Whether they call it a Freedom Dividend or a baby bond, some 2020 Democratic contenders have embraced the tenets of a universal basic income (UBI).
Proponents of UBI — including Tesla TSLA, +2.72% CEO Elon Musk and Facebook FB, +1.81% CEO Mark Zuckerberg — argue that it would help workers impacted by job automation and provide Americans with a safety net.
About 36 million Americans — or 25% of U.S. jobs — have “high exposure to automation” over the next few decades, according to a Brookings Institute analysis published in January, with more than 70% of their tasks “at risk of substitution.” Jobs in food preparation, office administration, transportation and production are at greatest risk for automation, the report said.
But the concept of guaranteed income didn’t originate with 2020 Democrats — in fact, figures as varied as Martin Luther King, Jr., former President Richard Nixon and economist Milton Friedman have all backed versions of such a policy.
‘UBI is our only hope to deal with a coming labor market unlike any in human history and that it represents our best hope to revitalize American civil society.’
“I think that a UBI is our only hope to deal with a coming labor market unlike any in human history and that it represents our best hope to revitalize American civil society,” Charles Murray, a scholar at the conservative American Enterprise Institute, wrote in a 2016 Wall Street Journal essay.
Some states and cities have implemented or considered a universal basic income. Alaska has paid out an annual Permanent Fund Dividend since 1982 to each resident drawn from oil revenue. (A working paper last year found that Alaska’s dividend didn’t appear to disincentivize work.) Last year’s checks totaled $1,600 per person.
Stockton, Calif. is currently piloting a monthly $500 payment among 130 low-income residents. And a Chicago task force in February recommended a $1,000-a-month guaranteed income pilot for 1,000 low-income participants.
A study released earlier this year on Finland’s UBI pilot program found that recipients reported greater well-being, less stress, improved mental and physical health and more confidence in their futures.
Meanwhile, a study released earlier this year on Finland’s UBI pilot program found that recipients reported greater well-being, less stress, improved mental and physical health and more confidence in their futures.
However, the payouts didn’t impact their ability to find a job, the researchers found. Critics of universal basic income maintain that giving people free money would discourage people from seeking out work, and point out that such proposals often lack clarity and detail.
Andrew Yang’s bold proposal
The 2020 race’s most prominent UBI champion is Yang, a businessman who has placed a $1,000-a-month payout at the forefront of his platform. Despite grassroots support, Yang is polling at 0.8%, according to the most recent RealClearPolitics average.
Yang, a former corporate lawyer and entrepreneur promoting an exhaustive list of policy proposals, wants to give $1,000 a month to every American over age 18 — a “no strings attached” policy meant to help workers sidelined by robots, artificial intelligence and other new tech innovations, he says. Yang says on his website he would pay for this annual $12,000 “Freedom Dividend” by introducing “a new tax on the companies benefiting most from automation.”
“It would improve people’s health [and] nutrition, it would elevate graduation rates, it would improve people’s mental health,” Yang told CNN in April. “It would help people make transitions in a time of historic change.”
Shelling out $10,000 a year to some 300 million Americans would run a bill of more than $3 trillion a year, according to one estimate published by the Center of Budget and Policy Priorities.
Yang has already launched his own UBI trial runs without the U.S. government’s economic might, personally funding $1,000-a-month payments for a year to two families in New Hampshire and Iowa — two early primary states.
Where the leading candidates stand
Joe Biden: Prior to his current presidential bid, the former vice president came out against UBI in a 2017 blog post for the University of Delaware’s Biden School of Public Policy and Administration.
‘The theory is that automation will result in so many lost jobs that the only plausible answer is some type of guaranteed government check with no strings attached. I believe there is a better way forward.’
“The theory is that automation will result in so many lost jobs that the only plausible answer is some type of guaranteed government check with no strings attached,” Biden wrote. “I believe there is a better way forward. I believe we can — we must — build a future that puts work first.”
The ex-veep instead stressed the importance of training and retraining workers for “jobs of the future.” He advocated for offering two free years of community college, providing aid to communities bearing the brunt of such transformation, and ensuring that benefits and workplace protections remain in place.
“While I appreciate concerns from Silicon Valley executives about what their innovations may do to American incomes, I believe they’re selling American workers short,” Biden added. “The future will not change the enduring American values that got us here.”
Elizabeth Warren: After Vox’s Ezra Klein raised the idea of UBI during a recent podcast interview, the Massachusetts senator replied that “there’s so much more that we should do before we get there.”
‘Start with universal child care and education and investment in education from zero on through college, and let’s see what that starts to do.’
“Start with the wealth tax. Come on. Start with universal child care and education and investment in education from zero on through college, and let’s see what that starts to do,” Warren said.
“Do the student-loan debt forgiveness and that will start to close the black-and-white wealth gap. Use my housing plan and attack red-lining straight on. Help close the differences between the poorest in this country and the middle class. Give people more opportunities. Let’s get everybody on board and try that.”
Kamala Harris
The California senator in October proposed the LIFT the Middle Class Act to mitigate cost-of-living increases. While not exactly a universal basic income policy, the LIFT Act would give large refundable tax credits of up to $500 a month or $6,000 a year to families earning less than $100,000 annually. Single filers who earn below $50,000 annually could get up to $3,000 a year.
Kamala Harris’s refundable tax credits would cost more than $270 billion in 2020, according to an estimate by the Washington, D.C.-based Institute on Taxation and Economic Policy.
“I am running to guarantee working and middle class families an overdue pay increase. We will deliver the largest working- and middle-class tax cut in a generation — up to $500 a month to help America’s families make ends meet,” Harris said during her campaign kick-off in January. “And we’ll pay for it by reversing this administration’s giveaways to big corporations and the top 1%.”
Harris’s proposal would cost more than $270 billion in 2020, according to an estimate by the Washington, D.C.-based Institute on Taxation and Economic Policy. The Tax Policy Center noted that the plan would provide substantial relief for low- and middle-income people and appeared to be an improvement on the Earned Income Tax Credit, but warned it would be “extremely costly” and “add significantly to the budget deficit.”
Bernie Sanders: Asked during an Iowa town hall this year whether he supported Yang’s UBI idea, the Vermont senator replied, “Nah, I got a better idea.”
“Just think about it: You’ve got an infrastructure which is crumbling. We can put millions of people to work doing that. Transforming our energy system in terms of weatherizing homes all over this country, building a more efficient transportation system. Putting more money into wind and solar and other sustainable technologies,” Sanders said. “We can create millions of jobs doing that.”
‘We need more doctors in rural areas and in urban areas. We need more nurses. We have a dental crisis all over this country. We need to train dentists and get them out there.’
He wasn’t finished: “Think about day care. You want a world-class child-care center? You need well-educated, well-trained, well-paid child-care workers. We need many of them,” the senator said. “We need more doctors in rural areas and in urban areas. We need more nurses. We have a dental crisis all over this country. We need to train dentists and get them out there. We need more social workers. You want to reform our criminal justice system? You’re going to need people to start working with prisoners. You want kids not dropping out of high school? You’re going to need mentors working with them.”
In sum, Sanders said, a better approach would be “guaranteeing a job in this country to anybody who is prepared to work.”
Pete Buttigieg: “I think that it’s worth taking seriously,” the South Bend, Ind., mayor said in a March interview with “Pod Save America,” pointing to the Stockton pilot program.
‘A lot of evidence would suggest that by far the simplest and most effective and cost efficient way to [boost third-grade reading levels would be to] just give the family a little more cash.’
“I know there are many times where we’ve been sitting around the table working on some elaborate policy contraption to do something like boost third-grade reading levels — when a lot of evidence would suggest that by far the simplest and most effective and cost efficient way to do it is [to] just give the family a little more cash,” Buttigieg said. “Because it turns out not being poor is one of the best things that can help you make it to a third grade reading level, because of nutrition or stability or whatever it is.”
Buttigieg likes the idea of connecting such a policy with work, he said, but would also want to broaden the definition of “work” to include typically uncompensated roles like caregiving.
“I think with a richer and thicker understanding of what work is, some kind of relationship between a guaranteed income and work, and some kind of structure that makes it equitable … I don’t know that anybody can say now that they have a fully informed, considered opinion on this, but I think that it’s the right moment to have that conversation,” he said.
Beto O’Rourke: The former Texas representative in March said he did not support universal basic income, according to Texas Tribune reporter Patrick Svitek. But by early June, Svitek reported, O’Rourke called the policy “an idea worthy of conversation and debate right now as we see more and more jobs being automated out of existence.”
Cory Booker: The New Jersey senator last year introduced a bill to provide every American child with an “American Opportunity Account” starting at birth.
The accounts, which would be managed by the Treasury Department with a 3% annual return and accessible once a child turned 18, would be seeded with $1,000 and receive up to $2,000 extra every year depending on family income. Recipients could only use the money for expenses like education costs and home ownership.
The senator’s office estimates that an account holder whose family made under 100% of the federal poverty line would have $46,215 in the bank by the time they turned 18, having received the maximum $2,000 payment every year.
These funds, Booker says, would help close America’s yawning wealth gap. “It would be a dramatic change in our country to have low-income people break out of generational poverty,” Booker told Vox. “We could rapidly bring security into those families’ lives, and that is really exciting to me.”
So-called baby bonds would “considerably narrow wealth inequalities by race” among young adults, according to a 2018 working paper by Columbia University researcher Naomi Zewde. “A universal baby bond program would be race-neutral in its implementation, race-conscious in its design, and racially and economically progressive in its impact,” she concluded.
Researchers in 2015 estimated that a baby-bond program would cost about $80 billion, assuming four million infants born every year and an average $20,000 endowment.
Former Democratic presidential nominee Hillary Clinton also floated a $5,000 baby-bond plan during her 2008 presidential bid. She even considered proposing a universal basic income policy during her 2016 campaign, she wrote in her post-election memoir — but ultimately dropped the idea after she was unable to work out the math, she told Vox’s Klein in 2017.
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