Shielding Victims from the Automation Monster: Universal Basic Income is NOT the Solution

Picture Credit: Thameen Khan from boomi

Over the years, we have had many technological advancements. Although these advancements are beneficial, they come with a steep price: the jobs of many. Blue-collar jobs, especially those that involve repetitive work, can be easily taken over by new automation advances, causing the middle to lower classes to view these advances as a bane over a boon. Unfortunately, this automation monster will only continue to consume the jobs of its victims; experts find that 36 million Americans have jobs highly susceptible to the automation monster [1]. They further that 20 million manufacturing jobs will be lost to automation by 2030 [2].

The automation monster tends to take over jobs that are repetitive in nature and require little to no impromptu thinking. For example, people used to hand-make goods produced in factories. Now, most factories are run by robots doing all the manual labor, with just a few workers to oversee the robots. As more jobs are being taken over by automation, many experts suggest a Universal Basic Income (UBI) policy would help the jobless.

A UBI system would provide every citizen in the country (in this article, I’ll use the United States as an example) a guaranteed sum of money, usually around $1000 per month. The jobless can then use this money to survive. Although the idea of Universal Basic Income may sound like a viable solution, diving into the deeper waters reveals a few key issues:

1. Cost Concern: Paying every citizen in the United States $1000 every month would cost the government trillions. Andrew Yang, 2020 Presidential Race Drop-out, estimated that paying every US citizen $12,000 per year would cost the government $2.8 trillion annually [3] — that’s more than half the US federal budget! Although the government would likely use taxes to help fund the plan, taxes won’t be nearly enough to fund such a large program, forcing the US government to deficit spend. As I explained in my previous article, The Danger of Increasing Government Debt and a Potential Solution, deficit spending in large chunks devastates US businesses because it draws investors into buying treasury bonds rather than investing in company stocks. Already devastated from the COVID-19 pandemic, businesses have no more room for loss.
2. Bad Budgeting: A UBI system comes with no checks on how citizens are spending the money they receive. Shocking statistics reveal that one in every eight US adults struggled with alcohol and drug abuse disorders in 2017 [4]. Providing these people with “free” money could cause many of them to waste the money on drugs/alcohol, only fueling their addiction and worsening their health. Non-addicts may not budget the money properly, spending more on a “want” rather than a “need.” Because it is so hard to know what these people will use the money on and how much of it is actually benefiting them, the money won’t be used to its full potential. The money could be used in programs that can help these people more than a UBI would (as explained below).
3. Faulty Funding: Despite $12,000 being a relatively large sum for many, it’s still not enough for many to live on. For example, rent in the United States soars at $1,200 monthly just for a one-bedroom room [5]. The $1,000 provided by a UBI isn’t nearly enough to cover necessities needed by the people with no source of income.
4. Minimizing Motivation: By providing citizens with “free” money, people won’t be motivated to work. In fact, 80% of Americans dislike their job [6]. A UBI tells these people there’s no need to work if they are already receiving money. Although a UBI isn’t enough to cover necessities, the people surviving on income at the same rate as a UBI may not feel the need to work anymore. Disincentivizing people from working is disastrous to the economy as it could stagnate economic growth.

Fortunately, there is a way to shield victims from the automation monster. America’s Means-Tested Welfare system provides citizens with benefits such as food stamps and affordable housing based on their income level. Those with low income have access to benefits provided by this system. Despite having a low budget, the Means-Tested Welfare system reduced poverty from 26% in 1967 to 14.4% in 2017 [7]. Going back to the rent example, Section 18 of the program states that families are only required to pay 23.8% of their income towards rent, and the government will cover the rest of the rent expense [8]. The program also provides citizens with educational programs, helping them receive a higher-paying job.

The only reason the Means-Tested Welfare Program system hasn’t been able to help the jobless is because it has a restriction of only helping those with a job, leaving the automation monster’s victims without aid. If the government changes this requirement to allowing those without a job into the program, automation will take less of a toll on the economy.

1: Press, A. (2019, January 24). Over 30 million U.S. workers will lose their jobs because of AI. Retrieved December 21, 2020, from https://www.marketwatch.com/story/ai-is-set-to-replace-36-million-us-workers-2019-01-24

2: Dautovic. (2020, June 30). Automation & Job Loss Statistics — 2020 Overview. Retrieved December 21, 2020, from https://fortunly.com/statistics/automation-job-loss-statistics

3: Clifford, C. (2020, January 15). This free cash plan would pay you $1,320 per month and wouldn’t cost the government a cent. Retrieved December 21, 2020, from https://www.cnbc.com/2020/01/14/budget-neutral-universal-basic-income-plan-would-pay-1320-per-month.html

4: Thomas, S. (n.d.). Addiction Statistics: Drug & Substance Abuse Statistics. Retrieved December 21, 2020, from https://americanaddictioncenters.org/rehab-guide/addiction-statistics

5: Gerstein, N. (2020, December 04). Zumper National Rent Report: December 2020. Retrieved December 21, 2020, from https://www.zumper.com/blog/rental-price-data/

6: Newswire, I. (2019, February 22). 80 percent of Americans don’t like their jobs. Retrieved December 21, 2020, from https://www.wmar2news.com/lifestyle/80-percent-of-americans-dont-like-their-jobs

7: Law, L. (2020, October 13). Important Welfare Statistics for 2020. Retrieved December 21, 2020, from https://www.lexingtonlaw.com/blog/finance/welfare-statistics.html

8: H. (n.d.). Housing Choice Voucher Program Section 8: HUD.gov / U.S. Department of Housing and Urban Development (HUD). Retrieved December 21, 2020, from https://www.hud.gov/topics/housing_choice_voucher_program_section_8