Living wage

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Living_wage 

 

Cost of a basic but decent life for a family.

A living wage is defined as the minimum income necessary for a worker to meet their basic needs. This is not the same as a subsistence wage, which refers to a biological minimum. Needs are defined to include food, housing, and other essential needs such as clothing. The goal of a living wage is to allow a worker to afford a basic but decent standard of living through employment without government subsidies. Due to the flexible nature of the term "needs", there is not one universally accepted measure of what a living wage is and as such it varies by location and household type. A related concept is that of a family wage – one sufficient to not only support oneself, but also to raise a family.

The living wage differs from the minimum wage in that the latter can fail to meet the requirements for a basic quality of life which leaves the worker to rely on government programs for additional income. Living wages have typically only been adopted in municipalities. In economic terms, the living wage is similar to the minimum wage as it is a price floor for labor. It thus differs from the national minimum wage in that it is not set according to a legal threshold.

In the United Kingdom and New Zealand, advocates define a living wage to mean that a person working 40 hours a week, with no additional income, should be able to afford the basics for a modest but decent life, such as, food, shelter, utilities, transport, health care, and child care. Living wage advocates have further defined a living wage as the wage equivalent to the poverty line for a family of four. The income would have to allow the family to 'secure food, shelter, clothing, health care, transportation and other necessities of living in modern society'. A definition of a living wage used by the Greater London Authority (GLA) is the threshold wage, calculated as an income of 60% of the median, and an additional 15% to allow for unforeseen events.

Calculating a living wage

Living wage campaigns came about partially as a response to Reaganomics and Thatcherism in the US and UK, respectively, which shifted macroeconomic policy towards neoliberalism. A living wage, by increasing the purchasing power of low income workers, is supported by Keynesian and post-Keynesian economics which focuses on stimulating demand in order to improve the state of the economy.

History

"It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country."

President Franklin D. Roosevelt, 1933

The concept of a living wage, though it was not defined as such, can be traced back to the works of ancient Greek philosophers such as Plato and Aristotle. Both argued for an income that considers needs, particularly those that ensure the communal good. Aristotle saw self-sufficiency as a requirement for happiness which he defined as, ‘that which on its own makes life worthy of choice and lacking in nothing’. As he placed the responsibility in ensuring that the poor could earn a sustainable living in the state, his ideas are seen as an early example of support for a living wage.

"Everyone who works has the right to just and favourable remuneration ensuring for himself and for his family an existence worthy of human dignity."

Universal Declaration of Human Rights, Art. 23 Sec. 3

The evolution of the concept can be seen later on in medieval scholars such as Thomas Aquinas who argued for a 'just wage'. The concept of a just wage was related to that of just prices, which were those that allowed everyone access to necessities. Prices and wages that prevented access to necessities were considered unjust as they would imperil the virtue of those without access.

In Wealth of Nations, Adam Smith recognized that rising real wages lead to the "improvement in the circumstances of the lower ranks of people" and are therefore an advantage to society. Growth and a system of liberty were the means by which the laboring poor were able to secure higher wages and an acceptable standard of living. Rising real wages are secured by growth through increasing productivity against stable price levels, i.e. prices not affected by inflation. A system of liberty, secured through political institutions whereupon even the "lower ranks of people" could secure the opportunity for higher wages and an acceptable standard of living.

Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.

— Adam Smith, Wealth of Nations, I .viii.36

Based on these writings, Smith advocated that labor should receive an equitable share of what labor produces. For Smith, this equitable share amounted to more than subsistence. Smith equated the interests of labor and the interests of land with overarching societal interests. He reasoned that as wages and rents rise, as a result of higher productivity, societal growth will occur thus increasing the quality of life for the greater part of its members.

Like Smith, supporters of a living wage argue that the greater good for society is achieved through higher wages and a living wage. It is argued that government should in turn attempt to align the interests of those pursuing profits with the interests of the labor in order to produce societal advantages for the majority of society. Smith argued that higher productivity and overall growth led to higher wages that in turn led to greater benefits for society. Based on his writings, one can infer that Smith would support a living wage commensurate with the overall growth of the economy. This, in turn, would lead to more happiness and joy for people, while helping to keep families and people out of poverty. Political institutions can create a system of liberty for individuals to ensure opportunity for higher wages through higher production and thus stable growth for society.

In 1891, Pope Leo XIII issued a papal bull entitled Rerum novarum, which is considered the Catholic Church's first expression of a view supportive of a living wage. The church recognized that wages should be sufficient to support a family. This position has been widely supported by the church since that time, and has been reaffirmed by the papacy on multiple occasions, such as by Pope Pius XI in 1931 Quadragesimo anno and again in 1961, by Pope John XXIII writing in the encyclical Mater et magistra. More recently, Pope John Paul II wrote, "Hence in every case a just wage is the concrete means of verifying the whole socioeconomic system and, in any case, of checking that it is functioning justly."

Contemporary thought

Suffrage campaign seeking the right of women to vote and a living wage. (c.1903)

Different ideas on a living wage have been advanced by modern campaigns that have pushed for localities to adopt them. Supporters of a living wage have argued that a wage is more than just compensation for labour. It is a means of securing a living and it leads to public policies that address both the level of the wage and its decency. Contemporary research by Andrea Werner and Ming Lim has analyzed the works of John Ryan, Jerold Waltman and Donald Stabile for their philosophical and ethical insights on a living wage.

John Ryan argues for a living wage from a rights perspective. He considers a living wage to be a right that all labourers are entitled to from the 'common bounty of nature'. He argues that private ownership of resources precludes access to them by others who would need them to maintain themselves. As such, the obligation to fulfill the right of a living wage rests on the owners and employers of private resources. His argument goes beyond that a wage should provide mere subsistence but that it should provide humans with the capabilities to 'develop within reasonable limits all [their] faculties, physical, intellectual, moral and spiritual.' A living wage for him is 'the amount of remuneration that is sufficient to maintain decently the laborer'.

Jerold Waltman, in A Case for the Living Wage, argues for a living wage not based on individual rights but from a communal, or 'civic republicanism', perspective. He sees the need for citizens to be connected to their community, and thus, sees individual and communal interests as inseparably bound. Two major problems that are antithetical to civic republicanism are poverty and inequality. A living wage is meant to address these by providing the material basis that allows individuals a degree of autonomy and prevents disproportionate income and wealth that would inevitably lead to a societal fissure between the rich and poor. A living wage further allows for political participation by all classes of people which is required to prevent the political interests of the rich from undermining the needs of the poor. These arguments for a living wage, taken together, can be seen as necessary elements for 'social sustainability and cohesion'.

Waiting for a living wage poster (1913)

Donald Stabile argues for a living wage based on moral economic thought and its related themes of sustainability, capability and externality. Broadly speaking, Stabile indicates that sustainability in the economy may require that people have the means for 'decent accommodation, transport, clothing and personal care'. He qualifies the statement as he sees individual necessities as contextual and therefore able to change over time, between cultures and under different macroeconomic circumstances. This suggests that the concept and definition of a living wage cannot be made objective over all places and in all times. Stabile's thoughts on capabilities make direct reference to Amartya Sen's work on capability approach. The tie-in with a living wage is the idea that income is an important, though not exclusive, means for capabilities. The enhancement of people's capabilities allows them to better function both in society and as workers. These capabilities are further passed down from parents to children. Finally, Stabile analyses the lack of a living wage as the imposition of negative externalities on others. These externalities take the form of depleting the stock of workers by 'exploiting and exhausting the workforce'. This leads to economic inefficiency as businesses end up overproducing their products due to not paying the full cost of labour.

Other contemporary accounts have taken up the theme of externalities arising due to a lack of living wage. Muilenburg and Singh see welfare programs, such as housing and school meals, as being a subsidy for employers that allow them to pay low wages. This subsidy, taking the form of an externality, is of course paid for by society in the form of taxes. This thought is repeated by Grimshaw who argues that employers offset the social costs of maintaining their workforce through tax credits, housing, benefits and other wage subsidies. The issue was raised during the Democratic party primary election of 2016 in the United States, when presidential candidate Bernie Sanders mentioned that "struggling working families should not have to subsidise the wealthiest family in the country", and therefore, implied that the large retailer Walmart, who is owned by the wealthiest family in the country, was not paying fair wages and was being subsidised by taxpayers.

Those in favor of living wage ordinances primarily research the negative impacts of insufficient minimum wages. In a cross-comparison between minimum wage and living wage ordinances, there are profound psychological impacts to living wage implementations. Those in favor of living wage oriented policies assert that it is important to acknowledge the region-specific costs that is severely lacking in minimum wage measurements. This line of thinking argues that a living wage can both enhance engagement and performance if implemented.

Implementations

Australia

Living wage inquiry in Sydney, Australia. (1935)

In Australia, the 1907 Harvester Judgement ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community" to live in "frugal comfort estimated by current... standards," regardless of the employer's capacity to pay. Justice H. B. Higgins established a wage of 7/- (7 shillings) per day or 42/- per week as a 'fair and reasonable' minimum wage for unskilled workers.

Bangladesh

In Bangladesh, salaries are among the lowest in the world. During 2012 wages hovered around US$38 per month depending on the exchange rate. Studies by Professor Doug Miller during 2010 to 2012, has highlighted the evolving global trade practices in Towards Sustainable Labour Costing in UK Fashion Retail. This white paper published in 2013 by University of Manchester, appears to suggest that the competition among buying organisation has implications to low wages in countries such as Bangladesh. It has laid down a road map to achieve sustainable wages.

United Kingdom

Living wage
Select countries (2017)

Country	Hourly (LCU)	Hourly (US$)
New Zealand
National	NZ$20.50	$14.57
United States
National Los Angeles New York City San Francisco	$16.07 $18.95 $21.55 $23.79	$16.07 $18.95 $21.55 $23.79

Municipal regulation of wage levels began in some towns in the British Isles in 1524. National minimum wage law began with Winston Churchill's Trade Boards Act 1909, and the Wages Councils Act 1945 set minimum wage standards in many sectors of the economy. Wages Councils were abolished in 1993 and subsequently replaced with a single statutory national minimum wage by the National Minimum Wage Act 1998, which is still in force. The rates are reviewed each year by the country's Low Pay Commission. From 1 April 2016 the minimum wage has been paid as a mandatory National Living Wage for workers over 25. It is being phased in between 2016 and 2020 and is set at a significantly higher level than previous minimum wage rates. By 2020 it is expected to have risen to at least £9 per hour and represent a full-time annual pay equivalent to 60% of the median UK earnings.

The National Living Wage is nevertheless lower than the value of the Living Wage calculated by the Living Wage Foundation. Some organisations voluntarily pay a living wage to their staff, at a level somewhat higher than the statutory level. From September 2014 all NHS Wales staff have been paid a minimum of the "living wage" recommended by the Living Wage Commission. About 2,400 employees received an initial salary increase of up to £470 above the UK-wide Agenda for Change rates.

United States

As of 2006, U.S. cities with living wage laws include Santa Fe and Albuquerque in New Mexico; San Francisco, California; and Washington, D.C. The city of Chicago, Illinois also passed a living wage ordinance in 2006, but it was vetoed by Mayor Richard M. Daley. Living wage laws typically cover only businesses that receive state assistance or have contracts with the government.

In 2014, Wisconsin Service Employees International Union teamed up with public officials against legislation to eliminate local living wages. According to U.S. Department of Labor data, Wisconsin Jobs Now - a non-profit organization fighting inequality through higher wages - has received at least $2.5 million from SEIU organizations from 2011 to 2013.

Although these ordinances are recent, a number of studies have attempted to measure the impact of these policies on wages and employment. Researchers have had difficulty measuring the impact of these policies because it is difficult to isolate a control group for comparison. A notable study defined the control group as the subset of cities that attempted to pass a living wage law but were unsuccessful. This comparison indicates that living wages raise the average wage level in cities, however, it reduces the likelihood of employment for individuals in the bottom percentile of wage distribution.

Impact

Research shows that minimum wage laws and living wage legislation impact poverty differently: evidence demonstrates that living wage legislation reduces poverty. The parties impacted by minimum wage laws and living wage laws differ as living wage legislation generally applies to a more limited sector of the population. It is estimated that workers who qualify for the living wage legislation are currently between 1-2% of the bottom quartile of wage distribution. Real life implications to living wage legislation is important to address. Raising wages can decrease job opportunities for low wage workers as it cuts costs for profit seeking organizations and companies. The pool gets smaller despite an increase in wage rates.

Neumark and Adams, in their paper, "Do living wage ordinances reduce urban poverty?", state, "There is evidence that living wage ordinances modestly reduce the poverty rates in locations in which these ordinances are enacted. However, there is no evidence that state minimum wage laws do so."

A study carried out in Hamilton, Canada by Zeng and Honig indicated that living wage workers have higher affective commitment and lower turnover intention. Workers paid a living wage were more likely to support the organization they work for in various ways including: "protecting the organizations public image, helping colleagues solve problems, improving their skills and techniques, providing suggestions or advice to a management team, and caring about the organization." The authors interpret these finding through social exchange theory, which points out the mutual obligation employers and employees feel towards each other when employees perceive they are provided favorable treatment.

Living wage estimates

As of 2003, there are 122 living wage ordinances in American cities and an additional 75 under discussion. Article 23 of the United Nations Universal Declaration of Human Rights states that "Everyone who works has the right to just and favourable remuneration ensuring for himself and for his family an existence worthy of human dignity."

In addition to legislative acts, many corporations have adopted voluntary codes of conduct. The Sullivan Principles in South Africa are an example of a voluntary code of conduct that state that firms should compensate workers to at least cover their basic needs.

Living wage estimates vary considerably by area, and may be calculated in different ways. In a 2019 report, the U.S. advocacy group National Low Income Housing Coalition calculated the necessary full-time hourly wage to spend 30% of income on rental of a fair-market, 2-bedroom apartment. Estimates range from a high of $36.82/hr in Hawaii (where minimum wage is $10.10/hr) to $14.26 in Arkansas (the lowest state, raising its minimum from $9.25 to $11/hr) and $9.59/hr in Puerto Rico (where minimum wage is $7.25/hr).

Living wage movements

Living Wage Foundation

Workers protesting for a living wage in London, United Kingdom. (2017)

The Living Wage Campaign in the United Kingdom originated in London, where it was launched in 2001 by members of the community organisation London Citizens (now Citizens UK). It engaged in a series of Living Wage campaigns and in 2005 the Greater London Authority established the Living Wage Unit to calculate the London Living Wage, although the authority had no power to enforce it. The London Living Wage was developed in 2008 when Trust for London awarded a grant of over £1 million for campaigning, research and an employer accreditation scheme. The Living Wage campaign subsequently grew into a national movement with local campaigns across the UK. The Joseph Rowntree Foundation funded the Centre for Research in Social Policy (CRSP) at Loughborough University^[46] to calculate a UK-wide Minimum Income Standard (MIS) figure, an average across the whole of the UK independent of the higher living costs in London.

In 2011 the CRSP used the MIS as the basis for developing a standard model for setting the UK Living Wage outside of London. Citizens UK, a nationwide community organising institution developed out of London Citizens, launched the Living Wage Foundation and Living Wage Employer mark. Since 2011, the Living Wage Foundation has accredited thousands of employers that pay its proposed living wage. The living wage in London is calculated by GLA Economics and the CRSP calculates the out-of-London Living Wage. Their recommended hourly rates for 2015 are £9.40 for London and £8.25 for the rest of the UK. These rates are updated annually in November. In January 2016 the Living Wage Foundation set up a new Living Wage Commission to oversee the calculation of the Living Wage rates in the UK.

In 2012, research into the costs and benefits of a living wage in London was funded by the Trust for London and carried out by Queen Mary University of London. Further research was published in 2014 in a number of reports on the potential impact of raising the UK's statutory national minimum wage to the same level as the Living Wage Foundation's living wage recommendation. This included two reports funded by the Trust for London and carried out by the Institute for Public Policy Research (IPPR) and Resolution Foundation: "Beyond the Bottom Line" and "What Price a Living Wage?" Additionally, Landman Economics published "The Economic Impact of Extending the Living Wage to all Employees in the UK".

A 2014 report by the Living Wage Commission, chaired by Doctor John Sentamu, the Archbishop of York, recommended that the UK government should pay its own workers a "living wage", but that it should be voluntary for the private sector. Data published in late 2014 by New Policy Institute and Trust for London found 20% of employees in London were paid below the Living Wage Foundation's recommended living wage between 2011 and 2013. The proportion of residents paid less than this rate was highest in Newham (37%) and Brent (32%). Research by the Office for National Statistics in 2014 indicated that at that time the proportion of jobs outside London paying less than the living wage was 23%. The equivalent figure within London was 19%. Research by Loughborough University, commissioned by Trust for London, shows 4 in 10 Londoners cannot afford a decent standard of living - that is one that allows them to meet their basic needs and participate in society at a minimum level. This is significantly higher than the 30% that fall below the standard in the UK as a whole. This represents 3.5 million Londoners, an increase of 400,000 since 2010/11. The research highlights the need to improve incomes through better wages, mainly, the London Living Wage, to ensure more Londoners reach a decent standard of living.

Ed Miliband, the leader of the Labour Party in opposition from 2010 until 2015, supported a living wage and proposed tax breaks for employers who adopted it. The Labour Party has implemented a living wage in some local councils which it controls, such as in Birmingham and Cardiff councils. The Green Party also supports the introduction of a living wage, believing that the national minimum wage should be 60% of net national average earnings. Sinn Féin also supports the introduction of a living wage for Northern Ireland. Other supporters include The Guardian newspaper columnist Polly Toynbee, Church Action on Poverty, the Scottish Low Pay Unit, and Bloomsbury Fightback!.

Asia Floor Wage

Launched in 2009, Asia Floor Wage is a loose coalition of labour and other groups seeking to implement a Living Wage throughout Asia, with a particular focus on textile manufacturing. There are member associations in Bangladesh, Cambodia, Hong Kong S.A.R., India, Indonesia, Malaysia, Pakistan, the Philippines, Sri Lanka, Thailand and Turkey as well as supporters in Europe and North America. The campaign targets multinational employers who do not pay their developing world workers a living wage.

United States living wage campaigns

New York City

March for a living wage in Seattle, United States. (2014)

The proposed law will inform tax-payers of where their investment dollars go and will hold developers to more stringent employment standards. The proposed act will require developers who receive substantial tax-payer funded subsidies to pay employees a minimum living wage. The law is designed to raise quality of life and stimulate local economy. Specifically the proposed act will guarantee that workers in large developmental projects will receive a wage of at least $10.00 an hour. The living wage will get indexed so that it keeps up with cost of living increases. Furthermore, the act will require that employees who do not receive health insurance from their employer will receive an additional $1.50 an hour to subsidize their healthcare expenses. Workers employed at a subsidized development will also be entitled to the living wage guarantee.

Many city officials have opposed living wage requirements because they believe that they restrict business climate thus making cities less appealing to potential industries. Logistically cities must hire employees to administer the ordinance. Conversely advocates for the legislation have acknowledged that when wages aren't sufficient, low-wage workers are often forced to rely on public assistance in the form of food stamps or Medicaid.

James Parrott of the Fiscal Policy Institute testified during a May 2011 New York City Council meeting that real wages for low-wage workers in the city have declined substantially over the last 20 years, despite dramatic increases in average education levels. A report by the Fiscal Policy Institute indicated that business tax subsidies have grown two and a half times faster than overall New York City tax collections and asks why these public resources are invested in poverty-level jobs. Mr. Parrott testified that income inequality in New York City exceeds that of other large cities, with the highest-earning 1 percent receiving 44 percent of all income.

Miami-Dade County

The Community Coalition for a Living Wage (CCLW) was launched in 1997 in Miami, Florida, as a partnership between local anti-poverty and labor organizations Catalyst Miami, Legal Services of Greater Miami, and the South Florida AFL-CIO. The CCLW organized the successful campaign for the passage of a Miami-Dade County living wage ordinance in 1999, the first of its kind in the South. The ordinance requires Miami-Dade County and its contractors to pay all employees a living wage pegged to inflation: $12.63/hr with benefits, or $15 without (as of 2018).

Living wage protest and march in New York City (2015)

University of Virginia

In February 2012, a Living Wage Campaign at the University of Virginia released a series of demands to University administrators calling for a living wage policy at the University. These demands included a requirement that the University "explicitly address" the issue by 17 February. Although University President Teresa Sullivan did respond to the demands in a mass email sent to the University community shortly before the end of the day on 17 February, the Campaign criticized her response as "intentionally misleading" and vowed to take action.

On 18 February, the campaign announced that 12 students would begin a hunger strike to publicize the plight of low-paid workers.

Criticism

Criticisms against the implementation living wage laws have taken similar forms to those against minimum wage. Economically, both can be analyzed as a price floor for labor. A price floor, if above the equilibrium price and thus effective, necessarily leads to a "surplus". In the context of a labor market, this means that unemployment goes up as the number of employers willing to hire people at a "living wage" is below the number they would be willing to hire at the equilibrium wage price. As such, setting the minimum wage at a living wage has been criticized for possibly destroying jobs. For more information, see price floor.

A contention that often impedes the progression of a living wage ordinance has to do with the scope; it is controversial whether it should apply to an individual or an entire family as wages can be nuanced when there are multiple types of households among a state. Potential solutions to the complexity of a living wage ordinance include a “specific employer provision,” which seeks to evaluate the pros and cons to a living wage on a company to company basis. An argument In favor of this approach asserts that it can help bolster employee morale and increase social capital.

Critics have warned of not just an increase in unemployment but also price increases and a lack of entry level jobs due to ‘labor substitutions effects’. The voluntary undertaking of a living wage is criticized as impossible due to the competitive advantage other businesses in the same market would have over the one adopting a living wage. The economic argument would be that, ceteris paribus (all other things being equal), a company that paid its workers more than required by the market would be unable to compete with those that pay according to market rates. See competitive advantage for more information.

Another issue that has emerged is that living wages may be a less effective anti-poverty tool than other measures. Authors point to living wages as being only a limited way of addressing the problems of rising economic inequality, the increase of long-term low-wage jobs, and a decline of unions and legal protection for workers. Since living wage ordinances attempt to address the issue of a living wage, defined by some of its proponents as a family wage, rather than as an individual wage, many of the beneficiaries may already be in families that make substantially more than that necessary to provide an adequate standard of living. According to a survey of labor economists by the Employment Policies Institute in 2000, only 31% viewed living wages as a very or somewhat effective anti-poverty tool, while 98% viewed policies like the US earned income tax credit and general welfare grants in a similar vein. On the other hand, according to Zagros Madjd-Sadjadi, an economist with the State of California's Division of Labor Statistics and Research, the living wage may be seen by the public as preferable to other methods because it reinforces the "work ethic" and ensures that there is something of value produced, unlike welfare, that is often believed to be a pure cash "gift" from the public coffers."

The concept of a living wage based on its definition as a family wage has been criticized by some for emphasizing the role of men as breadwinners.

 

Universal basic income

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Universal_basic_income 

In 2013, eight million 5-cent coins (one per inhabitant) were dumped on the Bundesplatz, Bern to support the 2016 Swiss referendum for a basic income (which was rejected, 75%–25%).

Universal basic income (UBI), also called unconditional basic income, citizen's basic income, basic income guarantee, basic living stipend, guaranteed annual income, universal income security program or universal demogrant, is a sociopolitical financial transfer concept in which all citizens of a given population regularly receive a legally stipulated and equal financial grant paid by the government without a means test. A basic income can be implemented nationally, regionally, or locally. If the level is sufficient to meet a person's basic needs (i.e., at or above the poverty line), it is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income.

There are several welfare arrangements that can be viewed as related to basic income. Many countries have something like a basic income for children. Pension may be partly similar to basic income. There are also quasi-basic income systems, like Bolsa Familia in Brazil, which is conditional and concentrated on the poor, or the Thamarat Program in Sudan, which was introduced by the transitional government to ease the effects of the economic crisis inherited from the Bashir regime. The Alaska Permanent Fund is essentially a partial basic income, which averages $1,600 annually per resident (in 2019 currency). The negative income tax (NIT) can be viewed as a basic income in which citizens receive less and less money until this effect is reversed the more a person earns.

Several political discussions are related to the basic income debate, including those regarding automation, artificial intelligence (AI), and the future of the necessity of work. A key issue in these debates is whether automation and AI will significantly reduce the number of available jobs and whether a basic income could help prevent or alleviate such problems by allowing everyone to benefit from a society's wealth, as well as whether a UBI could be a stepping stone to a resource-based or post-scarcity economy. The economic impact of the COVID-19 pandemic prompted some countries to send direct payments to citizens.

History

Antiquity

In an early example, Trajan, emperor of Rome from 98–117 AD, personally gave 650 denarii (equivalent to perhaps US$260 in 2002) to all common Roman citizens who applied.

16th to 18th century

In his Utopia (1516), English statesman and philosopher Sir Thomas More depicts a society in which every person receives a guaranteed income. Spanish scholar Johannes Ludovicus Vives (1492–1540) proposed that the municipal government should be responsible for securing a subsistence minimum to all its residents "not on the grounds of justice but for the sake of a more effective exercise of morally required charity." Vives also argued that to qualify for poor relief, the recipient must "deserve the help he or she gets by proving his or her willingness to work." In the late 18th century, English Radical Thomas Spence and English-born American philosopher Thomas Paine both had ideas in the same direction.

Paine authored Common Sense (1776) and The American Crisis (1776–1783), the two most influential pamphlets at the start of the American Revolution. He is also the author of Agrarian Justice, published in 1797. In it, he proposed concrete reforms to abolish poverty. In particular, he proposed a universal social insurance system comprising old-age pensions and disability support and universal stakeholder grants for young adults, funded by a 10% inheritance tax focused on land.

Early 20th century

Around 1920, support for basic income started growing, primarily in England.

Bertrand Russell (1872–1970) argued for a new social model that combined the advantages of socialism and anarchism, and that basic income should be a vital component in that new society.

Dennis and Mabel Milner, a Quaker married couple of the Labour Party, published a short pamphlet entitled "Scheme for a State Bonus" (1918) that argued for the "introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom." They considered it a moral right for everyone to have the means to subsistence, and thus it should not be conditional on work or willingness to work.

C. H. Douglas was an engineer who became concerned that most British citizens could not afford to buy the goods that were produced, despite the rising productivity in British industry. His solution to this paradox was a new social system he called social credit, a combination of monetary reform and basic income.

In 1944 and 1945, the Beveridge Committee, led by the British economist William Beveridge, developed a proposal for a comprehensive new welfare system of social insurance, means-tested benefits, and unconditional allowances for children. Committee member Lady Rhys-Williams argued that the incomes for adults should be more like a basic income. She was also the first to develop the negative income tax model. Her son Brandon Rhys Williams proposed a basic income to a parliamentary committee in 1982, and soon after that in 1984, the Basic Income Research Group, now the Citizen's Basic Income Trust, began to conduct and disseminate research on basic income.

Late 20th century

In his 1964 State of the Union address, U.S. President Lyndon B. Johnson introduced legislation to fight the "war on poverty". Johnson believed in expanding the federal government's roles in education and health care as poverty reduction strategies. In this political climate the idea of a guaranteed income for every American also took root. Notably, a document, signed by 1200 economists, called for a guaranteed income for every American. Six ambitious basic income experiments started up on the related concept of negative income tax. Succeeding President Richard Nixon explained its purpose as "to provide both a safety net for the poor and a financial incentive for welfare recipients to work." Congress eventually approved a guaranteed minimum income for the elderly and the disabled.

In the mid-1970s the main competitor to basic income and negative income tax, the Earned income tax credit (EITC), or its advocates, won over enough legislators for the US Congress to pass laws on that policy. In 1986, the Basic Income European Network, later renamed to Basic Income Earth Network (BIEN), was founded, with academic conferences every second year. Other advocates included the green political movement, as well as activists and some groups of unemployed people.

In the latter part of the 20th century, discussions were held around automatization and jobless growth, the possibility of combining economic growth with ecological sustainable development, and how to reform the welfare state bureaucracy. Basic income was interwoven in these and many other debates. During the BIEN academic conferences there were papers about basic income from a wide variety of perspectives, including economics, sociology, and human right approaches.

21st century

In recent years the idea has come to the forefront more than before. The Swiss referendum about basic income in Switzerland 2016 was covered in media worldwide, despite its rejection. Famous business people like Mark Zuckerberg and Elon Musk have lent their support, as have high-profile politicians like Jeremy Corbyn.

In the US Democratic Party primaries, a newcomer, Andrew Yang, touted basic income as his core policy. His policy, referred to as a "Freedom Dividend", would have provided American citizens US$1000 a month.

Response to COVID-19

As a response to the COVID-19 pandemic and related economic impact, basic income and similar proposals such as helicopter money and cash transfers were increasingly discussed across the world. Most countries have implemented forms of partial unemployment schemes, which effectively subsidized workers' incomes without work requirement. Some countries like the United States, Spain, Hong Kong and Japan introduced direct cash transfers to citizens.

In Europe, a petition calling for an "emergency basic income" gathered more than 200,000 signatures, and polls suggested widespread support in public opinion for it. Unlike the various stimulus packages of the US administration, the EU's stimulus plans did not include any form of income-support policies.

Differences from guaranteed minimum income

Basic income means the provision of identical payments from a government to all of its citizens. Guaranteed minimum income (GMI) is a system of payments (possibly only one) by a government to citizens who fail to meet one or more means tests. While most modern countries have some form of GMI, a basic income is rare.

Basic income vs negative income tax

Two ways of looking at basic income when combined with a flat income tax, both of which result in the same net income (orange line). 1. (red) stipend with conventional tax for income above the stipend. 2. (blue) Negative tax for low-income people and conventional tax for high-income people.

The diagram shows a basic income/negative tax system combined with flat income tax (the same percentage in tax for every income level).

Y is here the pre-tax salary given by the employer and y' is the net income.

Negative income tax

For low earnings there is no income tax in the negative income tax system. They receive money, in the form of a negative income tax, but they don't pay any tax. Then, as their labour income increases, this benefit, this money from the state, gradually decreases. That decrease is to be seen as a mechanism for the poor, instead of the poor paying tax.

Basic income

That is however not the case in the corresponding basic income system in the diagram. There everyone typically pays income taxes. But on the other hand everyone also gets the same amount in basic income.

But the net income is the same

But, as the orange line in the diagram shows, the net income is anyway the same. No matter how much or how little one earns, the amount of money one gets in one's pocket is the same, regardless of which of these two systems is used.

Basic income and negative income tax are generally seen to be similar in economic net effects, but there are some differences:

• Psychological. Philip Harvey accepts that "both systems would have the same redistributive effect and tax earned income at the same marginal rate" but does not agree that "the two systems would be perceived by taxpayers as costing the same".
• Tax profile. Tony Atkinson made a distinction based on whether the tax profile was flat (for basic income) or variable (for NIT).
• Timing. Philippe van Parijs states that "the economic equivalence between the two programs should not hide that the fact that they have different effects on recipients because of the different timing of payments: ex-ante in Basic Income, ex-post in Negative Income Tax".

When the level of the basic income is high enough for people to live purely from that income, it is sometimes referred to as a "full basic income". If not, it is often referred to as a "partial basic income". No country has yet introduced either to all its citizens.

Perspectives and arguments

Main themes

Basic income and automation

There is a prevailing opinion that we are in an era of technological unemployment – that technology is increasingly making skilled workers obsolete.

Prof. Mark MacCarthy (2014)

One central rationale for basic income is the belief that automation and robotisation could lead to a world with fewer paid jobs. U.S. presidential candidate and nonprofit founder Andrew Yang has stated that automation caused the loss of 4 million manufacturing jobs and advocated for a UBI (which he calls a Freedom Dividend) of $1,000/month rather than worker retraining programs. Yang has stated that he is heavily influenced by Martin Ford. Ford, in his turn, believes that the emerging technologies will fail to deliver a lot of employment; on the contrary, because the new industries will "rarely, if ever, be highly labor-intensive". Similar ideas have been debated many times before in history—that "the machines will take the jobs"—so the argument is not new. But what is quite new is the existence of several academic studies that do indeed forecast a future with substantially less employment, in the decades to come. Additionally, President Barack Obama has stated that he believes that the growth of artificial intelligence will lead to increased discussion around the idea of "unconditional free money for everyone".

Basic income and economics

Some proponents of UBI have argued that basic income could increase economic growth because it would sustain people while they invest in education to get higher-skilled and well-paid jobs. However, there is also a discussion of basic income within the degrowth movement, which argues against economic growth.

The cost of basic income is one of the biggest questions in the public debate as well as in the research. But the cost depends on many things. It first and foremost depends on the level of the basic income as such, and it also depends on many technical points regarding exactly how it is constructed. According to Karl Widerquist it also depends heavily on what one means with the concept of "cost".

Basic income and work

Many critics of basic income argue that people in general will work less, which in turn means less tax revenue and less money for the state and local governments. Although it is difficult to know for sure what will happen if a whole country introduces basic income, there are nevertheless some studies who have attempted to look at this question.

• In negative income tax experiments in the United States in the 1970 there was a five percent decline in the hours worked. The work reduction was largest for second earners in two-earner households and weakest for primary earners. The reduction in hours was higher when the benefit was higher.
• In the Mincome experiment in rural Dauphin, Manitoba, also in the 1970s, there were slight reductions in hours worked during the experiment. However, the only two groups who worked significantly less were new mothers, and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling.
• A study from 2017 showed no evidence that people worked less because of the Iranian subsidy reform (a basic income-reform).

Regarding the question of basic income vs jobs there is also the aspect of so-called welfare traps. Proponents of basic income often argue that with a basic income, unattractive jobs would necessarily have to be better paid and their working conditions improved, so that people still do them without need, reducing these traps.

Philosophy and morality

By definition, universal basic income does not make a distinction between "deserving" and "undeserving" individuals when making payments. Opponents argue that this lack of discrimination is unfair: "Those who genuinely choose idleness or unproductive activities cannot expect those who have committed to doing productive work to subsidize their livelihood. Responsibility is central to fairness." Proponents argue that this lack of discrimination is a way to reduce social stigma.

Basic income, health and poverty

The first comprehensive systematic review of the health impact of basic income (or rather unconditional cash transfers in general) in low- and middle-income countries, a study which included 21 studies of which 16 were randomized controlled trials, found a clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers, according to the study, may also improve food security and dietary diversity. Children in recipient families are also more likely to attend school and the cash transfers may increase money spent on health care.

The Canadian Medical Association passed a motion in 2015 in clear support of basic income and for basic income trials in Canada.

Academics on basic income

Economists

• James Meade advocated for a social dividend scheme funded by publicly owned productive assets.
• Bertrand Russell argued for a basic income alongside public ownership as a means of shortening the average working day and achieving full employment.
• Guy Standing has proposed financing a social dividend from a democratically accountable sovereign wealth fund built up primarily from the proceeds of a tax on rentier income derived from ownership or control of assets—physical, financial, and intellectual. Standing also generally argues that basic income would be a much simpler and more transparent welfare system.
• Douglas Rushkoff, a professor of Media Theory and Digital Economics at the City University of New York, has stated that he sees basic income as a sophisticated way for corporations to get richer at the expense of public money.
• Milton Friedman, world famous economist, supported UBI by reasoning that it would help to reduce poverty. He said: "The virtue of [a negative income tax] is precisely that it treats everyone the same way. [...] [T]here's none of this unfortunate discrimination among people."
• Eric Maskin has stated that "a minimum income makes sense, but not at the cost of eliminating Social Security and Medicare".
  
• Simeon Djankov, professor at the London School of Economics, argues the costs of a generous system are prohibitive.
• Ailsa McKay, a Scottish economist, has argued that basic income is a way to promote gender equality. She has specifically argued that "social policy reform should take account of all gender inequalities and not just those relating to the traditional labor market" and that "the citizens' basic income model can be a tool for promoting gender-neutral social citizenship rights".

Other academics

• Erik Olin Wright argues that basic income will empower labor by giving the workers greater bargaining power.
• Harry Shutt proposed basic income and other measures to make most or all businesses collective rather than private. These measures would create a post-capitalist economic system.
• Philippe van Parijs, a Belgian philosopher, has argued that basic income at the highest sustainable level is needed to support real freedom, or the freedom to do whatever one "might want to do".
• Karl Widerquist and others have proposed a theory of freedom in which basic income is needed to protect the power to refuse work.
• Frances Fox Piven argues that an income guarantee would benefit all workers by liberating them from the anxiety that results from the "tyranny of wage slavery" and provide opportunities for people to pursue different occupations and develop untapped potentials for creativity.
• André Gorz, a French sociologist, saw basic income as a necessary adaptation to the increasing automation of work, yet basic income also enables workers to overcome alienation in work and life and to increase their amount of leisure time.

Pilot programs and experiments

Omitara, one of the two poor villages in Namibia where a local basic income was tested in 2008–2009

Since the 1960s, but in particular since 2010, several pilot programs and experiments on basic income have been conducted. Some examples include:

1960s−1970s

• Experiments with negative income tax in United States and Canada in the 1960s and 1970s.
• The province of Manitoba, Canada experimented with Mincome, a basic guaranteed income, in the 1970s. In the town of Dauphin, Manitoba, labor only decreased by 13%, much less than expected.

2000−2009

• The basic income grant in Namibia, launched in 2008 and ended in 2009.
• An independent pilot implemented in São Paulo, Brazil launched in 2009.

2010−2019

• Basic income trials run in 2011-2012 in several villages in India, whose government has proposed a guaranteed basic income for all citizens. It was found that basic income in the region raised the education rate of young people by 25%.
• Iran introduced a national basic income program in autumn 2010. It is paid to all citizens and replaces the gasoline subsidies, electricity and some food products, that the country applied for years to reduce inequalities and poverty. The sum corresponded in 2012 to approximately US$40 per person per month, US$480 per year for a single person and US$2,300 for a family of five people.
• In Spain, the ingreso mínimo vital, the income guarantee system, is an economic benefit guaranteed by the social security in Spain, but in 2016 was considered in need of reform.
• The GiveDirectly experiment in a disadvantaged village of Nairobi, Kenya, the longest-running basic income pilot as of November 2017, which is set to run for 12 years.
• A project called Eight in a village in Fort Portal, Uganda, that a nonprofit organization launched in January 2017, which provides income for 56 adults and 88 children through mobile money.
• A two-year pilot the Finnish government began in January 2017 which involved 2,000 subjects. In April 2018, the Finnish government rejected a request for funds to extend and expand the program from Kela (Finland's social security agency).
• An experiment in the city of Utrecht in the Netherlands, launched in early 2017, that is testing different rates of aid.
• A three-year basic income pilot that the Ontario provincial government, Canada, launched in the cities of Hamilton, Thunder Bay and Lindsay in July 2017. Although called basic income, it was only made available to those with a low income and funding would be removed if they obtained employment, making it more related to the current welfare system than true basic income. The pilot project was canceled on 31 July 2018 by the newly elected Progressive Conservative government under Ontario Premier Doug Ford.
• In Israel, in 2018 a non-profit initiative GoodDollar started with an objective to build a global economic framework for providing universal, sustainable and scalable basic income through new digital asset technology of blockchain. The non-profit aims to launch a peer-to-peer money transfer network in which money can be distributed to those most in need, regardless of their location, based on the principles of UBI. The project raised US$1 million from eToro.
• The Rythu Bandhu scheme is a welfare scheme started in the state of Telangana, India, in May 2018, aimed at helping farmers. Each farm owner receives 4,000 INR per acre twice a year for rabi and kharif harvests. To finance the program a budget allocation of 120 billion INR (US$1.6 million as of June 2020) was made in the 2018–2019 state budget.

2020−present

• Swiss non-profit Social Income started paying out basic incomes in the form of mobile money in 2020 to people in need in Sierra Leone. Contributions finance the international initiative from people worldwide, who donate 1% of their monthly paychecks.
• In May 2020 Spain introduced minimum basic income, reaching about 2% of the population, in response to COVID-19 in order to "fight a spike in poverty due to the coronavirus pandemic". It is expected to cost state coffers three billion euros ($3.5 billion) a year."
• In August 2020, a project in Germany started that gives a 1,200 Euros monthly basic income in a lottery system to citizens who apply online. The crowdsourced project will last three years and be compared against 1,380 people who do not receive basic income.
• In October 2020, HudsonUP was launched in Hudson, New York, by The Spark of Hudson and Humanity Forward Foundation to give $500 monthly basic income to 25 residents. It will last five years and be compared against 50 people who are not receiving basic income.
• In May 2021 the government of Wales, which has devolved powers in matters of Social Welfare within the UK, announced the trialling of a universal basic income scheme to "see whether the promises that basic income holds out are genuinely delivered".

Examples of payments with similarities

Alaska Permanent Fund

The Permanent Fund of Alaska in the United States provides a kind of yearly basic income based on the oil and gas revenues of the state to nearly all state residents. More precisely the fund resembles a sovereign wealth fund, investing resource revenues into bonds, stocks, and other conservative investment options with the intent to generate renewable revenue for future generations. The fund has had a noticeable yet diminishing effect on reducing poverty among rural Alaska Indigenous people, notably in the elderly population. However, the payment is not high enough to cover basic expenses (it has never exceeded $2,100) and is not a fixed, guaranteed amount. For these reasons, it is not considered a basic income.

Macau

Macau's Wealth Partaking Scheme provides some annual basic income to permanent residents, funded by revenues from the city's casinos. However, the amount disbursed is not sufficient to cover basic living expenses, so it is not considered a basic income.

Quasi-UBI programs

• Pension: A payment which in some countries is guaranteed to all citizens above a certain age. The difference from true basic income is that it is restricted to people over a certain age.
• Child benefit: A program similar to pensions but restricted to parents of children, usually allocated based on the number of children.
• Conditional cash transfer: A regular payment given to families, but only to the poor. It is usually dependent on basic conditions such as sending their children to school or having them vaccinated. Programs include Bolsa Família in Brazil and Programa Prospera in Mexico.
• Guaranteed minimum income differs from a basic income in that it is restricted to those in search of work and possibly other restrictions, such as savings being below a certain level. Example programs are unemployment benefits in the UK, the revenu de solidarité active in France and citizens' income in Italy.

Bolsa Familia

Bolsa Família is a large social welfare program in Brazil that provides money to many low-income families in the country. The system is related to basic income, but has more conditions, like asking the recipients to keep their children in school until graduation. As of March 2020, the program covers 13.8 million families, and pays an average of $34 per month, in a country where the minimum wage is $190 per month.

Petitions, polls and referendums

• 2008: An official petition for basic income was launched in Germany by Susanne Wiest. The petition was accepted, and Susanne Wiest was invited for a hearing at the German parliament's Commission of Petitions. After the hearing, the petition was closed as "unrealizable."
• 2013–2014: A European Citizens' Initiative collected 280,000 signatures demanding that the European Commission study the concept of an unconditional basic income.
• 2015: A citizen's initiative in Spain received 185,000 signatures, short of the required number to mandate that the Spanish parliament discuss the proposal.
• 2016: The world's first universal basic income referendum in Switzerland on 5 June 2016 was rejected with a 76.9% majority. Also in 2016, a poll showed that 58% of the EU's population is aware of basic income, and 65% would vote in favour of the idea.
• 2017: Politico/Morning Consult asked 1,994 Americans about their opinions on several political issues including national basic income; 43% either "strongly supported" or "somewhat supported" the idea.
• 2019: In a September poll conducted by The Hill and HarrisX, 49% of U.S. registered voters support basic income, up 6% from a similar survey conducted six months earlier.
• 2019: In November, an Austrian initiative received approximately 70,000 signatures but failed to reach the 100,000 signatures needed for a parliamentary discussion. The initiative was started by Peter Hofer. His proposal suggested a basic income of €1,200 for every Austrian citizen.
• 2020: A study by Oxford University found that 71% of Europeans are now in favour of basic income. The study was conducted in March, with 12,000 respondents and in 27 EU-member states and the UK. A YouGov-poll likewise found a majority for universal basic income in United Kingdom and a poll by University of Chicago found that 51% of Americans aged 18–36 support a monthly basic income of $1,000. In the UK there was also a letter, signed by over 170 MPs and Lords from multiple political parties, calling on the government to introduce a universal basic income during the COVID-19 pandemic.
• 2020: A Pew Research Center Survey, conducted online in August 2020, of 11,000 U.S. adults found that a majority (54%) oppose the federal government providing a guaranteed income of $1,000 per month to all adults, while 45% support it.
• By mid-2021, a Change.org petition calling for monthly stimulus checks in the amount of $2,000 per adult and $1,000 per child for the remainder of the COVID-19 pandemic had received almost 3 million signatures.