inspire additional payments in the future.

If the future of work includes a UBI safety net, there would be a massive power shift, giving employees more leverage than ever before - a constant seller's market. And, more leverage forces companies to be more competitive for talent, which in turn creates a healthier work environment. You are more likely to quit your job or switch jobs when you are confident that you can pay your bills. You are more likely to start a business if you have money to invest in it, and a safety net to fall back into if it fails. Guaranteed income outside of employment gives workers freedom - the freedom to make employment decisions based on their passions, interests, and skillset. Think about how game-changing a strong social safety would be in a world where 80 percent of workers dislike their jobs. Whether UBI comes to fruition or not, more money for workers means a revival of the American Dream and actually being able to follow your passion, not just consuming Instagram quotes telling you to.

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