The Pros and Cons of a Universal Basic Income Level

As the globe’s economy slowly declines, many citizens continue to struggle with inflation and the level of income they are receiving from their place of work. In 2020–2021, this was the shared story between millions of Americans who struggled to cope with the heightened effects of the COVID-19 pandemic and the increase in the price of day-to-day household commodities.

Why implement a universal basic income level?

As the economy continues to improve and rebuild itself, following the effects of the COVID-19 pandemic, the price of many commodities remains at high prices due to conflicts and the decrease in real GDP across the globe. Items such as gasoline, olive oil, and eggs continue to be highly priced across the globe and are synonymous with the struggle many citizens face to this day. In fact, it was seen that U.S. wages increased by roughly 4.6–5.7% while the inflation rate is at 9.6%. Despite the growth in one’s wages, the inflation rate continues to limit much of the spending ability consumers have globally. On a global scale, inflation continues to remain at 6.9% while commodities continue to rise in prices due to scarcity. The use of universal basic income has now become a popular solution as the real GDP only recovered by 0.8%. As a result, millions of individuals are being put under question due to the combined effects of inflation and the lack of business interest directed toward the workforce.

What does a universal basic income level entail?

A universal basic income level, known as UBI is a program oriented on a global scale to support low-income individuals with their needs and includes instituting a monthly support income of 1,000$. Universal basic income involves every single citizen receiving a designated amount of money on a monthly basis, depending on where they reside. The amount provided to the consumer can constantly change, depending on the state of the economy and the level of inflation/deflation in the overall global economy. Additionally, a UBI is designed to limit poverty on a global scale and promote the overall economy as well. However, despite its potential, there are many drawbacks to the idea.

The pros of a universal basic income level:

• Reduced poverty: A UBI will ensure that poverty is significantly decreased on a global scale. Citizens will now be able to receive a monthly set of designated income to support themselves and their families. The money received from a UBI can be directed to be of use at the grocery market and to afford day-to-day commodity items. Additionally, this can result in a global decrease in the level of poverty in third-world countries and in the United States as well. Following the COVID-19 pandemic, the United States realized that its economy was fragile as the unemployment rate jumped to nearly 14.8%, leaving thousands of families without work and without the ability to support their children and loved ones. Additionally, the global unemployment rate remains at 5.3% leaving 415 million individuals without work.
• An increase in overall economy and GDP: By lowering the overall level of poverty across the globe, the real GDP is expected to increase and consumers will have an expected greater desire to continue working, knowing that they are being compensated fairly. The desire to work will increase as citizens realize that working will enable their spending ability to increase along with the monthly expected UBI. Therefore, there will be more money spent back into the economy which will support businesses and the overall government of the country. Together, these businesses and countries will gain an increased level of trade, synonymous with the growth of the workforce as individuals continue to receive funding and work.

The cons of a universal basic income:

• Increased business costs: By implementing UBI, businesses will be forced to pay their employees an increased wage monthly, which will affect the level of money they make on a yearly basis. This can particularly prove to be harmful to small businesses that cannot afford to pay their employees a monthly designated cost. Additionally, small businesses make up nearly 99% of the businesses present in the United States and this number could decrease as a result of UBI. A lessened number of businesses could mean that consumers have less to choose from and that cities' and towns' economies may struggle heavily. This could in return heavily affect the U.S. economy and force investors to invest in locations in which there are no UBI systems in place. Therefore, unemployment will potentially remain at the same level, forcing businesses to shut their doors and lowering the total amount of jobs made available to the public. Therefore, the stress of paying for the UBI will be placed upon the government and will result in an increase in taxes.

Conclusion

While UBI has many potential upsides and can help individuals in poverty succeed and pay for basic goods, it also faces many potential consequences for the economy and small businesses. It is important to note that while poverty remains a large issue on a global scale, enacting UBI may result in the unnecessary closure of businesses and affect business owners. Therefore, if worked upon in Congress and with economists across the globe, UBI may still have the potential to succeed if enacted correctly.