by Chris Hughes
Nine out of ten economists, a University of Chicago survey found, agree with Furman and Mnuchin. As Furman later explained it in a seminal speech, “Over long periods of time it has generally been the case that about 95 percent of the people in the United States who want a job at a given point in time can find one—despite massive changes in technology.” Workers, technologists, and politicians have indeed often cried wolf, going back to the dawn of the Industrial Revolution. During the Luddite uprisings in early nineteenth-century England, weavers destroyed the automated looms that were threatening their livelihoods. A century and a half later, in the 1950s and 1960s, early computers raised concerns among policymakers and business leaders that mass unemployment was just around the bend. A report written by prominent academics, journalists, and technologists called the “Triple Revolution” foresaw a world of historic inequality as machines dramatically increased industrial output and required “little cooperation with human beings.” In response to the report, President Lyndon Johnson convened a National Commission on Technology, Automation, and Economic Progress to prepare for a robot future. Yet over the decade that followed, the American economy created 18 million new jobs, many of them unheard of before.
There are days when I talk to a technologist in the morning, who is convinced that the end of work is looming, and in the afternoon to an academic, who believes nothing has changed. They may not always realize it, but there is a lot of room for agreement between the camps if they focus on what we know. Technology has already changed the nature of work. Incomes are stagnant and unpredictable, and fewer and fewer people are able to do better than their parents, while the cost of living keeps rising. The debate about artificial intelligence is in large part irrelevant to why we need a guaranteed income today: we are already experiencing one of the most significant economic dislocations in modern history.
We don’t need to predict the future to know that we need to respond to the problems of the economy of the present. Regardless of how artificial intelligence evolves, a guaranteed income is the best tool to provide financial stability and opportunity to people who already need it.
To understand how our new economy, defined by technological advances and globalization, affects the bottom lines of working people, two researchers, Rachel Schneider and James Morduch, set out to monitor the day-to-day financial behavior of 235 low- and middle-income families over the course of a year. They tracked all money in, all money out, what they spent it on, and why. They combined that data set with anonymized statements from Chase bank accounts to create an even larger sample. The top-line conclusion from their work: while income inequality gets a lot of attention, financial instability and the challenges that come with weathering the ups and downs of unpredictable income are just as problematic, if not more so.
I worked with a woman on the Obama campaign who lived that instability every year. A Chicago local, she didn’t have a fancy educational pedigree or deep campaign experience, but for all that her resume lacked, she had a dedication and passion that matched or exceeded everyone else’s to put her senator in the White House. I remember one night in the campaign office, after almost everyone had left, she told me what her life had been like over the past several years. She worked at the Navy Pier, a local amusement park, from May to September and took as many hours as she could. When the pier closed in the fall, she turned to odd jobs, babysitting, and any kind of temp work she could find, scrounging and saving until spring came around again. Technically, she had an income for much of the year, and while I don’t know for sure, she probably did not appear in any poverty statistics. She lived right on the brink, one month to another, hoping for no major setbacks. She is one of the tens of millions of temporary workers this economy has created. Headlines tell us that unemployment numbers keep hitting record lows in the United States, but these numbers mask the human effects of precarious work.
My colleague and people like her live in a precarity trap that Schneider and Morduch describe in their work. “Without basic economic stability,” Schneider and Morduch write, “their choices are often difficult, and they’re forced to make them frequently. Short-term imperatives undermine long-term goals. Saving and borrowing need to be recalibrated with the spikes and dips of their income. The consequences of bad decisions can compound, and quickly. Stress and anxiety make it all harder.”
In a separate study, the Pew Research Center asked more than 7,000 Americans to balance the trade-off between reliable income and more income. Nine out of ten said they would rather be paid less and have the money arrive regularly. Most of the people in these studies, like most Americans today, can find some kind of paid work, but the kinds of jobs that are available to them fail to provide the security of a reliable income.
A hundred and fifty million Americans are living from paycheck to paycheck, and it isn’t because they aren’t trying hard enough. Some might wonder, are they just not saving? Are they buying too many new gadgets and fancy cars when they should be diligently socking money away into a rainy day fund? Almost to a fault, every poor and middle-class person in these studies was attempting to build a nest egg. Nearly all the participants had savings accounts and many of them thought up ways to make it harder for them to touch that money. One woman in Mississippi purposefully opened a savings account in a credit union an hour’s drive away from her home. She cut up her ATM card to make it harder to withdraw money from it, and she destroyed her checkbook so she wouldn’t be tempted by payday loans, which often require a signed check as collateral. Despite many similar stories of thoughtfulness and preparation from the families interviewed for the study, few of the participants managed to create long-term savings because of unpredictable life events like collapses in wages, hospitalizations, or unexpected childcare costs.
If instability has become the new norm, a second effect of the winner-take-all economy on workers’ lives is the absence of economic mobility, the chance to get ahead. My parents and their parents before them felt, like most Americans, a confidence that their kids would be better off than they were. Incomes rose in the United States in every decade leading up to the Great Depression, and then again in the decades that followed. Jobs were changing with every decade, but pay was consistently rising.
Across the board today, it has become less likely that people born into poor or middle-class households will move up the economic ladder. In the America of the 1950s, a child had a nine-out-of-ten chance of making more money than their parents, but today it is only 50 percent. Today, a child born into poverty in France has a better chance of entering the highest social classes than one born in the United States. The majority of middle-class Americans today are stuck where they are—or they are falling. “If you’re in the middle, you’re stuck in the middle, which means there’s less space for others to move into the middle,” says Elisabeth Jacobs, the senior director for policy and academic programs at the Washington Center for Equitable Growth. As jobs have become increasingly unreliable, they don’t offer the same chance to move up and out that they once did.
We shouldn’t let nostalgia for the good old days of economic mobility allow us to forget that it was largely only one class of Americans, white men, who were able to take advantage of available economic opportunities. Policymakers across the country and in Washington consistently made decisions that made it easier for whites to get ahead and harder for minorities, particularly African Americans. Few African Americans were able to take advantage of early social assistance programs like the Homestead Act, which gave each settler 160 acres in exchange for a commitment to work the land. African Americans were denied access to many of the land grant colleges that provided free education to farmers who wanted it. (Most Southern universities refused to admit African Americans until the late 1960s.) Later, in the middle of the twentieth century, the GI Bill provided service members returning home after the Second World War with low-interest loans and low-cost mortgages, but only to those who were white. Banks
for most of American history refused to lend to African Americans, even well after the passage of the Civil Rights Act. Similarly, elected officials made it difficult for women to purchase and own property for much of American history. Women lacked access to many professional schools, like law schools and medical schools, and the financially rewarding careers that result. Even today, men are paid consistently more in jobs than women who do the exact same work, and we have no national paid leave policies to help new parents, particularly mothers, balance work with children. We don’t need to go back in time and “make America great again” by re-creating a world that provided economic mobility to a select group—we need to build a new economic order that empowers all Americans to get ahead.
A third and final effect of the new economy on working people is an exorbitant and growing cost of living. The NPR show Marketplace, in collaboration with Frontline and PBS NewsHour, crunched the data on the cost of everything from fast food to health care and movie tickets to gas between 1995 and 2015. Their finding was conclusive: “Middle-class life has become 30 percent more expensive in the past 20 years. In that same time, Americans haven’t received a raise.”
The rise in expense of three essentials—housing, health care, and education—accounts for the bulk of the cost explosion. Even after adjusting for inflation, college tuition fees are two and a half times what they were 20 years ago, while the costs of childcare and medical care are double what they were in 1997. Housing, food, and energy costs are similarly 50 percent more expensive than they were then. (The only things that have gotten much cheaper are television sets, toys, and software.) The “production” of things like health care, education, and housing has not gotten meaningfully more efficient through automation or globalization, because they all rely on cognitive human labor, which is harder to automate or ship overseas than manufacturing processes. You might be able to buy a less expensive television made in a Chinese factory, but you can’t save money by sending your kids to a preschool in Beijing.
Unfortunately, these trends show no signs of slowing down. As state and federal governments tighten their belts, tuition and medical expenses are trending upward. While artificial intelligence will likely bring down the cost of some goods, costs will likely continue to rise in the industries that most rely on human expertise like education and health care. Business journalist Jordan Weissmann points out that “prices are rising on the very things that are essential for climbing out of poverty. A college education has become a necessary passport to financial stability. It’s hard to hold a job if you’re chronically ill. Working full-time is difficult if you can’t pay somebody to watch your child.”
A high cost of living is not just a problem for the poor—the cost squeeze affects most of the middle class as well. The poor struggle to pay heating bills and make rent. While the middle class may not be going to bed hungry, the rising costs of housing, health care, and education mean many of them live on the financial brink.
We rely on the monthly job report with fresh unemployment numbers to gauge how well the economy is doing for working people, but it says nothing about these hidden problems that many employed people still have. In a world in which a job meant stability and opportunity, it made sense to look at the number of jobs as a barometer of how well people were faring in the economy. Lots of people today have a job but do not have any semblance of financial security in their lives. There’s a reason we have a reactionary president who leverages populist rhetoric at a time of record-low unemployment. We have the power to fix these problems by creating an income floor to support and stabilize the lives of poor and working-class Americans.
5
A Guaranteed Income for Working People
Here’s what I propose we do. Government should provide a guaranteed income of $500 a month to every adult who lives in a household making less than $50,000 per year and who is working in some way. This would add up to $6,000 a year for a single person or $12,000 for a married couple. A family of four making $38,000 a year would see their annual income rise to $50,000, a huge boost to their bottom line. A single worker at Walmart who works 25 hours a week for $10 an hour would see her income increase from $13,000 to $19,000.
The guaranteed income would create a floor below which people could not fall, a reliable foundation for people to build on. It wouldn’t be enough money on its own for anyone to live on. It would supplement income from other sources like formal labor, a job in the gig economy, informal work, or other government benefits. Everyone who contributes to their community would earn the income, even if they’re not making money in the formal economy. That would include mothers and fathers of young kids, adults caring for aging parents, and college students.
A fruit picker or Lyft driver would have a monthly cash stipend they could plan on, even if it were a bad season or if fewer people needed rides one particular month. A student would have a foundation to be able to pursue her studies full time, and a mother with young kids would have extra cash to help with the cost of diapers and clothes. A guaranteed income would stabilize erratic financial lives and give people extra cash to invest in themselves and their families.
A guaranteed income of this size would lift 20 million out of poverty overnight and provide financial stability to many in the middle class. It would give people the chance to invest in themselves to start a small business, or to move to a new city for a new job. It would help people keep up with the rising cost of living. They could spend the money on whatever was most important to them—housing, health care, education, childcare, or something else. But perhaps most importantly, the guaranteed income would embrace the dignity and freedom of people to chase their own dreams with no restrictions.
Anyone who made more than $50,000 would not get the money, because they have enough income to make ends meet. (This amount would be adjusted by the cost of living in each state: in California it would be a bit higher, and in Alabama, it would be lower.) But no one in the middle class would pay for it either. A tax on the incomes of the richest Americans, those who make more than $250,000 a year, would underwrite the program in its entirety.
A guaranteed income of this size would provide 60 million adults with monthly checks, at a new annual cost of $290 billion, about half of what we spend each year on defense. It’s important to be clear about the scale of this program: it would be big and expensive. It would be the fourth-largest social benefit in government, just behind Social Security, Medicare, and Medicaid. This level of spending is ambitious, but it’s feasible if we have the political will to do it. We could begin more modestly and scale the program up over time, just as we’ve done with other programs, like Social Security. When President Franklin Roosevelt signed the first Social Security bill, it barely covered half of the working population, but it grew over decades to cover virtually every American. We could start the guaranteed income at $150 per month, taking the cost down dramatically to less than $50 billion, and then increase it gradually over time. Over the long term, the income should rise to the level of $500, but we should not be afraid to start more modestly to get there. Given the glacial pace of change in Washington, we can also begin organizing in states to create smaller state-based income floors.
To be clear, I’m not proposing a universal basic income. Proponents of that idea favor giving every American, regardless of their wealth or whether they work, $1,000 a month with no strings attached at a cost of several trillion dollars. A guaranteed income for working people, by contrast, would go to a more narrow set of recipients, specifically working people in need, and it would cost much less.
The idea of a guaranteed income that encourages work isn’t a fringe idea. Nearly a dozen Nobel Prize–winning economists believe that it’s a smart way to grow the economy and reduce inequality. Many of them do not make their case from a moral perspective, but from a practical one. “The pie is growing bigger, there is no guarantee that everyone will benefit if we leave the market alone,
” explains Nobel laureate Sir Christopher Pissarides, a professor at the London School of Economics, whose words echo comments of other Nobel Prize winners. “A universal minimum income is one of those ways, in fact, it is one I am very much in favor of, as long as we know how to apply it without taking away incentive to work at the lower end of the market.”
A guaranteed income designed in this particular way—$500 a month to working people making under $50,000—would be the most powerful tool we have to combat inequality in our country. And it would encourage work by making it pay.
6
Worthwhile Work
My father worked as a traveling salesman at Snyder Paper Corporation for 39 years. On his last day on the job before he retired, his colleagues rented the ballroom at the Holiday Inn in our hometown of Hickory for a farewell lunch. I was in eighth grade at the time and I got to take the day off from school—a nearly unprecedented event in our family—to join the celebration.
My dad was visibly anxious as we walked into the hotel. He carried a leather-bound notebook in which he’d written his speech, and he kept passing it from one hand to the other while compulsively clearing his throat. His nerves were contagious. I felt butterflies in my own stomach as we passed a banner emblazoned with his name in big letters, congratulating him on his long run. Pacing back and forth between our small dining room and kitchen, he had rehearsed his speech for days, speaking with a formal, foreign-seeming diction, with little trace of his usual Southern lilt. This was one of the most important moments of his life, and he wanted to get it right.