Universal Basic Income (UBI), a program initiated by the government, has aroused the attention of the U.S. population since 2020. The idea is simple: Every adult citizen receives a monthly payment, which ensures a certain amount of income to cover basic living expenses. The goal of the UBI is to reduce poverty and promote financial stability.
While there are concerns that UBI might disincentivize people to work, increase government debt and fail to handle the root cause of poverty, I personally believe it still helps improve people’s physical and mental health and combat poverty.
A study conducted by the National Bureau of Economic Research points out the benefits of UBI. The research involved a sample group with an average annual household income of $30,000. Among the participants, there was a control group where 2,000 people received $50 per month and an experimental group of 1,000 people who received UBI of $1,000 per month for three years. The research concluded that the UBI group spent more on basic needs like rent, food and transportation than the control group.
This group also reported better financial stability and mental well-being. These findings are crucial, as financial security can improve people’s well-being significantly by relieving anxiety and stress caused by income issues. However, the study did not suggest a significant effect on physical health.
More significantly, the treatment group also paid more financial support, such as helping their family members, than the control group. This means that the UBI program is beneficial not only to the participants but also the people around them.
Many other programs also show the positive impact brought about by UBI. For example, in Louisiana, the UBI program offered $1,000 basic income to injured individuals who couldn't work. This support allowed them to get through their recovery period and eventually give back to their community. Stories like this demonstrate UBI’s great potential to provide support during difficult times and reduce poverty.
Furthermore, the basic income pilot in Georgia (GBI) has reported positive results. The GBI Program, which helped low-income Black women with $20,000 for two years, enabled participants to pay bills and debt and to alleviate poverty. According to one participant of the GBI Program, the basic income helped her afford housing fees and make healthy food accessible. In this way, the GBI Program reduced her financial burden and provided economic security.
Oregon is considering implementing a UBI program that would offer $750 to every resident. This initiative is funded by raising the minimum corporate tax rate of Oregon businesses to three percent while the current tax rate is lower than one percent. This proposal will be voted on during the 2024 election in November.
If this proposal is passed, the collected tax will be distributed to every resident of Oregon. The remaining tax fund will be spent on elder care and public education services. This indicates that the UBI Program in Oregon will be helpful to both residents and public services financially.
While the UBI Program has numerous benefits, some people are concerned about the potential for reduced work motivation, increased government debt and failure to address the root causes of poverty.
One of the most common concerns is that UBI might discourage people’s motivation to work. However, evidence from the UBI Program in Alaska suggests the opposite. While there was little impact on the full-time employment rate, part-time employment increased significantly. Thus, instead of reducing incentive to work, UBI can motivate people to seek part-time jobs.
Another concern is the increased government debt. However, here is the thing—funding mechanisms matter. The government does not need to be responsible for the funding. Oregon raising the minimum corporate tax rate is a good case in point. Besides, the long-term economic benefits brought about by more financially stable workers can offset the temporary costs.
I would say UBI is not a cure-all due to some critics’ argument on UBI’s failure to deal with the root causes of poverty, such as unequal opportunities for healthcare and education. However, it can serve as a complement to other policies and solve the root causes jointly. Through the UBI Program, healthcare and education can be available to more people, which can result in economic growth in the long run.
UBI is a promising tool to reduce poverty and increase financial security. In spite of the challenges, it is crucial to consider the potential benefits, improved economic status and well-being. By coping with the concerns and learning from previous examples, we can hopefully move toward a more financially stable future.
Acknowledgment: The opinions expressed in this piece are those of the individual author.
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