Today, the greatest threat to the future American labor economy is no longer the robot. Instead, it’s the microbe.
If COVID-19 has shown us anything, it’s that what was once conceived as radical or unimaginable can quickly become the new normal. The domestic effects of the pandemic are jarring: nearly 54 million K-12 students are out of school, over 90% of the U.S. population is under a stay-at-home order, and nearly 10 million people have filed for unemployment benefits.
As jobless parents struggle to feed their children without the assistance of the public school system, food insecurity and financial instability will only intensify. Economic hardships will worsen in the next few months as the virus inevitably spreads, prompting social distancing measures that will wipe out savings and upend the fabric of American life.
With workers forced to stop working and consumers forced to stop consuming, it is clear that the resolution of the public health crisis will come at the expense of the destruction of the American labor economy. The Federal Reserve is projecting a 32.1% unemployment rate that would top the 24.9% peak during the Great Depression, and 67 million Americans are working jobs at high risk for layoff. This is a public health crisis with severe economic implications, and our social safety net is ill-suited to meet the diverse and expansive needs of citizens living in a halted economy.
Unprecedented times demand unprecedented solutions. Our welfare policy options must expand beyond traditional paradigms to ensure financial stability during the crisis and guarantee prolonged financial assistance for all households in its wake. In the face of this global pandemic and the grim future of rapid job loss and burgeoning economic inequality that unavoidably lies ahead, a universal basic income is needed more urgently than ever before.
What is a UBI?
A universal basic income program guarantees an ongoing, unconditional, direct income transfer of an agreed-upon value for permanent residents, regardless of employment status. It is more flexible than in-kind benefits like food stamps or vouchers, and allows consumers to direct funds to their most pressing needs in order to sustain themselves and their families. A UBI is especially salient during times of crisis where the welfare needs of American households are both diverse and dispersed among individuals of all income levels. The regular payments ensure a level of income stability and allow for long-term planning. Andrew Yang’s campaign popularized the idea by advocating for a monthly $1,000 government check to all American adults in order to address the disruption that automation will cause to the labor market. However, until now, the idea has fallen short of mainstream support.
The UBI Debate Reimagined
The merits of a UBI have been rigorously debated for decades. The COVID-19 crisis, however, has transformed the conventional political calculus, engendering a new set of conditions that dramatically strengthen the case for a UBI.
A sticking point among economists debating a UBI is that by enabling the needy to maintain a basic standard of living, it perversely encourages joblessness. Through its unconditionality, people will lose their incentive to work, resulting in a dramatic reduction of labor market supply.
That claim is not only unsubstantiated, but it is also irrelevant to our current catastrophic reality. To stop the spread of COVID-19, we actually need the vast majority of the population to stop working. We need non-essential workers to stay at home, to accept joblessness for the time-being, and to be able to afford to do so. In an economy in which nearly 80% of workers are living paycheck to paycheck and 37.2 million people are living in food-insecure households, an emergency UBI for at least the duration of the outbreak is essential to allow folks a cushion to remain at home and maintain some degree of spending power.
Many economists also argue that a federal UBI program would be bureaucratically, fiscally and politically impossible to implement. As of the COVID-19 stimulus bill, that argument is void. We witnessed something revolutionary in the past two weeks: the graduation of a left-wing academic idea into the political mainstream. The fact that Rep. Alexandria Ocasio Cortez (D-NY), Senator Mitt Romney (R-UT), and President Donald Trump agreed upon a policy instrument is a terrifying sign of the times. It dishearteningly reveals that bipartisan agreement on fiscal policy can only be garnered during times of existential crisis. In a matter of days, the question of whether direct unconditional cash payments to individuals was sound policy quickly became “how much” and “to whom.” U.S. lawmakers agreed on a $2.2 trillion stimulus bill that would send a direct payment of up to $1,200 for an individual earning up to $75,000 a year with special provisions for married couples and families with children. Although this is an emergency stopgap program, no longer can anyone argue the technical impracticality of a universal basic income. Yes, an ongoing UBI would be massively expensive, but if Congress can conjure up trillion-dollar aid packages to bail out massive corporations, surely it can spend to protect American workers operating in an unpredictable labor economy.
The Long-Term Case for UBI: Global Pandemic Edition
Unlike 1929 or 2008, this economic fallout is not a result of faulty but fixable financial practices. Instead, it is the result of the necessary halting of all economic activities that involve physical interactions — the vast majority of our service-based economy — in order to stop viral outbreak. In that sense, our labor market is entirely defenseless against a global pandemic.
We do not know how long this pandemic will last, and the timetable for an effective vaccine or for herd immunity to set in are unknown. Worse yet, it would be extremely misguided to argue that this pandemic is an anomaly. Scientific evidence shows that the unsustainable practices of mass global deforestation coupled with increasingly densified urban structures have created the conditions for a range of deadly pathogens to continue to spread rapidly around the globe. COVID-19 is not an aberration; rather, it’s a signal of the new normal. The next pandemic is around the corner, and it’s our fault.
We entered into a new world this March. A world in which a viral outbreak will be a constant threat to public health, and by proxy, the labor pool. The government will more frequently be forced to require people to forgo work that involves physical interaction and to remain at home. Under these conditions, maintaining a stable income will be impossible for many working class people. Moreover, the ability to work from home is dependent on one’s industry, which is a metric deeply segregated by race, gender, and class.
However, this is the new normal that we must accept and live in, and the existing social safety net is unprepared for a future of viral pandemic and massive job loss. People will need income stability and the ability to plan for the long-term as the labor market periodically comes to a halt to fight the next pandemic.
While the conventional tool of unemployment insurance expansion is crucial in addressing the immediate needs of tens of millions of people and preparing for this inevitable future, the state-by-state systems for doling out benefits are overloaded and inefficient in getting relief to the citizens that most urgently need it. Without a UBI, unemployment insurance will always be weeks behind in providing financial and psychological relief in this coming age of pandemic. The least the federal government can do is insure its people against the catastrophic outcomes of COVID-19 and the unavoidable pandemics of the future.
Preparing for Now
As people are forced to return to the labor market to sustain the basic needs of their family, they will facilitate the spread of this virus unless we are willing to dramatically reimagine our globalized economy, the existing social safety net and the future of our labor market. Once we escape the COVID-19 outbreak, our labor market will have to transition towards sectors consistent with public health priorities. In the more immediate sense, a UBI will allow workers the financial security needed to remain at home and curb the spread of the virus. Further, it will provide workers the ability to remain temporarily afloat, as the new labor market wipes out jobs that involve physical interaction and transitions to jobs compatible with social distancing.
Never before has it been more clear that we are only as healthy as the healthiest among us. The priority right now must be public health and giving people the means to live healthily for the foreseeable future. The way to ensure that is the implementation of a UBI.
Image Source: Flickr/401(K) 2012