• Aucun résultat trouvé

Can state and local basic income policies support planning for equity?

N/A
N/A
Protected

Academic year: 2021

Partager "Can state and local basic income policies support planning for equity?"

Copied!
126
0
0

Texte intégral

(1)

Can state and local basic income policies support planning for equity?

by

Daniel L. Powers

B.S., Industrial and Labor Relations Cornell University, 2014

Submitted to the Department of Urban Studies and Planning in Partial Fulfillment of the Requirements for the Degree of

Master in City Planning at the

Massachusetts Institute of Technology May 19, 2020

© 2020 Daniel Powers. All rights reserved.

The author hereby grants to MIT permission to reproduce and to distribute publicly paper and electronic copies of the thesis document in whole or in part

in any medium now known or hereafter created Signature of Author:

Department of Urban Studies and Planning May 19, 2020

Certified by:

Karilyn Crockett Lecturer of Public Policy and Urban Planning Thesis Supervisor Certified by:

Ceasar McDowell Professor of the Practice Chair, MCP Committee Department of Urban Studies and Planning

(2)
(3)

3 Can state and local basic income policies support planning for equity?

by Dan Powers

Submitted to the Department of Urban Studies and Planning on May 19, 2020 in Partial Fulfillment of the

Requirements for the Degree of Master in City Planning

Abstract: Interest in basic income has been rising as more and more cities and places undertake basic income pilots, seams in existing supports become more and more apparent, and racial and class-based disparities widen. Yet the justifications offered for basic income programs are diffuse and sometimes in tension. Questions remain about the purpose of pilots, and whether pilots will ever make the jump to permanent policies.

This thesis sets out to answer whether basic income policies at the city or state level can support equity. In doing so, it reviews the existing literature; examines failed basic income programs; investigates existing federal benefits systems and policies, and how they could constrain a basic income; and compares a city-level basic income pilot (Stockton’s Economic Empowerment Demonstration) with a state-level basic income program (Alaska’s Permanent Fund Dividend). Assessing this evidence demonstrates the breadth of decisions involved in designing basic-income policies, and the tradeoffs involved in each. Ultimately, basic income policies can support equity by providing a direct, flexible benefit to the poor and avoiding administrative burdens built into many benefit programs. However, whether a policy actually supports equity goals depends on the specific decisions involved in its design, including its financing, eligibility criteria, and whether other services are sacrificed to implement it. Serious questions remain unanswered by existing pilots about how a permanent policy would be financed and implemented. Uncritical calls for a basic income risk neglecting details that determine whether policies will support or undermine equity. City and state governments could still benefit from incorporating features of basic income into their equitable development

strategies, and pilots and advocates could work more to answer unknowns about the transition to policies.

Karilyn Crockett

Lecturer, Department of Urban Studies and Planning Thesis Supervisor

Jeff Levine

Lecturer of Economic Development and Planning Thesis Reader

(4)
(5)

5

Acknowledgments

I am immeasurably grateful to Karilyn and Jeff, for their support and (especially) patience throughout this process. Karilyn in particular deserves credit for most of the things I’ve done of any value in graduate school since my first semester in her Housing, Community, and Economic Development class, and I will forever be indebted to her for her assurance and advice

throughout my time at MIT.

I am also so appreciative of the chance to meet my classmates in DUSP. I am running out of time as I write this so I will be brief, but you all have been the best part of my time in graduate school and I am deeply saddened that our physical time together was cut short by the

Coronavirus.

Thank you to my parents and brother, for your love and support. Thank you to my friends, for existing and making my life better.

Thank you to the basic income researchers and practitioners who took the time to meet with me and share information. I am especially grateful to the Stockton Economic Empowerment

(6)
(7)

7

Table of Contents

Abstract... 3 Acknowledgments ... 5 Table of Contents ... 7 Chapter 1: Introduction ... 9 Introduction ... 9 Methodology ...12 Theoretical Grounding...13

Chapter 2: History of and Existing Research on Basic Income ...18

Definition and History of Basic Income ...18

Literature Review on Basic Income ...24

Examining Basic Income Failures ...34

Federal Social Services and Transfer Programs ...44

Chapter 3: Examining Basic income in Stockton and Alaska ...64

Overview ...64

Context-setting ...65

Basic Income in Stockton and Alaska ...75

Chapter 4: Evaluating and Designing Basic Income Policies ...94

Overview ...94

Policy Choices and Tradeoffs...95

Benefit Simulation in Stockton ... 104

Conclusion and Design Considerations ... 105

Chapter 5: Conclusions ... 109

(8)
(9)

9

Chapter 1: Introduction

Introduction

The US has a deeply problematic relationship with social assistance. Welfare has only been set aside for the “worthy” poor, defined in racist and regressive ways that direct aid away from the most needy, stigmatize recipients, and set up numerous administrative hurdles to claiming aid. Out of a patronizing concern that people who receive aid will use it in

“unproductive” or non-socially sanctioned ways, aid is traditionally burdened with numerous conditions—such as work requirements—to control the type of beneficiary, the way that they use their benefits, and limit participation.

Cities and states have a deeply problematic relationship with equity and inclusion. The tools available to each to ensure that the most-needy benefit from development are often compromised or vulnerable to compromise. Cities often view their responsibilities to their residents as magnets for private investment from which benefits will flow, rather than providers of essential services and structures that shape people’s lives. Community benefits agreements have been used to try to ensure that residents benefit from development, yet often require public giveaways as tradeoffs for private concessions and can give a façade of public approval to projects opposed to community interests.1 Cities and states often give tax incentives to projects purporting to provide public benefit without accountability mechanisms to ensure that they meet their promises.2

In March 2020, the advent of COVID-19 across the US made both failures apparent. The US social safety net is not equipped to help masses of people unable to work in conditions of social distancing, and who rely on discontinued public services to provide and offset expenses of childcare. Cities and states have strained to maintain existing systems while bleeding money from the pandemic’s economic hit.3 While COVID-19 has expanded the number of people victimized by the failings of our social safety net, those who will suffer most deeply are the same communities of color who status quo economic policies and processes have always failed.

In the midst of the COVID-19 pandemic, republican and democratic politicians have considered at least a short-term, national-level universal basic income to both counteract the economic pain wrought by the pandemic and facilitate social distancing, and have passed

1 Wolf-Powers, “Community Benefits Agreements and Local Government,” 4, 14-15. 2 Florida, “Rethinking Tax Incentives So They Actually Work.”

(10)

10 legislation giving all Americans a one-time economic impact payment in the meantime.4 During the 2020 democratic primary, candidate Andrew Yang proposed replacing existing social services programs with a national-level universal basic income to address the effects of automation, but the US has never had a national-level basic income, and only limited

experiences with basic income at other scales of government.5 Since 1982 the state of Alaska has had a near-universal basic income in the form an oil and gas dividend, which distributes a portion of yearly oil and gas revenues in the state to most residents.6 Several indigenous tribes provide each of their members a portion of yearly casino profits, ranging from $900 to $35,000 annually.7 Before the pandemic, a number of US cities undertook or considered pilots providing periodic cash transfers to a select group of (often low-income) residents, motivated by goals of economic equity and inclusion. City pilots have attracted substantial media attention, but none have been scaled up to a permanent program, leaving what they might look like in practice— and their ultimate purpose—an open question.

In this thesis, I seek to answer whether basic income policies at the city and state-level could help advance goals of equity and inclusion or whether basic income policies threaten to siphon funding away from more effective programs in a context of tight state and local budgets, using Stockton’s basic income pilot and Alaska’s Permanent Fund Dividend as case studies. My thesis sets out to answer the following research questions:

1) How do basic income policies fit within existing national, state, and local-level policy frameworks for equity and inclusion?

2) What do existing research, failed basic-income policies, and Stockton/Alaska’s

experience tell us about the benefits and tradeoffs of basic income policies compared to other equitable development policies?

3) How could a basic income policy could be structured to best achieve goals of equity and inclusion?

Chapter 1 introduces the thesis topic, describes the thesis methodology, and presents the theoretical frameworks the thesis uses to assess basic income. Chapter 2 covers

background information on basic income and contextualizes it, including defining basic income

4 “Economic Impact Payment Information Center | Internal Revenue Service”; Klein, “This Feels Much Worse than 2008”; Matthews, “Mitt Romney’s Coronavirus Economic Plan”; Matthews, “Dear Congress.” 5 “The Freedom Dividend, Defined - Yang2020 - Andrew Yang for President.”

6 “Permanent Fund Dividend | Alaska Oil and Gas Association.” In practice, the amount of the benefit has been capped below it’s proportioned amount for a number of years. Additionally, the benefit does not go to all residents.

7 Bidadanure et al., “Basic Income in Cities,” 9; Lapowsky, “Free Money”; Marinescu, “No Strings Attached,” 15.

(11)

11 and going through a brief history of the policy; reviewing what existing literature has to say on the benefits and tradeoffs of basic income policies, examining failed basic income programs for explanations on how they failed, and what lessons that offers for future policies; and examining the existing system of federal benefits and transfers—including a deeper dive on three

policies—to assess how that system would constrain a basic income program. Chapter 3 delves into Stockton and Alaska’s basic income policies, including the economic and policy context of each place, the goals of each basic income program, and the benefits/costs of each program. Chapter 4 examines more closely the decisions involved in designing a state and local basic income and the tradeoffs associated with each, runs through a rough simulation of the costs of a permanent basic income program in Stockton, and identifies relevant considerations

policymakers should account for in designing a basic income program.

This thesis ultimately finds that evidence on the benefits of a basic income are well-established, and demonstrated in both the Alaska and Stockton pilots. However, a number of challenging decisions go into the design of a basic income and significant obstacles exist to establishing more permanent basic income policies, especially around program financing. How these decisions and tradeoffs play out in specific places will determine whether future basic income programs serve goals of equity and inclusion, or tradeoff from other priorities.

Regardless of basic income’s future, thinking about how existing systems of social service and equity policies can move closer to a basic income could help capture some of the benefits of a basic income, and reduce the burden the most-needy face in navigating complex, stigmatizing social service programs.

This thesis can help inform:

1) Current and future debates about the benefits of basic income policies compared to other policies: Local governments must make decisions about how to allocate scarce financial resources. This thesis can help local governments and practitioners understand whether pursuing a basic income policy makes sense to achieve equity goals and how they could design those policies, or whether they should pursue alternative measures. 2) Features of basic income policies that could be adopted for other policies: Even if basic

income policies are unfeasible at the city level, elements of basic income policies could be beneficial for other policies (e.g., reducing administrative burdens). This thesis can help identify which and how.

3) The scale at which to sponsor basic income policies; and how cities can imagine their roles in achieving equitable development: Basic income policies have been proposed and sponsored at national, state, city, and other (e.g., tribal) scales. By evaluating their

(12)

12 potential at the city level, this thesis can help in assessing at which scale basic income policies are most appropriate. It can also inform debates about how cities should imagine their role in advancing equitable economic development, and the purpose of ongoing and proposed basic income pilots.

Methodology

To examine the potential of basic income as an equity policy, I used as case studies Stockton’s basic income pilot—the Stockton Economic Empowerment Demonstration (SEED)— and Alaska’s basic income policy, the Alaska Permanent Fund Dividend. Stockton and Alaska offer a number of useful points of comparison. Beyond a contrast of a state and local

government, each program has different purposes and motivations. While Stockton’s is explicitly intended to address poverty and inequality in the city, Alaska’s was created to build public support for risk-averse management of oil and gas revenue. Alaska payments go to almost all Alaska residents, whereas Stockton’s pilot is targeted at low-income neighborhoods. Alaska’s program is permanent, whereas Stockton’s is a pilot. A private organization finances Stockton’s pilot, while Alaska’s program is financed by oil and gas revenue. Stockton provides $500 a month, while Alaska pays out varying amounts annually (based on oil and gas revenue in a given year; payments averaged $1,157.34 per person since 1982).8

Other reasons also inform the choice of Stockton and Alaska. Practically, information about both is available and comprehensive. Stockton has been transparent about the design of the program and data on midpoint outcomes, and has been covered widely. Alaska’s program has existed since 1982 and has been researched extensively. Recent controversy over Alaska’s program also illustrates the important political difficulties involved in pursuing a basic income policy.

To answer my research questions, I used several methods:

1) Policy and legislative analysis: I examined the design of Stockton’s basic income pilot and Alaska’s basic income program, reviewing foundational documents, state

information, legislation, and regulations. I also examined the existing set of equitable development policies to understand how a basic income policy would fit in, and for comparison of the potential benefits and tradeoffs of a basic income policy to existing programs. This included a review of federal-level social services, to understand how a city-level basic income program would fit in or conflict with other sets of benefits.

(13)

13 2) Budget analysis: I examined budget information on Stockton and Alaska to understand

their overall financial situation and current support for equitable economic development policies. This analysis also informed my discussion of how cities and states could finance a basic income policy (whether through new financing mechanisms or using existing sources of revenue).

3) Literature review: I reviewed literature on the expected benefits and tradeoffs of basic income policies, as well as literature on the benefits and costs of Alaska’s basic income policy.9

4) News coverage: I examined news coverage on the effects of basic income policies, political developments around the basic income policies, on failed basic income policies, and for context on the basic income policies.

5) Interviews: I interviewed five basic income researchers and practitioners, as well as one of the administrators of the Stockton pilot. The administrators of Stockton’s program shared access to a collection of 14 interviews with participants in the pilot; I coded these interviews based on common themes, and report their results.

6) Data: I report data from the midpoint of the Stockton basic income pilot, and on Alaska’s basic income program. I also used Census data to project the cost of a basic income policy in Stockton and for context on Stockton’s program.

Theoretical Grounding

Evaluation Standard

My thesis sets out to answer whether basic income policies could help states and cities advance equity. I use the following standard to evaluate basic income policies’ equity potential: a basic income policy would advance equity if it predominantly serves the interests of low-income and racially marginalized persons in cities. This can include redistributing resources to these groups; helping them better meet their needs; increasing their power in government decision-making; reducing barriers they face (including barriers accessing public assistance); acknowledging and trying to redress historical injustices; and transforming the relationship between government and these groups. A basic income policy could fail to advance equity if, for instance, it siphoned funding away from more effective equity programs; most benefits flowed to higher-income or white people; low-income and racially marginalized people are unable to

9 Stockton’s policy is ongoing, so there has not been time enough yet for research to be published about it.

(14)

14 access the income; or it was rolled back before all benefits were distributed. In evaluating

whether basic income policies could meet this standard, this thesis draws from three theoretical frameworks: equity planning and the just city, administrative burdens, and the role of the

state/city. The table below provides a brief summary; I delve into each in more detail in the section that follows.

Table 1: Theoretical Frameworks for Assessing Basic Income

Framework Description Evaluation Questions

Equity planning and the just city

Public policies should prioritize racial and economic justice over other considerations

To what extent do basic income policies advance or prioritize racial and economic justice?

Administrative burdens

Requirements in government social service programs impose learning, compliance, and psychological costs on potential participants, which 1) can reduce program effectiveness and participation, and 2) affect the most-vulnerable most deeply

To what extent do basic income policies impose or reduce

administrative burdens, especially on the most-vulnerable?

Role of the state/city

Cities and states often conceive of their role as to attract private investment, without thinking of more direct

responsibilities or obligations to existing residents who have historically suffered under traditional development processes; and government social service programs typically condition assistance on work, without consideration of people’s inherent worth or whether work is the best use of their time

To what extent do basic income policies represent a new approach for city/state economic

development, or to who is worthy of state social services?

1) Equity Planning and the Just City

I will evaluate the extent to which basic income programs advance goals of racial and economic justice. In doing so, I draw from Jonathan Metzger’s framework for equity planning and Susan Fainstein’s concept of the just city.10

Metzger defines equity planning as: 11

“A framework in which advocacy planners use their research, analytical, and organizing skills to influence opinion, mobilize underrepresented constituencies, and advance and perhaps implement policies and programs that redistribute public and private resources to the poor and working class in cities.”

Fainstein defines a just city as one:12

10 I expand the Just City’s application to states.

11 Metzger, “The Theory and Practice of Equity Planning: An Annotated Bibliography,” 113. 12 Fainstein, The Just City, 3.

(15)

15 "in which public investment and regulation would produce equitable outcomes rather than support those already well off…to ‘name’ justice as encompassing equity, democracy, and diversity and to argue that its influence should bear on all public decisions…there is not always a trade-off between justice and efficiency, but when there is, the demands of justice should prevail.”

Fainstein develops these arguments further throughout her book, putting forth the maximization of equity, diversity, and democracy in policy as the goals of just policymaking, and setting out “to specify programs that would benefit relatively disadvantaged social groups”.13 She critiques cities for narrowly conceiving of their role as attracting private development in pursuit of economic growth without an ethical or moral grounding to their actions.14 Finally, Fainstein contextualizes our understanding of justice within the constraints of multiple layers of government, including the federal government.15

Therefore, while I discuss administrative efficiencies to some extent, my primary criteria in assessing basic income at the local and state level is its role in advancing racial and

economic justice; redistributing resources to marginalized groups; and influencing opinion around de-stigmatization of benefits, and racial and class inequities. This will consider the design of basic income policies compared to other policies aimed at inclusive economic development (e.g., how basic income policies compare in terms of requirements placed on recipients, or assumptions about who is deserving of benefits), the discourse used to legitimate each, and the effects of basic income policies for low-income and racially marginalized groups. To make the constraints of existing benefit systems more visible and how a basic income policy oriented towards justice pushes up against them, I describe federal policies and their interaction with basic income policies.

2) Administrative Burdens

Compared to other social service programs, a commonly discussed benefit of a basic income—and similar cash transfer programs—is their administrative efficiency. This benefit can manifest in multiple ways, including lower program costs and greater benefits per dollar spent, and fewer barriers for participants to receive benefits they’re eligible for. I will focus mainly on the latter, drawing from Pamela Herd and Donald Moynihan’s concept of administrative burdens to do so. Herd and Moynihan define administrative burdens as “the learning, psychological, and compliance costs that citizens experience in their interactions with government”.16 Program rules and requirements can serve legitimate purposes but tradeoff with program accessibility,

13 Fainstein, 166. 14 Fainstein, 1. 15 Fainstein, 7, 17-18.

(16)

16 and many social services programs come layered with levels of complexity that make it

challenging for people to learn about and claim benefits they should be eligible for. This can reduce participation rates, program effectiveness, and diminish the self-worth of people who do participate.17

Specifically, Herd and Moynihan identify three types of administrative costs faced by people seeking social services:18

1) Learning costs, such as finding out about social services, their eligibility requirements, and going through the application process;

2) Compliance costs, such as meeting program rules and documentation requirements; and

3) Psychological costs, such as stress, loss of autonomy, and stigma from using programs.

Administrative burdens are usually excluded from technocratic cost-benefit analyses that typify our understanding of administrative efficiency, even though they have important equity implications—"they affect some groups more than others, and in doing so, often reinforce inequalities in society”—and can disable access to essential rights and benefits like financial assistance for college, voting, or citizenship for the people who most need them.19 Burdens also compound for people who most need social supports:20

“Individuals applying for Medicaid are also likely to be applying for SNAP and possibly the EITC. These same individuals are also less likely to have IDs or live in neighborhoods that provide enough polling places, making it harder to access the right to vote. Poor women are disproportionately more likely to have

unplanned pregnancies and also to need access to abortion services—which many states are making more difficult to access. If their children are to go on to postsecondary school, they can look forward to the overwhelming and frustrating financial aid process. In short, not only are policies targeted at the poor more burdensome, but the poor are also more likely to experience government as routinely burdensome.” [emphasis added]

Herd and Moynihan’s framework elevates the constructed nature of administrative burdens, and differences in treatment between administrative burdens and regulatory costs on businesses. Burdens are reflective of policy choices, with embedded values; a state’s decision

17 Herd and Moynihan, “UNDERSTANDING ADMINISTRATIVE BURDEN,” 23-29. 18 Herd and Moynihan, “UNDERSTANDING ADMINISTRATIVE BURDEN,” 23-29.

19 Herd and Moynihan, “INTRODUCTION,” 2, 3; Herd and Moynihan, “UNDERSTANDING

ADMINISTRATIVE BURDEN," 17; Herd and Moynihan, “TOWARD AN EVIDENCE-BASED APPROACH TO ADMINISTRATIVE BURDEN," 242-243 In a particularly stark example of the stakes involved in administrative burdens, Herd and Moynihan describe the Treasury Department’s memo to Franklin Deleanor Roosevelt titled “Report to the Secretary on the Acquiescence of This Government in the Murder of the Jews,” condemning State Department officials for deliberately creating administrative burdens to limit the immigration of European Jews. Herd and Moynihan, “INTRODUCTION,” 8. 20 Herd and Moynihan, “INTRODUCTION,” 7; Herd and Moynihan, “UNDERSTANDING ADMINISTRATIVE BURDEN,” 27, 31.

(17)

17 to make it more difficult to access SNAP benefits (food stamps) reflects a set of ideas about who is likely to apply for food stamps, how state aid should be used, and a state’s obligation to its most in-need residents.21 Whereas discussions about regulatory impacts on businesses have become normalized in discussions of regulations—and regulatory costs on businesses are intuitively accepted as an unwelcome side effect of regulations that ought to be minimized— discussions of burdens’ impacts on potential beneficiaries are often not given the same

privileged treatment by policymakers, and businesses lobby to maintain burdens so as to profit off of resolving them.22

In evaluating the administrative burdens associated with basic income versus other equity policies—and in assessing different choices of how to design a basic income policy—this paper foregrounds Herd and Moynihan’s assumption that “public officials should explicitly consider the [administrative burdens] that come for those who have the greatest difficulties in overcoming burdens.”23

3) Role of the State and City

This thesis will evaluate the vision of the city and state governance put forward by basic income policies compared to existing economic development policies. Some academics have discussed the evolution in city governance towards “entrepreneurialism,” pursuing public-private partnerships and working to attract private investment.24 Many contemporary equitable

development tools are designed to enlist the private sector into providing public benefits (e.g., community benefits agreements), to better fit workers/businesses into market dynamics (e.g., workforce training; minority and women-owned business procurement), or to attract private investment on the assumption that doing so will bring benefits to local workers. Contemporary benefits programs across scales of government condition benefits on work and income, and often prescribe how recipients can use benefits, reflecting deeply racialized and gendered notions of who is deserving of public assistance and who is not.25 This thesis will contemplate

21 Herd and Moynihan, “INTRODUCTION,” 8-12; Herd and Moynihan, “UNDERSTANDING ADMINISTRATIVE BURDEN,” 33-34

22 Herd and Moynihan, “UNDERSTANDING ADMINISTRATIVE BURDEN,” 37. For example, the tax-preparation industry has lobbied extensively to prevent the Internal Revenue Service from automating or simplifying tax preparation.

23 Herd and Moynihan, “INTRODUCTION,” 13.

24 Harvey, “From Managerialism to Entrepreneurialism,” 3-5.

25 Burnham, “Racism in United States Welfare Policy,” 47, 48-49; Chunn and Gavigan, “Welfare Law, Welfare Fraud, and the Moral Regulation of the Never Deserving Poor,” 230-236

(18)

18 how the adoption of basic income policies could fit into or break away from these frameworks, and what paradigm of city governance a basic income policy could instantiate instead.

Chapter 2: History of and Existing Research on Basic Income

Definition and History of Basic Income

Reviewing basic income’s definitions, ideological history, and pilots reveal several main takeaways:

1) Intellectual support for basic income has existed since the 16th century, although it has taken until the last 60 years for that support to manifest in pilots or policies. 2) Support for basic income has originated mostly—although not exclusively—from

academic or government circles as opposed to the grass-roots, and its supporters represent eclectic ideological backgrounds.

3) A number of basic income pilots have and are being implemented, although almost no permanent basic income policies have been established.

Basic income policies provide periodic payments to all or some residents of a place, unconditional on employment status and benefit-use.26 The National League of Cities and Stanford Basic Income Lab defines a universal basic income as:27

“a cash payment granted to all members of a community on a regular basis, regardless of employment status or income level. It is meant to be individual, unconditional, universal and frequent.”

In their working paper examining basic income pilots in the US and developed nations, Hilary Hoynes and Jesse Rothstein identify three features of a universal basic income:28

“a) it provides a sufficiently generous cash benefit to live on, without other earnings; b) it does not phase out or phases out only slowly as earnings rise; and

c) it is available to a large proportion of the population, rather than being targeted to a particular subset (e.g., to single mothers).”

In discussing basic incomes for equity purposes, I depart from features a) and c) in Hoynes and Rothstein’s definition, examining universal and targeted forms of basic income, and levels of basic income sufficient to fully support recipients as well as supplement recipients’ other income. It is possible that a targeted basic income could better advance equity than a universal one, and that even a cash benefit inadequate to live on without other earnings could promote equity.

26 “Universal Basic Income: Who’s Piloting It?” 27 Bidadanure et al., “Basic Income in Cities,” 3.

(19)

19 Although cities recently undertaking pilots have done so out of concerns for equity and inclusion, numerous ideological justifications have been offered for basic income policies throughout history.29 The concept of a minimum guaranteed income originated in the 16th

century as a way to disincentivize theft, and to assist poor people who were willing to work.30 At the start of the 20th century, British philosopher Bertrand Russell advocated for a universal basic income sufficient to meet basic needs but scaling up for workers under an anarcho-socialist system, and Quakers Dennis and Mabel Milner advocated for a state-provided, universal basic income to efficiently eliminate poverty.31

American interest in basic income emerged in the 1960s, from different ideological sources. Economist Robert Theobold proposed a basic income to deal with impending job losses from automation, free-market capitalist Milton Friedman proposed a negative income tax to replace the existing social welfare state, and liberal economist James Tobin proposed a guaranteed minimum income to support the poor while incentivizing work (similar to today’s Earned Income Tax Credit).32 Legislation establishing a guaranteed income with supplements for workers—the Family Assistance Plan, proposed by President Nixon and discussed in more detail in the “Examining Basic Income Failures” section that follows—made it through the House before ultimately being killed in Committee by the Senate in 1972.33 Recently, universal basic income policies have been championed by prominent figures in Silicon Valley, including Mark Zuckerberg and Elon Musk; Y Combinator, a Silicon Valley start-up, provides financing for basic income pilots, and Andrew Yang (founder of Venture for America) made establishing a basic income a centerpiece of his presidential campaign.34 In parallel, equity advocates have forwarded basic income as a response to severe wealth inequality and racial injustice.35

Much of basic income’s support throughout history has come from elite circles, although not all. In organizing the Poor People’s Campaign before his assassination, Martin Luther King critiqued the piecemeal approach of the existing social welfare system as well as the

stigmatization of people impoverished through discrimination and economic dislocation,

29 Hoynes and Rothstein, 1 3-5. 30 “History of Basic Income.” 31 “History of Basic Income.” 32 “History of Basic Income.”

33 Herd and Moynihan, “THE EARNED INCOME TAX CREDIT,” 198-200; “History of Basic Income”; Meyer and Holtz-Eakin, Making Work Pay, 22.

34 Clifford, “Alaska Gives Residents Free Cash Handouts—Here’s What Mark Zuckerberg Thinks Everyone Can Learn from It”; Ito, “The Paradox of Universal Basic Income.”

(20)

20 dismissing the idea that the normal operations of the market could eliminate poverty.36 He instead advocated for either full-employment or a guaranteed median income:37

“To guarantee an income at the floor would simply perpetuate welfare standards and freeze into the society poverty conditions…The contemporary tendency in our society is to base our distribution on scarcity, which has vanished, and to compress our abundance into the overfed mouths of the middle and upper classes until they gag with superfluity. If democracy is to have breadth of meaning, it is necessary to adjust this inequity. It is not only moral, but it is also intelligent. We are wasting and degrading human life by clinging to archaic thinking.

The curse of poverty has no justification in our age. It is socially as cruel and blind as the practice of cannibalism at the dawn of civilization, when men ate each other because they had not yet learned to take food from the soil or to consume the abundant animal life around them. The time has come for us to civilize ourselves by the total, direct and immediate abolition of poverty.”

During the 1960s in the US, United Kingdom, and Italy, women welfare claimants organized and campaigned for basic income policies to compensate women for unpaid work, and decrease men’s power in the household from their access to wages.38 Additionally, in Denmark in the 1980s, basic income gained a following with food sector trade unions, made up by a high proportion of women and part-time workers.39

Basic income pilots have been implemented in a variety of places and for a variety of purposes, although few permanent examples exist. The Eastern Band of Cherokee Indians provide each of their members a portion of yearly casino profits.40 An early basic income program in the 1970s in Canada called “Mincome” provided a guaranteed income to more than 1,000 low-income families across Manitoba, and to all 12,400 residents in the town of

Dauphin.41 In the 1960s and 1970s, the Nixon administration started income-maintenance pilots in Seattle and Denver, which paired cash with counseling and training.42 India’s Self Employed Women’s Association conducted basic income pilots in nine villages from 2011 and 2013 to fill-in for failures fill-in government welfare programs.43 Finland ran a basic income pilot from January 2017 to December 2018 with the goal of increasing workforce participation,44 and Namibia ran a basic income pilot from 2008 to 2009 in a village near the capital to reduce poverty and

inequality.45 The Mexican Government sponsored an experiment providing unconditional food

36 Weissmann, “Martin Luther King’s Economic Dream.” 37 Weissmann.

38 Miller, Yamamori, and Zelleke, “The Gender Effects of a Basic Income,” 138-145. 39 “History of Basic Income.”

40 Bidadanure et al., “Basic Income in Cities,” 9; Marinescu, “No Strings Attached,” 15.

41 Bidadanure et al., “Basic Income in Cities,” 8; Calnitsky and Latner, “Basic Income in a Small Town,” 375-376

42 Bidadanure et al., “Basic Income in Cities,” 9. 43 Davala, “Pilots, Evidence and Politics,” 373-374.

44 De Wispelaere, Halmetoja, and Pulkka, “The Finnish Basic Income Experiment.”

(21)

21 assistance, an equivalent amount of cash, or no aid (as a control) to 200 villages in 2003.46 The nonprofit poverty-reduction GiveDirectly is currently operating a 20,000 person unconditional cash transfer study in Kenya.47

The National League of Cities and Stanford Basic income lab published a table

categorizing basic-income-like programs and pilots in the US and Canada.48 The table illustrates both the surprising extent of basic income programs across the US, and variation in their

features.

Table 2: Basic Income Policies in North America (Reproduced from the National League of Cities and Stanford Basic Income Lab)49

Project

Location

Implementing

organization

Dates

Recipients

Amount

and

frequency

Universal basic income

Eastern Band of Cherokee Indians Casino Revenue Fund

North Carolina Eastern Band of Cherokee

Indians Ongoing since 1996 members of Eastern All enrolled Band of Cherokee

Indians

Approx. $3,500-6,000 / 6 months

Basic Income

Project TBD in 2019 Y Combinator Research TBD (3-5 yrs) 1,000 residents of low- to middle-income neighborhoods

$1,000 / month

Ontario Basic

Income Pilot 3 sites in Ontario, Canada Government of Ontario 2019 (possible 2017 - March early termination) 4,000 low-income individuals and couples (18-64 years old) Up to $16,989 per year for a single person, less 50% of any earned income

Up to $24,027 per year for a couple, less

50% of any earned income

46 Cunha and Giorgi, “The Price Effects of Cash Versus In-Kind Transfers,” 2. 47 “Basic Income Kenya Study.”

48 “Universal Basic Income: Who’s Piloting It?”

49 “Universal Basic Income: Who’s Piloting It?”. A base income is “intended to be a supplement, but not to ensure basic needs,” whereas a basic income is “approximately sufficient to meet basic needs,” and a cash transfer is a one-time payment. Universal programs go to everyone, and non-universal are targeted.

(22)

22

Up to $500/month additional for people

with disabilities

Universal base income

Alaska Permanent Fund

Dividend

Alaska Alaska Permanent Fund Corporation

(state-owned)

Ongoing since

1982 All Alaska residents Approx. $1,000-$2,000 / year

Stockton Economic Empowerment Demonstration

(SEED)

Stockton, CA Office of Mayor Michael Tubbs, Reinvent South

Stockton Coalition, Reinvent Stockton Foundation Feb 2019 - Jul 2020 100 residents of low-to middle-income neighborhoods $500 / month Chicago Resilient Families Initiative (proposed)

Chicago, IL Chicago Resilient Families

Initiative Task Force TBD Proposed: 1000 families Proposed: $500 / month

Basic income

Magnolia

Mother’s Trust Jackson, MS Springboard To Opportunities 2018 - 2019 African-American 16 low-income mothers

$1,000 / month

Preserving Our Diversity

Santa Monica, CA City of Santa Monica Housing and Economic

Development Nov 2017 - ongoing 21 low-income elderly, rent-burdened renters. Proposed expansion to serve up to 300 Calculated by household using the Basic Needs Subsidy Method, average of

$500 / month

Base Income

Baby’s First Years (Income &

the Developing Brain Study)

New York City, NY New Orleans metropolitan area, LA Omaha metropolitan area, NE Twin Cities, MN University of California, Irvine Columbia University New York University University of Wisconsin-Madison 2017 - 2022 1,000 low-income mothers with newborns $333 / month for 40 months for treatment mothers; $20 / month for 40 months for control-group mothers

(23)

23

Direct Giving Lab Chicago, IL Direct Giving Lab Ongoing since

2017 families. Proposed 70 low-income expansion to 200

$100 / month

Cash transfers

General

Assistance Merced, CA Merced County Human Services Agency Ongoing individuals ineligible Low-income for CalWORKs and without children in

the home

Calculated based on individual need

Due to its equity focus, Magnolia Mother’s Trust—a pilot in Jackson, Mississippi funded by the Economic Security Project—deserves some additional attention. The pilot provided $1,000 a month for one year to 20 black mothers living in extreme poverty.50 The project emerged out of a consultative process with community members, who elevated the need for cash as their main need.51 However, the basic income program was implemented as part of a set of interventions alongside other services, including connections with financial institutions and credit repair.52 The pilot found that beneficiaries used cash benefits to invest in education and skill building, and worked longer hours, counteracting common criticisms of a basic income that aid would disincentivize work and be misused.53

Other cities have also considered a basic income policy, even if they have not

implemented one yet. The Economic Security Project and Jain Family Institute convened a task force in collaboration with the City of Chicago to work on social safety net reform—which

proposed a guaranteed income pilot—and are working with Newark on a similar project.54 Other states and cities have also reached out to the Jain Family Institute about feasibility studies.55

50 “The Magnolia Mother’s Trust.”

51 Black, Interview with Rachel Black, administrator of Magnolia Mother’s Trust. 52 Black.

53 Black.

54 “BIG SHOULDERS, BOLD SOLUTIONS: ECONOMIC SECURITY FOR CHICAGOANS,” 4, 7-8; Nunez, Interview with Stephen Nunez at Jain Family Institute.

(24)

24

Literature Review on Basic Income

Overview

Although examples of basic income are limited, a robust literature has developed on it, covering basic income’s design and implementation, benefits and risks of basic income policies, and simulations of those benefits and risks.

Designing and Implementing a Basic Income

Design

While the idea of giving people unconditioned money seems simple, its mechanics are complicated. Obstacles to implementation include deciding on appropriate benefit levels,56 identifying eligible beneficiaries—for example, to households or individuals57—designing a payment distribution system, and designing an oversight system to ensure beneficiaries receive their payments.58 For example, it may be best to distribute benefits monthly, but distributing benefits annually alongside the taxation cycle may be administratively easier.59 Benefit levels could be equal for everyone, or tied to a person’s characteristics (e.g., age).60 Basic income could entirely replace existing benefit systems, or complement them.61

Financing

Financing a basic income remains another question; proposals include raising taxes,62 distributing dividends from a permanent fund, and creating new money, although not all of these tools are available at the city level.63 A national-level proposal suggested eliminating tax

deductions and tax credits, valued at $600 billion per year.64 Some academics have suggested

56 Desai and Palermo, “Some Effects of Basic Income on Economic Variables,” 92-94 57 Van Parijs, “Basic Income,” 10-12.

58 Wispelaere and Stirton, “The Many Faces of Universal Basic Income,” 269-272; Wispelaere and Stirton, “A Disarmingly Simple Idea?”, 115-118

59 Nunez, Interview with Stephen Nunez at Jain Family Institute. 60 Torry, “Is a Citizen’s Income Administratively Feasible?”, 120

61 Straubhaar, “On the Economics of a Universal Basic Income”, 2-3; Torry, “Is a Citizen’s Income Desirable?”, 123-124

62 Morgan, Reed, and Torry, “Analysis of the Financial Effects of Basic Income,” 191-193; Sampford, “Paying for a Basic Income,” 134; Straubhaar, “On the Economics of a Universal Basic Income,” 3 63 Andrade, Crocker, and Lansley, “Alternative Funding Methods,” 176-185; Desai and Palermo, “Some Effects of Basic Income on Economic Variables,” 93-94; Hartley and Garfinkel, “Income Guarantee Benefits and Financing: Poverty and Distributional Impacts," 2-3; Pereira, “Conclusion,” 103-105; Van Parijs, “Basic Income,” 20-22

64 Hartley and Garfinkel, “Income Guarantee Benefits and Financing: Poverty and Distributional Impacts,” 2

(25)

25 tying basic income to environmental goals through its financing mechanism, such as carbon pricing.65

Financing is also inseparable from the benefits of a basic income; a paper found that financing by just increasing tax rates—rather than eliminating tax deductions and credits—would limit the poverty-reducing effects from 13.2% to between 8% and 6.5%.66 The same paper found that using a carbon tax to finance the basic income would only reduce poverty by 1.5 to 4.5%, compared to 4% to 6.5% by increasing income taxes.

Eligibility

Places must also decide on which participants are eligible. Eligibility is inseparable from program cost, and—like the choice of financing mechanism—the benefits of a basic income. Few basic incomes are truly universal; even Alaska’s excludes persons with a felony conviction in the last year.67 One paper simulating the effects of three national-level basic income policies found that the policy that reduced poverty most delivered half the monthly income of the other two programs but had broader eligibility.68 One of the authors also noted that the choice of financing mechanism in concert with eligibility affects the distribution of benefits between demographic groups.69 For example, using a value-added tax to finance a basic income and limiting the eligibility to adults imposes larger costs on large families without a corresponding increase in benefit. Similarly, restricting eligibility to ages below 65 could impose a tax on older people for a benefit they do not receive.

Benefits of a Basic Income

Basic income proponents point to many potential benefits, summarized in table 3.

65 Howard, Pinto, and Schachtschneider, “Ecological Effects of Basic Income,” 113-114

66 Hartley and Garfinkel, “Income Guarantee Benefits and Financing: Poverty and Distributional Impacts,” 3-6

67 Gonzalez, Stanford Basic Income Lab Interview.

68 Hartley and Garfinkel, “Income Guarantee Benefits and Financing: Poverty and Distributional Impacts”, 4

(26)

26 Table 3: Potential Benefits Identified in Literature of Basic Income Policies

Benefit Description

Flexibility70 Because basic income is provided as cash without conditions on use, it offers recipients a flexible benefit that can help with adjusting to economic instability, sudden emergencies, or whatever best serves their needs, increasing their agency and avoiding the paternalism that can be associated with more-prescriptive forms of benefits

Inequality/wealth redistribution71 With a progressive financing mechanism, even a universal basic income can distribute money from the more to less affluent

De-stigmatize benefits72 A basic income could help shift paradigms from means-tested or work-conditioned benefits towards universal benefits, shifting away from norms of deserving/undeservingness and towards social inclusion, and gesturing towards modes of living and working beyond capitalist markets

Access people excluded from traditional service programs73

Because basic income is not work-conditioned, it could reach persons with disabilities who are unable to work, and benefit women who bear

disproportionate responsibilities for unpaid care work Increase worker bargaining

power74

Similarly, basic incomes can boost workers’ bargaining power by decreasing their reliance for income on their employer; since so many low-income benefit programs are conditioned on work, it could increase low-wage workers’ leverage in particular

Encourage personal investments75

With the insurance of a basic income, people may feel more comfortable making otherwise risky investments that could benefit them in the long-run

70 Bidadanure et al., “Basic Income in Cities,” 8-9; Gilbert, Huws, and Yi, “Employment Market Effects of Basic Income,” 56-57; Mays, Marston, and Tomlinson, “Neoliberal Frontiers and Economic Insecurity,” 7-9; Mays, “Social Effects of Basic Income,” 77-77-9; Straubhaar, “On the Economics of a Universal Basic Income,” 75-81; Black, Interview with Rachel Black, administrator of Magnolia Mother’s Trust.

71 Mays, “Social Effects of Basic Income,” 82-88; Straubhaar, “On the Economics of a Universal Basic Income,” 78-79

72 Mays, “Social Effects of Basic Income,” 75-79; Torry, “From Feasibility to Implementation,” 156; Casassas, Raventós, and Szlinder, “Socialist Arguments for Basic Income,” 472-473

73 Mays, “Disability, Citizenship, and Basic Income,” 241-244; Miller, Yamamori, and Zelleke, “The Gender Effects of a Basic Income,” 134-136; Rocheleau, “Why a Universal Basic Income Is Better Than Subsidies of Low-Wage Work – GrowthPolicy.Org.”

74 Hartley, Interview with Rob Hartley at the Columbia School of Social Work. 75 Straubhaar, “On the Economics of a Universal Basic Income,” 77-78

(27)

27

Benefit Description

Administrative efficiencies and burdens76

A basic income could avoid costs associated with verifying recipients’ eligibility and burdens involved in verifying participants’ eligibility and compliance

Critiques of Basic Income

Substantive critiques of basic income include the program’s costs.77 Some have criticized the program’s universality as overbroad, and questioned whether benefit levels feasible to be universal would be adequate to meet its purported goals.78 As expressed in an assessment of a national-level basic income in the United Kingdom:79

“an affordable UBI would be inadequate, and an adequate UBI would be unaffordable… basic income policy design is subject to a three-way trade-off between the important goals of meeting need, controlling cost, and reducing the negative effects of means-testing; partial schemes are better equipped to ensure acceptable distributional outcomes, but fail to achieve many of UBI’s broader goals – including drastic reductions in bureaucratic complexity and the minimisation of poverty and unemployment traps – as effectively as full schemes.”

The costs required to implement a national-level, truly-universal basic income in the US are high, and would require significant structural changes:80

“A universal payment of $12,000 per year to each adult U.S. resident over age 18 would cost roughly $3 trillion per year. This is about 75 percent of current total federal expenditures, including all on- and off-budget items, in 2017. (If those over 65 were excluded, the cost would fall by about one-fifth.) Thus, implementing this UBI without cuts to other programs would require nearly doubling federal tax revenue; even eliminating all existing transfer programs – about half of federal expenditures – would make only a dent in the cost.”

Hoynes and Rothstein further demonstrate that—absent financing using a highly progressive tax and a generous benefit—doing away with all existing social services and

replacing them with a basic income would have regressive effects, especially for the elderly and persons with disabilities:81

“This implies that were we to eliminate current income support programs and apply the funds towards a pure UBI, there would be a relative redistribution from low-earners to zero earners, but the first-order effects would be a massive distribution up the earnings distribution, along with a redistribution from the elderly and disabled towards those who are neither, primarily but not exclusively those without children.”

76 Pereira, “The Cost of Universal Basic Income,” 15, 17; Sampford, “Paying for a Basic Income,” 134; Straubhaar, “On the Economics of a Universal Basic Income,” 76-80; Torry, “Is a Citizen’s Income Behaviourally Feasible?”, 152

77 Bernstein; Greenstein, “Commentary: Universal Basic Income May Sound Attractive But, If It Occurred, Would Likelier Increase Poverty Than Reduce It.”

78 Bernstein; “Debating the Robot Takeover from The Weeds”; Hoynes and Rothstein, “Universal Basic Income in the United States and Advanced Countries,” 24

79 Martinelli, “Assessing the Case for a Universal Basic Income in the UK,” executive summary 80 Hoynes and Rothstein, “Universal Basic Income in the United States and Advanced Countries,” 6 81 Hoynes and Rothstein, 13

(28)

28 The political feasibility of UBI policies are also debated. Several previous UBI programs have been canceled or discontinued after political changes, sometimes paired with narratives of undeservingness (as described in more detail in the “Examining Basic Income Failures” section of this paper). Building coalitional support for basic income may involve cutting other social programs, compromising the program’s goals.82 A review of media coverage of three previous basic income experiments found that the media focused on automation concerns in legitimating the experiments, and work incentives in expressing concerns about the experiment.83

Critics of basic income have also proposed alternatives to accomplish similar goals, either more effectively or without the advocacy and implementation hurdles involved in pushing forward a basic income. These include modifying and expanding the US Earned Income Tax Credit;84 increasing low-cost credit options for people with low-incomes;85 providing universal basic services, rather than requiring people to purchase them; and establishing a job

guarantee.86 While it is beyond the scope of this paper to fully compare the merits of each, the table below provides a brief summary of some advantages and disadvantages of each proposal: Table 4: Comparison of Basic Income to Alternatives

Program Advantages Disadvantages

Establishing a job guarantee

 Can provide benefits beyond cash

 More targeted to vulnerable people  Does not reach people who cannot work, or for whom choosing not to work may be a better decision (e.g., parents, students) 87

 Administrative difficulties and cost  Less flexibility

 Job quality Earned Income-tax

Credit

 Much research demonstrating high participation rates, poverty-reducing effects with low cost

 Popular

 Available option for cities/states to supplement

 Does not reach people without earnings88  Incentivizes work for people who are better off

choosing not to89  Less flexibility

82 De Wispelaere and Stirton, “The Politics of Unconditional Basic Income,” 916; Greenstein,

“Commentary: Universal Basic Income May Sound Attractive But, If It Occurred, Would Likelier Increase Poverty Than Reduce It.”; Hoynes and Rothstein, 24

83 Perkiö, Rincon, and van Draanen, “Framing Basic Income,” 233-234, 247-248

84 “BIG SHOULDERS, BOLD SOLUTIONS: ECONOMIC SECURITY FOR CHICAGOANS,” 31-33 85 Denniss and Swann, “Consumption Smoothing with Basic Income,” 115-117

86 Gonzalez, Stanford Basic Income Lab Interview; Leff et al., “Alternatives to Basic Income,” 219-229 87 Hartley, Interview with Rob Hartley at the Columbia School of Social Work.

88 Rocheleau, “Why a Universal Basic Income Is Better Than Subsidies of Low-Wage Work – GrowthPolicy.Org.”

(29)

29

Program Advantages Disadvantages

Low-cost credit options

 Potentially lower cost

 Incentivizes/enables investments  Problematic evidence from international development programs (e.g., debt-traps, access)  Requires repayment, less flexibility

Universal basic services

 Gets at systemic issues that cash

cannot address  Less flexibility  More complex to implement

Evidence from Past Basic Income and Cash Transfer Policies

In previous pilots, basic income and unconditional cash transfer programs have

increased food sufficiency, well-being, children’s nutrition, earning power, gender equity in the household, health access and choice, school attendance, recipient investments, small business growth, decreased crime, decreased poverty, and reduced reliance on debt payments, with some effects persisting even years after pilots concluded.90 Despite accusations that

unconditioned benefits will reduce work incentives, pilots have either shown no-to-negligible reductions in work or increases in access to work.91

While basic income policies can theoretically reduce administrative burdens, actually doing so is not a given; it depends on the program’s design. In a South African cash transfer program aimed at eleven million children:92

“Potential recipients experienced significant compliance costs, such as extensive documentation

requirements, delay at welfare offices, and learning costs exacerbated by changes in the policy rules. As a result, most beneficiaries experienced disruptions in cash transfers, and four in five of those disruptions were made in error. Eligible beneficiaries lost resources, which had a negative effect of adolescent outcomes, resulting in greater rates of sexual activity, alcohol consumption, and criminal behavior”

Research on another cash transfer program in India found that assisting applicants with forms and interceding with bureaucracies on behalf of applicants increased applications by 41%

90 Blattman et al., “The Returns to Microenterprise Support Among the Ultra-Poor,” 17-37; Davala, “Pilots, Evidence and Politics,” 375-380; Lapowsky, “Free Money”; Hanushek, “Non-Labor-Supply Responses to the Income Maintenance Experiments | Eric A. Hanushek,” 117; Haarmann, Haarmann, and Nattrass, “The Namibian Basic Income Grant Pilot,” 360-362; Kangas et al., “Suomen perustulokokeilun arviointi.” 91 Blattman et al., “The Returns to Microenterprise Support Among the Ultra-Poor,” 17-37; Blattman, Fiala, and Martinez, “Generating Skilled Self-Employment in Developing Countries,” 17-20; Calnitsky and Latner, “Basic Income in a Small Town,” 384-390; Davala, “Pilots, Evidence and Politics,” 377-378; Haarmann, Haarmann, and Nattrass, “The Namibian Basic Income Grant Pilot, 361-362”; Jones and Marinescu, “The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund,” 15-19, 27-28; Kangas et al., “Suomen perustulokokeilun arviointi”; Marinescu, “No Strings Attached,” 11, 16, 20

92 Herd and Moynihan, “TOWARD AN EVIDENCE-BASED APPROACH TO ADMINISTRATIVE BURDEN,” 265

(30)

30 and 70%, “especially benefitting more vulnerable women who were illiterate, lacked political connections, or had household autonomy”.93

However, it is uncertain how much we can conclude from basic income pilots, and how much existing pilots can answer remaining unknown questions about the value of a basic income, as described by Hilary Hoynes and Jesse Rothstein in their working paper investigating pilots.94 Pilots cannot show long-term effects or what effect universality would have—for

example, in actually reducing stigma around receiving an income—and have not shown whether large income amounts produce different benefits than small; how benefit tradeoffs would work out in practice; or how a basic income could be financed. Notably, these critiques do not apply to Alaska’s program, although the authors note that Alaska’s annual benefit is well-below the level and amount of income they are examining.

Equity Implications of a Basic Income

A basic income has important equity implications, although the basic income’s design plays a large role in determining what those are, and values are embedded in those design decisions. Because lower-income households start at a lower baseline income, even under a purely universal scheme they facially stand to benefit more relative to higher-income

households (e.g., someone making $1,000 dollars a month experiences a 50% income increase from an additional $500, compared to someone making $10,000 a month95).

Because the distribution of wealth and income in the US is racialized, even a universal income should benefit black and Hispanic households more than white.96 The income of the median white household is almost 10 times the median black household and more than 8 times the median Hispanic household; the median black household earned 59 cents on the dollar of the median white household, and the median Hispanic household earned 73 cents on the dollar; and poverty rates for black, Hispanic, and American Indian/Alaska native persons more than double white persons.97

93 Herd and Moynihan, 265.

94 Hoynes and Rothstein, “Universal Basic Income in the United States and Advanced Countries,” 22-24 95 This calculation ignores changes in tax brackets, and changes in means tested benefits for the lower-income household.

96 Assuming a non-regressive financing mechanism, and that gains are not offset by losses of other benefits.

97 “Nine Charts about Wealth Inequality in America (Updated)”; “Poverty Rate by Race/Ethnicity”; “Racial and Ethnic Income Gaps Persist amid Uneven Growth in Household Incomes.”

(31)

31 A paper simulating three national-level basic income programs—delivering $250 a month to all individuals under 6598, $500 to individuals between 19 and 64, and $500 to working individuals over age 18—projects that each would eliminate poverty in the US, at a cost of $720 billion to $1 trillion a year.99 The paper also examined the distributional implications of a basic income under three different proposals that phase out at $200,000.100 In all, the bottom decile of household income experienced around a 40-50% increase in income, while the top decile

experienced a decrease in income of around 10-15%.101 The authors only found small effects on labor-force participation, and one author critiqued previous studies that found higher declines in labor-force participation for failing to account for investments recipients could make with

earnings.102

98One of the authors explained that they chose 65 as a cutoff both for convenience, and based on the idea that people over 65 receive Social Security. Hartley, Interview with Rob Hartley at the Columbia School of Social Work.

99 Each proposal would begin phasing out at $150,000 in household income, decreasing 2% for each additional $1,000 in income. The paper uses a measure of poverty. Hartley and Garfinkel, “Income Guarantee Benefits and Financing: Poverty and Distributional Impacts,” 2

100 Hartley and Garfinkel, 1-4. 101 Hartley and Garfinkel, 5-6.

(32)

32 Figure 1: Distributional Effects of Different Basic Income Proposals103

A 2019 working paper attempted to model the effect of an annual $5,000 basic income for all residents of New York City (equivalent to $416.67 per month), financed by discretionary income taxes.104 The paper assumed an increase in total income taxes (including both labor and non-labor earners), and modeled different tax-levels and progressivity of taxes.105 Among other findings, the model predicted that a basic income would decrease income inequality106 by transferring wealth from higher-income residents to lower-income, and—counterintuitively—the basic income decreased rents, home-ownership rates, and housing construction, due to lower city-wide wealth and incomes caused by the income taxes used to finance it.107 The paper had

103 Hartley.

104 Esmkhani, Favilukis, and Nieuwerburgh, “Universal Basic Income and the City,” 2-5, November 25, 2019.

105 Esmkhani, Favilukis, and Nieuwerburgh, 2-5, 9-10.

106 Although not wealth inequality, due to changes in saving habits.

107 The model also predicted that the program would decrease work hours due to higher taxes, although empirical evidence on the effects of basic income have found little or no effect on hours worked

(33)

33 different predictions for changes to the composition of the city based on the progressivity of the tax rate. With a less- but still progressive tax, lower-income households leave the city center for the suburbs because they can afford larger dwellings, while wealthier households move to the center.108 With a more-progressive tax, wealthy and high-income households leave the center for the suburbs, and poorer households move in.109 This paper’s conclusions should be treated with a great deal of caution, because it is a working paper, and makes strong assumptions about changes in behavior without empirical backing. But it does get at necessary next-steps in research on basic-income: how would the effects of a basic income differ from pilots based on the financing mechanism and what secondary effects would a basic income have, including effects on affordability, population size, and—of particular note, since a basic income at the city or state level is spatially bounded—suburb-city dynamics.

Summary

Existing literature on basic income offers a number of important takeaways in considering the potential of basic income in cities and states:

1) Design: Serious design questions remain for a permanent basic income program, and seemingly different design decisions are interconnected (explored in more detail in the “Evaluating and Designing Basic Income Policies” section). Choices of financing mechanism and eligibility affect the equity impacts of a basic income program.

2) Benefits: Basic income programs offer numerous potential benefits. Of particular note, policies can offer participants flexibility to use benefits to best suit their needs, can reduce stigmatization tied to existing social service policies, and administrative hurdles that limit participation in existing programs.

3) Critiques: Tradeoffs in designing basic income policies may severely limit their efficacy. Overbroad programs may offer too few benefits to reduce poverty and be too expensive, while targeted programs may not be able to gain political support and reduce access. Meeting the costs of basic income programs may require rolling back existing supports. 4) Evidence from pilots: Pilots show a range of benefits for participants, and help answer

critiques that basic income will reduce work participation. However, there is a large gap

Matthews, “The 2 Most Popular Critiques of Basic Income Are Both Wrong”; Esmkhani, Favilukis, and Nieuwerburgh, “Universal Basic Income and the City,” 11-15, November 25, 2019.

108 Esmkhani, Favilukis, and Nieuwerburgh, “Universal Basic Income and the City,” 13-15, November 25, 2019.

109 Esmkhani, Favilukis, and Nieuwerburgh, “Universal Basic Income and the City,” 13-15, November 25, 2019.

Figure

Table 4: Comparison of Basic Income to Alternatives
Figure 2: Federal Programs Targeted to Poor People 175
Figure 3: Federal Spending on Programs for the Poor Compared to Social Security and  Medicaid 179
Table summarizes key policies whose design and development could be instructive for  basic income, before delving into them more deeply
+7

Références

Documents relatifs

Lorsque la nuit humide s’est éloignée Elle a déposé tels des trésors soignés Dans les hamacs filés par les araignées D’éphémères œuvres d’arts non signées.. Les

Die Kernfrage bei elektronischen Abstimmun- gen und Wahlen lautet: Wie kann ein Bürger sich in einem elektronischen Austauschprozess eindeutig identifizieren, authentifizieren und

Cur- rent response surfaces based methods used for global optimization can be categorized on the basis of the type of response surface and method used to determine the new

The CFW scheme under study consists of employing local peasants (with a fixed monthly remuneration) for protecting the village forest against fire, pest or unauthorized

weighted household post- government income, individual net income, corrected monthly household income, and household net income from wages) on subjective health were compared in

The European Union and its social self .... The main

Assuming first, that public support for international giving of people living in affluent countries rests upon fundamental values like solidarity and that second, a

 Develop a methodology to guide architects during early design within  Develop  a  methodology  to  guide  architects  during  early  design  within the circular