Interest in universal basic income has grown in recent years, and now many are looking to pilot programs to see whether local-level experiments could be applied to the federal level.
The concept of UBI, which is paying a person merely to exist and not in exchange for labor, has been around for decades. But interest in the idea grew amid presidential Andrew Yang’s push for UBI as well as the rounds of stimulus spending that the federal government churned out during the COVID-19 pandemic.
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There have been several pilot programs for UBI, although it is worth noting that opponents of the concept are quick to call those experiments flawed for many reasons. Critics contend that there has never been a scientifically sound UBI pilot because of how the local programs are structured — and that UBI on a broader level would be even more difficult.
Proponents of UBI argue that a broad-based program of direct payments could lift families out of poverty and even make employment more tenable because of fewer economic barriers. They also see it as a way that families could overcome healthcare and education challenges. But critics say that any sort of national UBI program would be prohibitively expensive and could end up hurting more than helping due to the massive tax burden involved.
Allison Schrager, a senior fellow at the Manhattan Institute, told the Washington Examiner that she can’t think of a single study or pilot program over the years that could be considered UBI or used to shed light on the viability of UBI on a larger scale.
“The idea is that people have a consistent amount of income regardless of their circumstances and they know they can count on it forever,” Schrager said. “And I’ve never seen a study that delivers that. It’s usually for a limited amount of time, it’s usually contingent on having certain characteristics.”
Still, there have been programs that are cited as pilots for UBI-like assistance.
One of the most prominent ones took place in Stockton, California, in February 2019. Spearheaded by former Mayor Michael Tubbs, the Stockton Economic Empowerment Demonstration gave 125 of the city’s residents $500 per month.
The results were seen as positive, with the control group experiencing 1.5 times more income volatility than those who received the funds, according to SEED. The share of participants with full-time employment rose from 28% at the start of the program to 40% a year later. Meanwhile, the control group only saw a 5% increase in full-time employment over the same period. Beneficiaries said that the monthly payments helped cover basic necessities and allowed them to focus on pursuing economic security.
But Robert Rector, a senior research fellow at the conservative Heritage Foundation focused on health and welfare policy, said the Stockton experiment suffered from what researchers call selection bias — that is, the beneficiaries were not randomly selected, but rather were people who knew about the pilot and volunteered to participate.
“So they were clearly not comparable to the general population — you’re not going to have any drug abusers or any low-incentive people that were getting into that program,” Rector told the Washington Examiner.
Richard Auxier, a senior policy associate at the Urban-Brookings Tax Policy Center, said pilots like Stockton are “very worthwhile” because they can show how direct payments can change variables in a person’s life — for instance, healthcare and education outcomes. But he made a point of noting that these pilots are nowhere near universal because of how they are conducted.
Because the pilots don’t head to universal across-the-board income, they might be thought of as being in a similar category to other programs and proposals like increased child tax credits and increased earned income tax credits, he told the Washington Examiner.
“It’s different but the idea is — like with those tax credits the same as with UBI — that our system of providing government programs can be really complicated … and cash is just really simple, whether that’s a UBI or whether that’s a tax credit,” Auxier said. “Giving them this money, getting around some of these hurdles and making it simpler to assist families.”
It is notable too that the Stockton program was funded by donors, including the Economic Security Project, and not by taxpayer monies.
Schrager said the experiment is short-term and had an end date, so it shouldn’t be considered a representative model of UBI.
“It’s just not UBI. All they are proving is that if we give people money for a couple months it doesn’t really change their behavior,” she said.
Another example pointed to by UBI proponents is that of the Alaska Permanent Fund, which is a constitutionally enshrined fund that pays out the Permanent Fund Dividend, a sum of money that residents receive every year (how much fluctuates depending on the year).
The program, which is available to all Alaskans regardless of income level, has been touted as a way to reduce poverty rates in the 49th State. It also has widespread support from residents regardless of political affiliation, and the size of payments in a given year is a big issue on the campaign trail.
In particular, the program, which began in 1982, has been cited for significantly reducing poverty among Alaska Natives. Studies have found that the PFD hasn’t reduced employment, and there is evidence of a small positive effect. Still, recent evidence suggests that income inequality in Alaska may have increased in both the short and long run.
But Schrager pointed out that the PFD payments vary greatly each year, so it isn’t the same as a UBI program where people can count on the same level of consistent income each year. Plus, the money isn’t being drawn from taxpayers — as would be done through UBI — and is rather a result of the Last Frontier’s rich oil revenues.
Auxier said the Alaska PFD is technically a universal program. That is because all eligible residents receive payouts each year. Still, he noted that because the payments aren’t financed by taxes, it would differ from any national program.
The largest UBI pilot, though, isn’t even in the U.S. It is miles away in Africa. Since 2017, GiveDirectly has been on a quest to study the effects of UBI in the broadest possible sense. Some 20,000 individuals across nearly 200 villages in Kenya have received funds, and another 100 villages are being used as a control group.
Some of the recipients will receive funds for the full 12 years of the study to survey the long-term effects of UBI.
The results of that study won’t be finalized for several more years, but initial results were released in 2020 during the pandemic in order to gauge how the UBI pilot had been working so far, and they were promising, according to researchers.
“Transfers significantly improved well-being on common measures such as hunger, sickness, and depression in spite of the pandemic, but with modest effect sizes,” the researchers said.
More broadly, as a concept, UBI has some major supporters. Schrager said that the best argument for UBI is that the current welfare system has a lot of incentives that discourage work because of high implied marginal taxes. For instance, after one earns above a certain level, they lose food stamps, meaning that they might avoid working enough hours to hit that level, she said.
“And I think that the idea with UBI, which is admirable, is that if we just gave everyone benefits regardless of how much they earn, you wouldn’t create those negative incentives,” said Schrager.
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But there are clearly major hurdles to overcome with any sort of national-level UBI program — perhaps the biggest of which is the sheer amount of money it would take to finance such a massive undertaking. The entire welfare system would also have to be revisited, further complicating matters.
“The thing with UBI, again, is that it’s universal and also that it’s expensive and that it would replace other programs and so if you are looking big picture, would UBI work, you really got to also get into well how much does it cost and what is it replacing,” Auxier said. “And that’s a more complicated conversation.”