Why Basic Income Is Good For Business

Jim Pugh
Basic Income
Published in
4 min readJul 5, 2016


Over the last few years, interest in universal basic income has grown considerably in the United States. The idea of providing all Americans with an income floor sufficient to cover their basic needs is proving attractive to many concerned with the changing nature of work, as well as those who would like to combat rising inequality and poverty.

Enacting an American basic income is an incredibly expensive proposition, however — an income level of $12,000 per year for all 240 million adults in the US would cost $2.9 trillion, which is well over half as large as the entire federal budget of the country. For this reason, universal basic income doesn’t seem like something that businesses would be likely to get behind, particularly if it were partially funded by increased corporate taxation.

But contrary to how it first appears, implementing basic income could be hugely helpful to business in the United States.

Saving the Middle Class

Inequality in the US has risen sharply in recent years, and the trend shows no sign of slowing. The result is a shrinking middle class, with more and more of the population having less financial resources than in the past.

If you’re a business that depends on a large consumer market, that’s a problem. The middle class spend a much higher percentage of their income on food, shopping, and pretty much every other consumption category than the rich do. With wealth getting concentrated amongst a smaller group of individuals, businesses in sectors like retail and foodservice are going to be faced with a shrinking set of potential customers.

With a universal basic income, you guarantee that everyone starts above the poverty line — any income earned on top of that can be used for improved living conditions. Even if jobs aren’t paying very much, when complemented with a basic income, people can land solidly back into a middle class existence. And businesses can count on their consumer base sticking around in the future.

Stimulating the Economy

When evaluating the merits of any government spending program, it’s important to consider how much stimulus the program will provide to the economy, which will affect the rate of future economic growth.

As it turns out, simply giving people money is one of the most powerful forms of economic stimulus available. In a comparison of the stimulus effects of different government spending by the Economic Policy Institute, food stamps and unemployment insurance topped the list, with each dollar spent yielding an effective boost to the economy of more than $1.60. By comparison, tax cuts for individuals provided a boost of only $1.03, and tax cuts for businesses yielded a measly boost of $0.30.

The monthly direct cash payments from a universal basic income would provide a massive level of on-going stimulus to the US economy, which should mean a substantial increase in economic growth over time.

Encouraging Innovation

One of the key attractive features of universal basic income is the security it provides — since people know that they’ll always have that income floor, they’ll be more comfortable taking financial risks. And a great example of such a risk is starting your own business.

Last year, venture capitalist Roy Bahat wrote about how basic income could unlock innovation in the United States, with those passionate about creating new technology being freed up to pursue that passion, rather than being constrained by having to hold down a crappy job to pay their bills. If you’re getting enough income to cover your basic needs, you can take the time needed to figure out whether your business idea has merit.

More new businesses means more innovation, and more innovation means more potential for economic growth.

A Track Record of Success

While we don’t yet have examples to look at in the United States, studies and experiments of universal basic income have been conducted in various countries around the world. We can observe the outcomes from these cases to get a sense for what effects basic income might have here in the US.

Interest in enacting universal basic income is growing rapidly, both in the United States and around the world. If business leaders are smart, they’ll get behind this idea — because basic income is exactly what we need to ensure that the American economy, and the American middle class, are able to grow.



Jim Pugh
Basic Income

Co-Director of Universal Income Project (@UIProj) and CEO of @ShareProgress. Former CTO of @RebuildDream and Analytics & Development Director for @BarackObama.