Universal Basic Income Or Federally Guaranteed Jobs?

Neil Mehta and Ella Bear

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Ahead of the 2020 democratic nomination, candidates Bernie Sanders and Andrew Yang have both proposed unique solutions to unemployment and job automation—a federal job guarantee and a universal basic income, respectively. As the November 20th Democratic debate approaches, we examine the benefits and downsides to the candidates’ proposals: 

 

Universal Basic Income

UBI, or Universal Basic Income, is presidential candidate Andrew Yang’s flagship proposal, which he calls the “Freedom Dividend.” The Freedom Dividend provides $1,000 for all Americans monthly as a right of citizenship. The Freedom Dividend would be an alternative for those currently using welfare programs and food stamps but would stack with Social Security benefits. Yang plans on paying for the UBI primarily using a 10% VAT (Value-Added Tax), implementing a carbon tax on corporations, the overlap with welfare and food stamp programs, decreased incarceration and homelessness costs due to the UBI’s effects on the community, and new revenue from economic growth.

Proponents of the Freedom Dividend argue that it is more effective than government retraining programs to adjust to nationwide job automation, would provide less than needed to survive without another source of income (therefore not de-incentivizing work), and would encourage the revitalization of communities with lower costs of living. 

However, opponents of the Freedom Dividend argue that the program would be unsustainable and unfeasible to implement, and would be especially costly to American taxpayers.

 

Federally Guaranteed Jobs

Federally Guaranteed Jobs (FGJ) is presidential candidate Bernie Sanders’ proposal to solve the problems of unemployment and inflation. The premise is that everyone in the country will be guaranteed a job from the United States government if they want one, with benefits such as a minimum wage of $15 an hour as well as health insurance, paid sick leave/vacation and retirement plans.

Proponents of federally guaranteed jobs such as Stephanie Kelton, a current professor at Stony Brook University and former advisor to Bernie Sanders, argue that, “bringing millions more into guaranteed federal jobs would lead to more buying power” and contend that, “it’s clear the economy as a whole does far better, and that means the private sector does far better.” Furthermore, it could increase employment rates by 2 to 4 percent a report by the Brookings Institution’s Hamilton Project found. Another positive is that it may compel private companies to raise their wages, to compete for employees. 

However, opponents of federally guaranteed jobs argue that not all unemployed people would want these jobs. They argue that people who are used to higher paid jobs in the private sector may not want to go down to a $15 per hour wage job. Furthermore, they claim that there could be a stigma attached to the federal jobs program, which could create issues for people looking to re-enter the private market, which in turn could create a permanent class of government-reliant workers.

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