Five questions for an “actually-existing” Universal Basic Income

1. Supplement, or replacement? Will the UBI be an addition to existing government services? Or will it supplant them? As originally proposed, UBI was meant to replace all government support services with a single cash payment. The intention was that the marketplace would decide the value of those services. This is the ideologically pure formulation. Of course, we have seen that markets rarely follow the orders of ideology. Without intervention, basic needs — housing, healthcare, education, transit, nutrition — could very quickly become dramatically more tiered and reallocated to the wealthy, perhaps even more so than currently. While none of the experiments to date have replaced all social services with UBI, it does seem to be how many talk about the idea, at least in the context of a federal UBI in the United States.

However, while there is substantive debate about the relationship of UBI of federal services, there has not yet been any commensurate attention paid to what might be the effects of a federal UBI on municipal and state services. Moreover, even if the UBI is not explicitly replacing federal services, might it be used to justify undermining, e.g., rent control laws, or other forms of market intervention by local governments? The existence of a federal UBI would present an opportunity and incentive for local governments to effectively shift the entire burden of wealth redistribution to the federal level. This would be a tempting proposition even for non ideologically motivated governments.

Would even a supplement approach thus result in a society at least as unequal as now? Could people be just as tied to work? What degree of federal, state, and local coordination might be necessary to ensure that UBI has the intended effects?

2. Minimum income, but no minimum wage? UBI is sometimes considered as a response to the spread of contingent employment, in which workers are classified as contractors and thus no longer subject to minimum wage. Would a federal UBI be tied to a reaffirmation of minimum wage laws, or could it undermine them? Similar market logic applies here. Even if the federal minimum wage is kept — even if it is strengthened — state and local variation in the wage levels could disappear in the presence of a UBI. Where there are no minimum wage laws, there will be a race to the bottom for wages. The argument is that UBI would shore up minimum wage by allowing people to opt out of work they don’t find remunerating, but without strict price controls, basic services will rise to the level of the UBI, and marginal income will once again be critical. If that is coupled with a lowered wage floor, the market will find a level where it is extracting the cheapest possible labor from those most in need. Given that Information about wage disparities is extremely hard to come by in most fields, in most localities, and to most people, these exploitative wage practices could in some places be deeply pernicious. Those with lower living expenses — e.g. the childless — will opt out, but those with dependents might be forced to eke out whatever additional money is available. Their situation could, feasibly, worsen.

3. Adjusted for cost of living? Will the UBI be enough to live on where you are, right now? Will it be the same across the country, or will the amount be adjusted for the living costs of a given area?

If the former, will mobile UBI recipients abandon the coastal cities and migrate to cheaper areas? What might be the effect on political visibility of the UBI-dependent who don’t have such mobility? What might be the effect on the culture of the areas they choose to depart? Or where they choose to congregate?

If the latter, will UBI recipients flock to areas with higher UBI, and find the niches within those areas where they can cut down on living expenses? Could this lead to crammed housing, or de-facto slums? What would be the effect on social services in those areas?

Will it be enough to live on reasonably, and not leave dependents vulnerable to sudden swings in the price of rent, food, or gasoline? Might this vulnerability be amplified to society, if price increases also increase the number of job-seekers?

Much of the utopian fantasizing around UBI assumes that if it is truly “basic” — that it can safely cover the requirements for living — that this will free people to pursue their dreams and maximize. However, if the UBI is merely emergency, sustenance-level cash, then it’s really just a tweak to the unemployment system — albeit without time limit or other explicit requirements. A useful tweak — one worth advocating for — but unlikely to result in the fundamental transformations some might expect, and thus should be approached more soberly.

4. Taxed? Will UBI be taxed? And, if so, will it be taxed at the same rate as other income? This is a trickier question than it might first seem. If UBI is taxed, then it would be effectively means-tested, because people earning over, say, $250,000/year will return much more of their UBI to the government than would people earning only their UBI. Is this positive, because it doesn’t waste money on those who don’t need it? Or is it a drawback, because it chips away at the solidarity of universal coverage? The universality has been called an essential component of the idea, that it doesn’t divide people by who receives the support. If the coverage is not universal by default, it will require additional layers of bureaucracy to administer, which could slow, interrupt, or even deny service when people fall through the inevitable cracks.

A similar set of questions surround whether UBI be included in means-testing for other services, such as SNAP, Medicaid, or income-based repayment plans for student loans. Even if UBI itself isn’t adjusted for cost of living, will these thresholds now be? Will local variations in means-testing levels lead to local variations in effective UBI, as discussed above? Some services have special provisions for $0 income. Will that need to be adjusted to be $0, other than UBI? Will UBI be suspended when enrolled in college? If not, will other provisions — such as student loan deferral, income-based repayment, and education expense tax credits — no longer apply to students? Or will these be additional burdens that effectively undermine the universality or “basic” nature of the income? Depending on how these questions are answered, UBI could end up exacerbating cost-of-living differences, rather than eliminating them.

5. No strings attached? Will any government — federal, state, local — place requirements on those for whom UBI is their only income? Will they need to show they are making “productive” use of their time? Will they be drug-tested? Will they need to submit receipts for major living expenses? Will UBI be taken away from those convicted of a felony, or a violent felony? Could it be suspended, or seized, to pay back federal loans, to cover fines or judgements, to compensate the cost of prosecution or incarceration? We have seen how these sorts of avenues, though they might seem “fairly” conceived within the vocabulary of a carceral system, can end up becoming extractive revenue on which municipalities support themselves. If any restrictions are applied that lead to UBI being denied to a swath of society, then we risk making inequality even more stark, as some are pulled up, while others are left behind.