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Universal Basic Income Is Not a Solution for What Ails Society

Providing guaranteed cash with no spending restrictions is massively expensive, and the public doesn’t support the idea. Policymakers should focus on reforms that maximize labor-force participation and make work more worthwhile.

Dollars falling from the sky
In recent years, a number of localities have been experimenting with providing a universal basic income, often referred to as UBI. In their idealized form, UBI policies would give every citizen a certain amount of guaranteed cash income with no spending restrictions. The theory is that this would reduce poverty, smooth income inequality and allow individuals more flexibility and security to gain more education or start businesses.

But however well intentioned these programs may be, they raise a lot of questions, not least whether they discourage participation in the labor force. And such plans are massively expensive. That is likely why most UBI programs in the United States are run by nonprofits or have been set up as limited-duration, small-sample pilots. Many of the most recent programs have been funded by the federal American Rescue Plan Act, which is not a viable long-term funding source. Others, including some in countries with more liberal attitudes toward social welfare, have been shut down due to financial sustainability concerns.

More recently, long-term data from pilot UBI programs is mixed, showing some potential benefits but for a limited constituency. Participants had to have knowledge of the program to apply and, for most programs, be in poverty and not the middle class. Furthermore, the temporary nature of the pilots likely failed to capture how the money would impact people over the long term.

In addition to questions of cost and benefit, the public will is missing. A Pew Research Center study from the summer of 2020, when the COVID-19 pandemic had forced double-digit unemployment, shows that even during a crisis less than half of Americans, 45 percent, supported a universal basic income. An October 2023 poll from the State Policy Network shows support down to 33 percent, with 37 percent in opposition. Support is not significantly different in the households with the lowest annual income (under $50,000). And even among demographic groups with more difficulty obtaining income security, such as the self-employed, support does not cross the 50 percent mark.

Public attitudes aside, for the amount of investment that UBI programs require one might assume they would solve many of society’s ills. But there are a wide variety of problems facing society — including loneliness, a lack of a sense of belonging and a lack of purpose among youth — that are specifically solved by contributing to society in a recognized way. Namely, with work. UBI can’t solve those underlying problems and could quite possibly make them worse by discouraging work. Data from studies in the U.S. in the late 1960s and early 1970s show that guaranteed income programs caused a clear reduction in labor-force participation.

It’s true that inflation and other economic pressures have made it harder for Americans to get by on their old salaries, but no-strings-attached government subsidies are not the solution — and not only because it is financially unworkable to pay people indefinitely but because work provides more benefits than just a paycheck. Working Americans seem to agree that employment provides not just cash but other intangible benefits. The State Policy Network poll shows that 3 out of 5 workers picked their current job because they wanted to help people, while 3 out of 4 believed that in their work they were currently helping people. Over two-thirds found their work personally fulfilling.

Discouraging work has real consequences for life satisfaction. Evidence and human experience suggest that work can be essential to fostering feelings of agency, purpose and dignity, and a good work environment provides the opportunity to be praised and engage in meaningful social interactions.

So instead of asking how we can guarantee income to people, policymakers should be asking how they can make work even more worthwhile. They should focus on maximizing the ability of workers to participate in the labor market. Many companies have already dropped college-degree requirements for job seekers, and at least 16 state governments have followed suit, making it easier for workers to become employed in stable, high-paying jobs. Other states, meanwhile, are working toward occupational licensing reforms that would reduce artificial barriers to employment and provide more opportunities for workers.

Policies like these will address inefficiencies in the labor market and can boost the earnings of hard-working Americans without undermining the non-financial benefits of work. Such policy work gets less attention than UBI but will do more to create long-term financial and emotional well-being than wealth redistribution programs.

Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
Erin Norman is the Lee Family Fellow and senior messaging strategist at the State Policy Network.
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