Fair Shot

by Chris Hughes

  86 a child born into poverty in France: Corak, “Economic Mobility.”

  87 The majority of middle-class Americans today are stuck where they are: DeParle, “Harder for Americans to Rise From Lower Rungs.”

  87 “If you’re in the middle, you’re stuck in the middle”: Quoted in Semuels, “Poor at 20, Poor for Life.”

  88 “Middle-class life has become 30 percent more expensive”: Andres, “Does the Middle Class Life Cost More?” Not all basics have become more expensive. Specifically, if something is a manufactured good, it’s probably gotten cheaper. Since the 1980s, “the real price of a midrange color television has plummeted about tenfold,” not to mention the fact that they are now flat-screen media centers that connect to the Internet, as Annie Lowrey writes in the New York Times. “Similarly, the effective price of clothing, bicycles, small appliances, processed foods—virtually anything produced in a factory—has followed a downward trajectory.” The rising cost of living in the twenty-first century is not necessarily coupled with an absence of cool stuff. See Lowrey, “Changed Life of the Poor.”

  88 Housing, food, and energy costs are similarly 50 percent more expensive than they were: Our World in Data, “Price Changes in Consumer Goods.”

  89 you can’t save money by sending your kids to a preschool in Beijing: Bloom, “It’s Not Your Imagination.”

  89 “prices are rising on the very things that are essential for climbing out of poverty”: Weissmann, “Why Poverty Is Still Miserable.”

  Five

  92 $6,000 a year for a single person: For people who make less than $6,000 a year, the income would be a 100 percent match of their previous year’s earnings, distributed monthly.

  92 A single worker at Walmart who works 25 hour a week: There are very important design questions about how to “phase out” the benefit to avoid creating an artificial cliff at the $50,000 mark. We don’t want a lot of jobs paying $49,999 a year or to create perverse incentives for people to not go above $50,000. The organization I co-run, the Economic Security Project (more on that later), is supporting institutions to develop recommendations for how to do this most effectively in the months and years to come.

  93 A guaranteed income of this size would lift 20 million out of poverty: The Institute for Taxation and Economic Policy and California Budget and Policy Center estimate that just shy of 20 million people would be lifted out of poverty. They calculate the rate using the Supplemental Poverty Measure. Please see Introduction, note 1 for further detail.

  93 60 million adults with monthly checks: U.S. Census Bureau, “Household Income in the Past 12 Months.” Sixty million adults live in the 41.8 million households that, according to the census, make $50,000 or less. The approximate cost would be $360 billion. If this program is built on the Earned Income Tax Credit, which I later recommend we cash in the $70 billion spent on it each year and replace it with this benefit. The new revenue required would be $290 billion. For detailed demographic and income data, see U.S. Census Bureau, “People in Households-Households.”

  94 guaranteed income at $150 per month: As we will see in chapters 8 and 9, I recommend using the existing Earned Income Tax Credit as the framework for the guaranteed income and cash in the program. At a $500 level, this would mean virtually all current recipients would receive at least as much money as they do from today’s EITC and the vast majority would receive significantly more. If the benefit size dropped to $150, however, some people could see their benefits reduced in size, clearly not my intent. It would be extremely important to protect these families and ensure that no one receives less in a future orientation of the program than they do today.

  94 “there is no guarantee that everyone will benefit”: Yamamori, “Christopher Pissarides, a Nobel Laureate.”

  Six

  100 “Professionals and blue collar workers alike are putting in long hours together”: Putnam, Bowling Alone, 86.

  103 Work that is rewarding and meaningful . . . makes us happier, healthier, and more fulfilled: The sociologist Michèle Lamont worked for years with men in blue collar jobs who found value and meaning in their resilience. “The collective identity of the men I talked to,” she wrote, “is articulated around their struggle to ‘make it through’ and keep the world together in the face of economic uncertainty, physical dangers, and the general unpredictability of life.” These men have created a work ethic of self-discipline that organized the focus of their days. “They don’t give up, and it’s largely through work and responsibility that they assert control over uncertainty. They wake up every morning, go out there in the cold, and do what they have to do to ‘keep it going.’” See Lamont, Dignity of Working Men, 23.

  103 psychological studies also show that people who work are happier: Wadell and Burton, “Is Work Good for Your Health and Well-Being?”

  103 it takes longer to recover from depression than it does to fall into it: Liem and Liem, “Psychological Effects of Unemployment.”

  104 Case and Deaton’s work connects these “deaths of despair”: See Case and Deaton, “Rising Morbidity and Mortality in Midlife,” and its 2017 follow-up, Case and Deaton, “Mortality and Morbidity in the 21st Century.”

  104 Unemployed people are more prone to alcohol and drug abuse: Waddell and Burton, “Is Work Good for Your Health and Well-Being?”

  104 Someone who is unemployed is more than twice as likely to use illegal drugs: Badel and Greaney, “Exploring the Link”; Dooley, Catalano, and Wilson, “Depression and Unemployment.”

  104 The correlation between unemployment rates and opioid abuse in particular is staggering: Hollingsworth, Ruhm, and Simon, “Macroeconomic Conditions and Opioid Abuse.”

  105 “If a man is called to be a street sweeper”: Fassler, “‘All Labor Has Dignity.’”

  106 “AFDC mothers, for example, are often forced to answer questions about their sexual behavior”: Piven and Cloward, Regulating the Poor, Loc. 2959.

  108 labor force participation rates are higher for single black mothers: U.S. Department of Labor, “Working Mothers Issue Brief”; Bureau of Labor Statistics, “Employment Status of the Civilian Population.”

  108 “People seeking jobs would come to these local offices”: Spross, “You’re Hired!”

  108 The cost would be significantly higher than a guaranteed income: Paul et al., “Returning to the Promise of Full Employment.”

  109 subsidized public-sector employment programs consistently came in last: Card et al., “What Works?”

  111 Thirty million Americans participate in this unrecognized workforce: Of the 49 million working-age Americans who are not doing work for pay, 16 million are enrolled in school and 13.5 million aren’t working because of home responsibilities. See Hipple, “People Who Are Not in the Labor Force.”

  111 nearly half of the “nonworking” poor are working to provide care for their families: Rachidi, “America’s Work Problem.”

  112 We claim dependents and report the tuition that we pay: The addition of a single check box on the 1040 Dependents section would ask if the dependent is under 6 or over 70.

  112 we can begin to recognize the contributions: I developed the idea of a guaranteed income tied to an expanded definition of work from the work of anti-poverty scholar Anthony Atkinson. He coined the term “participation income” in 1993 along similar lines: anyone who participated in society would receive a basic income. Questions about how to “verify” participation have plagued his proposal for years. My proposal, as outlined in the next chapter, ties the guaranteed income to work activities like wage labor, childcare, or study, all of which are reported on annual tax returns and verified by existing audit procedures. Perhaps after establishing a guaranteed income tied to an expanded definition of work, the next step might be a broader “participation income” as Atkinson outlined.

  112 Our country’s fastest-growing demographic is
people over age 85: Poo, Age of Dignity, 3.

  112 majority of people who end up in nursing homes die within two years: Komaromy, Sidell, and Katz, “Death and Dying”; Poo, Age of Dignity, 31.

  113 people who take on care and housing responsibilities pay a steep personal cost: National Alliance for Caregiving and AARP, “Caregiving in the U.S. 2015.”

  113 “Seventy percent of caregivers report making changes”: Poo, Age of Dignity, 64.

  113 “Often they do this without support”: Ibid., 27.

  114 over $4 trillion of economic activity is going unrecognized: Bridgman et al., “Accounting for Household Production.”

  Seven

  118 Facebook’s growing popularity: Facebook Blog, “Have a Taste . . .”

  132 “The dignity of the individual”: King, Where Do We Go from Here, 173.

  137 That plan was defeated: Barnes, With Liberty and Dividends for All, Loc. 70.

  Eight

  143 “The advantages of this arrangement are clear”: Friedman, Capitalism and Freedom, 192.

  144 The focus of the civil rights movement in the late 1960s turned to economic justice: The Black Panther Party began to agitate for the idea of a guaranteed income and incorporated it into its Ten-Point program, the “Bill of Rights” of the party.

  144 “There is nothing new about poverty”: King, “Remaining Awake Through a Great Revolution.”

  146 “The wonder of the American character”: Nixon, “Address to the Nation on Domestic Programs.”

  147 “The program was both too much and too little”: Moynihan, Politics of a Guaranteed Income, 506.

  148 Moynihan predicted that future proposals: Ibid., 551.

  149 The Wall Street Journal once called him the “fourth branch of government”: Kaufman, Carter Years, 293.

  150 unglorified tax credits already lift as many people out of poverty: Center on Budget and Policy Priorities, “Policy Basics.”

  150 the mechanics of the EITC are very simple: Ibid.

  150 Dozens of studies document: Many of these studies have been conducted on families receiving the EITC, and others have been done on similar unconditional cash transfer programs.

  151 Kids are more likely to finish high school and to enroll in college: Maxfield, “Effects of the Earned Income Tax Credit”; Manoli and Turner, “Cash-on-Hand”; Michelmore, “Effect of Income on Educational Attainment”; Milligan and Stabile, “Do Child Tax Benefits Affect the Well-Being of Children?”; Chetty, Friedman, and Rockoff, “New Evidence.”

  151 children under five go on to earn 17 percent more each year: Marr et al., “EITC and Child Tax Credit.”

  151 number of babies born with low birth weights . . . also decreases meaningfully: Ravanera, “Town with No Poverty”; Costello et al., “Association of Family Income”; Hoynes, Miller, and Simon, “Income, the Earned Income Tax Credit”; Hoynes, Miller, and Simon, “EITC.”

  151 Women make more money in the years after getting a boost in their EITC: Marr et al., “EITC and Child Tax Credit.”

  151 The EITC seems to slightly reduce the rates of smoking and drinking: Rehkopf, Strully, and Dow, “Short-Term Impacts.”

  152 the American studies didn’t track health outcomes: Marinescu, “No Strings Attached.”

  154 the dividend does not cause them or their neighbors to work any less: Ibid.

  155 Alaska comes in dead last: Sommeiller, Price, and Wazeter, “Income Inequality in the U.S.”

  155 “You could compare it to a new computer”: Bregman, “Poverty Isn’t a Lack of Character.”

  155 scarcity makes us “less insightful”: Mullainathan and Shafir, Scarcity, 13.

  156 “Clearly, this is not about inherent cognitive capacity”: Ibid., 52.

  Nine

  160 the wealth share of the richest families in the United States began to grow: Saez and Zucman, “Wealth Inequality in the United States Since 1913.”

  160 the top one percent of Americans controls nearly 40 percent of the wealth in our country: U.S. Federal Reserve, Division of Research and Statistics, “Changes in U.S. Family Finances.”

  160 a wealthy person who gets the same $100: Dynan, Skinner, and Zeldes, “Do the Rich Save More?”; Carroll et al., “Distribution of Wealth.” Economist J. W. Mason makes a robust case that we need more consumer spending to increase productivity and boost the economy. See Mason, “What Recovery?”

  161 A recent study by the Roosevelt Institute: Nikiforos, Steinbaum, and Zezza, “Modeling the Macroeconomic Effects.”

  161 International studies of cash transfer programs have shown little evidence: Matthews, “New Study Debunks.”

  162 “In an economic environment”: IMF Fiscal Monitor, “Tackling Inequality.”

  164 boost of $500 per month to every adult: The boost would work as previously described as an expanded EITC, adding $290 billion to the existing $70 billion of costs for a total of $360 billion. U.S. Census data shows that 60 million adults between ages 18 and 65 live in 42 million households with total incomes of less than $50,000 per year. These numbers are purposefully high; they assume that all adults in households with total incomes under $50,000 work in some way and all take the benefit. See https://www.census.gov/data.html.

  168 90 percent of the participants in a pilot program: Bellisle and Marzahl, “Restructuring the EITC.”

  168 people want simple, predictable amounts of money they can rely on: The complexity of the current benefit also gives its critics the authority to claim a high “fraud rate” of 25 percent. In reality, this “fraud” is more often than not the result of complexity in knowing who qualifies for the benefit and when, as the IRS itself acknowledges. As the Center on Budget and Policy Priorities writes on its website, “The EITC is one of the most complex elements of the tax code that individual taxpayers face. The IRS instructions for the credit are nearly twice as long as the 13 pages of instructions for the Alternative Minimum Tax, which is widely viewed as difficult. The EITC’s complexity is in significant part because of efforts by Congress to target the credit to families in need and thereby limit its budgetary cost. EITC overpayments often result from the interaction between the complexity of the EITC rules and the complexity of families’ lives. The Treasury Department has estimated that 70 percent of EITC improper payments stem from issues related to the EITC’s residency and relationship requirements, which are complicated; filing status issues, which can arise when married couples file (often following a separation) as singles or heads of households; and other issues related to who can claim a child in non-traditional family arrangements.” Greenstein, Wancheck, and Marr. “Reducing Overpayments in the Earned Income Tax Credit.”

  169 submerged in the tax code: The Cornell professor Suzanne Mettler examines the effect of hiding a variety of progressive policies in the tax code and thus obscuring them from the view of everyday people. When policies are invisible and confusing, beneficiaries are less likely to understand and defend them. They breed a cynicism that government does little and doesn’t work for everyday people. See Mettler, The Submerged State.

  170 significantly expanded and modernized EITC would not only help the 60 million adults: U.S. Census Bureau, “People in Households-Households.”

  170 tens of millions would receive dramatically more money: Single people with two or more children can currently receive as much as $6,269 per year depending on their earnings. For the small number of families who receive this amount, the IRS would send an annual check for the $269 to ensure that they would not inadvertently see a cut to their benefits because of the new policy. See Center on Budget and Policy Priorities, “Policy Basics.” A related policy that should like be expanded at the same time is the child tax credit, which, if modified, could private a recurring, monthly cash allowance to adults based on the number of children they have.

  170
“It’s abundantly clear that a basic income program has much greater potential”: Price, “Universal Basic Income.”

  171 knowledge sector jobs are not growing as quickly: Florida, Rise of the Creative Class, 44–49.

  172 “family support in the form of putting more money in the pockets of low-income parents”: Whitehurst, “Family Support or School Readiness?”

  173 two-thirds of manufacturing executives say they can’t find enough workers with adequate tech skills: Giffi et al., “Skills Gap in U.S. Manufacturing.”

  173 the more intense the government job training: U.S. Department of Labor, “Providing Public Workforce Services.”

  173 barely a third were working in the field they had been trained in: Job training programs have worked when industries have been willing to get their hands dirty and involve themselves in the process. In one example from 2002, the California Association of Health Facilities received several million dollars of state funding to train 2,000 new certified nursing assistants, and more than 90 percent of them landed jobs. But the results of similar programs have at other times come up short. A Michigan No Worker Left Behind program developed with the same philosophy focused on high-impact training in industries like energy storage and aircraft mechanics, and 41 percent of the 2009 graduates from this program were still looking for work a year later. See Goodman, “After Training.”

  174 There is some reason to believe job training programs could improve: Just as with pre-K, I have no ideological objection to job training programs, and there is reason to believe that programs could improve in future years. The Obama administration worked to narrow the gap between the skills learned in training and the abilities needed to fill real vacancies. The federal approach in recent years has turned toward training in partnership with industry associations, backed up by certifications from accredited academic institutions at the end. There are good reasons to believe this could be successful, but reliable data thus far is hard to come by.

  174 Tuition fees are $8,000 a year: National Center for Education Statistics, “Eastern Gateway Community College.”