As unemployment remains high and the threat of automation looms over any recovery, UBI is getting another look as a potential key to ongoing economic stimulus.
BROOKS RAINWATER AND CLAY DILLOW 07-20-20
When Andrew Yang dropped out of the Democratic presidential primary in February, he had no way of knowing that within weeks one of the central pillars of his failed campaign would move from the fringes of American political conversation to the very center of global policy debates. Citing looming labor market disruptions brought on by accelerating workplace automation, Yang ran on the idea of instituting a universal basic income (UBI), an idea that’s lived at the outskirts of American political thought—though never quite in the mainstream—for 250 years. Specifically, Yang proposed the U.S. government pay each of its adult citizens $1,000 per month (in lieu of some of the benefits the government currently offers) to alleviate poverty and gird all Americans for the day the robots come for their jobs, a notion dismissed by its many, many detractors as fantasy.
Five months on, with much of the global economy struggling to reopen and the Federal Reserve forecasting millions of jobs lost that will never return, Yang’s notion of a guaranteed income for all doesn’t feel nearly as fantastical. Since February, governments around the globe—including in the U.S.—have intervened in their citizens’ individual financial lives, distributing direct cash payments to backstop workers sidelined by the COVID-19 pandemic. Some are considering keeping such direct assistance in place indefinitely, or at least until the economic shocks subside. In some countries, that could keep some kind of regularly distributed guaranteed income in place for years, even if governments choose to call it by another name.
In the U.S., lawmakers continue to debate a range of economic stimulus measures beyond the onetime $1,200 stimulus checks sent out to most Americans starting in March and the additional $600 in federal funds tacked onto weekly state unemployment insurance payouts. Some of the measures under consideration include additional direct cash payments to citizens aimed at supporting workers until the pandemic eases and the economic crisis passes. But behind the scenes, another debate is emerging: What if the crisis doesn’t pass?
Even under more normal circumstances, recessions tend to accelerate adoption of the very technologies that Yang and many others in Silicon Valley believe will someday necessitate some sort of universal guaranteed income. In the decade since the last recession, a steady growth in automation was largely masked by surging demand, says Mark Muro, senior fellow and policy director for the Metropolitan Policy Program at the Brookings Institution. The vast wealth generated by economies and financial markets bouncing back from the 2008 crisis kept employment ticking upward even as companies steadily replaced lower-skilled labor with a mix of technology and fewer higher-skilled workers, a proven formula for boosting productivity.
The current pandemic-driven recession only makes automation more attractive. Not only do robots never get sick, but they address a public health priority by minimizing human interactions. And while it might seem like the ongoing spike in joblessness would make human labor attractively less expensive for companies, the opposite is true when consumer demand is simultaneously cratering. “When revenues are collapsing, people become more expendable,” Muro says. With fewer dollars to spend on wages and salaries, each worker becomes relatively more expensive.
Muro and his research associates have flagged some 36 million U.S. jobs rated as highly susceptible to automation, in sectors ranging from hospitality and food service to manufacturing, retail, agriculture, transportation, and logistics. Many if not most of the jobs supplanted by increasingly capable machines during the COVID-19 crisis won’t be coming back, making a jobs-led recovery increasingly unlikely.
Take the nation’s largest private employer, for example. By year’s end, Walmart plans to have autonomous floor-scrubbing robots deployed in 1,860 of its more than 4,700 stores, a robot rollout that began long before COVID-19 was a headline. The company is also deploying shelf-scanning and stock-sorting robots at more than 1,000 stores, a rollout that has continued during the pandemic, a Walmart spokesperson recently confirmed to CNN. And more autonomous robots are coming, says Phil Duffy, vice president of product for San Diego-based Brain Corp, the company behind the software that drives Walmart’s autonomous cleaning bots. “The world of fully autonomous robots at scale—these are robots that have all the sensors on them, have the processing on board, and are able to make decisions themselves—is probably less than five years away.”
These robots aren’t necessarily designed to replace humans, Duffy says, but to augment them, boosting their productivity (one less human mopping the floor frees up one more human to do work robots currently can’t, like cleaning high-touch surfaces that may more readily transmit COVID-19). But that’s not necessarily comforting news for workers as technology continues to allow machines to perform more and more tasks. A survey of corporate executives released by accounting firm PwC indicates that nearly half of CFOs anticipate cuts to workforce efforts in response to COVID-19. Meanwhile, only 17 percent expect cuts to initiatives like “digital transformation” and 44 percent plan to accelerate “automation and new ways of working”—all terms that either explicitly or implicitly nod toward replacing human workers with technology.
“A lot of the technologies that were relatively crude during the last recession are now ready for prime time,” Muro says. “So I don’t think this is a hot take. I think this is going to be a much more substantial feature of this downturn, both because the technology is so advanced and because of the particular nature of the infection danger. It’s almost perfectly programmed to ratchet up the use case for this stuff.”
Whenever major labor disruptions loom, UBI surfaces as a potential remedy. Its historical champions include representatives from across the philosophical and political spectra, from founding father Thomas Paine to conservative economist Milton Friedman to Dr. Martin Luther King Jr. and even President Richard Nixon. But in recent years the loudest voices pushing UBI into mainstream conversation come from Silicon Valley, names like Andrew Yang, Mark Zuckerberg, and Elon Musk. In late May, Twitter and Square CEO Jack Dorsey donated $3 million to Yang’s Humanity Forward nonprofit, cash that will be distributed in 20,000 micro grants of $250 each as the organization continues to make a case for UBI in the United States.
In Stockton, California, that case is already being made. The city of just over 300,000 people has teamed with the nonprofit Economic Security Project to conduct a UBI pilot program providing 125 residents with monthly no-strings-attached payments of $500 over the past 18 months—beginning in February of 2019—as a means of measuring their social and economic impacts. “I think at the bare minimum we’ve found that if you give money to people the world doesn’t implode, people don’t stop working, we don’t stop being America,” says Stockton Mayor Michael Tubbs, addressing some of the more persistent and hyperbolic critiques of UBI.
The initial data bears out the efficacy of Stockton’s program. Early results show that more than 40% of the funds are spent on food, 20% on consumer goods, and 10% on utilities. Additionally, participants are reporting that they are able to spend more money on their children, and to spend more time preparing for and applying to higher-paying jobs. But with the emergence of coronavirus, the experiment has become something of a measuring stick for how a guaranteed income can impact communities during a serious economic crisis (the project was recently extended for an additional six months in direct response to the COVID-19 crisis).
In response to both long-standing economic insecurity in their communities and the current coronavirus pandemic, 11 mayors (including Mayor Tubbs) came together in June to form Mayors for a Guaranteed Income. Within a few weeks their ranks grew to represent 15 cities, including Los Angeles, Atlanta, Pittsburgh, and Jackson, Miss. The organization’s goal: “Mayors will come together in this network to advocate for a guaranteed income—direct, recurring cash payments—that lifts all of our communities, building a resilient, just America,” a signal that UBI is gaining some political traction in the U.S., at least at the local level.
Meanwhile, the federal government’s primary pandemic relief initiative—the one-time $1,200 stimulus payment initially supplied by the federal government—is a distant memory for most recipients, their checks quickly absorbed by rent, bills, and the day-to-day costs of living, says Economic Security Project co-founder Natalie Foster. “Enhanced unemployment” continues to supply those eligible with an extra $600 per week, but that additional payout will cease at the end of July, 2020. For some in Stockton, the $500 monthly UBI payments are staving off financial catastrophe, but only for 125 families, and only for now. “The bills come due every month,” Foster says. “And so should the checks.”
As a growing number of lawmakers come around to the same way of thinking, Yang’s proposal to place a monthly income floor beneath all Americans has in a matter of months evolved from a politically untenable fringe notion to a palatable economic policy, at least on a limited basis. “There’s more interest in guaranteeing an income than we’ve ever seen in Washington, D.C.,” Foster says. “And for very good reason.” Representatives Tim Ryan (D-OH) and Rho Khanna (D-CA) have proposed a $2,000 monthly payment to adults (plus $500 per child up to three children) for a minimum of six months, continuing until the economic crisis is contained. A similar bill put forth by Senators. Kamala Harris (D-CA), Bernie Sanders (I-VT), and Ed Markey (D-MA) in the Senate would provide the same monthly payments until three months after the public health emergency ends.
Five of the six proposals circulating on Capitol Hill would means-test recipients, reducing or restricting payments based on a household’s income, but one of the bills—introduced by Representatives Rashida Tlaib (D-MN) and Pramila Jayapal (D-WA)—is truly universal, offering $2,000 monthly until the pandemic ends and then $1,000 until one year after the associated recession ends. But with more than 17 million Americans still filing for continuous unemployment benefits and more than 1 million filing new claims each week, it’s unclear what the end of the recession will look like for workers, particularly as increasing automation ensures many jobs won’t come back.
Looking toward 2021 it’s no longer difficult to envision a world wherein large swathes of the global population remain unemployed or underemployed as labor markets recover unevenly and accelerating automation continues to hamstring a jobs-led economic recovery. In that type of environment, “UBI becomes thinkable,” Brookings’ Muro says. In Spain, that thinking has led to the institution of a “national minimum income,” a means-tested program that will ensure its poorest people receive at least $500 a month (those earning less than $500 monthly would receive the difference). The initiative has re-ignited a long-dormant discussion of an EU-wide minimum income between some government leaders and members of the EU parliament. And in the U.S., the debate over the next phase of economic and fiscal stimulus continues.
After years spent on the political fringes, the notion of UBI (or “minimum income,” or “guaranteed income”) may be coming into its time not through the front door of political or ideological revolution but via a backdoor opened wide by an epidemiological crisis compounded by technological disruption. Those suffering through economic uncertainty unprecedented in our lifetimes likely won’t care how it gets here or how it’s marketed to voters if and when it arrives. “Whether we call it a guaranteed income, an income floor, whatever you want to call it,” says Stockton’s Mayor Tubbs. “I’m agnostic as long as people get what they need as part of a new social contract so they have some foundation to stand on.”
Brooks Rainwater is the senior executive and director of the National League of Cities’ (NLC) Center for City Solutions. Clay Dillow is a freelance technology and lifestyle journalist based in Brooklyn, New York.
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