What is the difference between the guaranteed income program in California and universal basic income?
Various cities across California are implementing pilots for guaranteed income programs. How does this differ from universal basic income?
Across the Golden State, cities and non-profit organizations are using money allocated by the legislature to implement pilots of guaranteed income programs to test their efficacy in supporting economically vulnerable households to meet their basic needs. In particular, the state is interested in examining how guaranteed income can prevent homelessness. Researchers monitoring the pilots will assess whether the direct monthly payments made to impoverished individuals and families can prevent their financial situation from becoming so severe that they are evicted and forced to live in their vehicles, shelters, or on the streets.
The difference between universal basic income and guaranteed income
UBI is predicated on the idea that all members of a certain group would receive a payment. Typically, UBI is conceptualized at some geo-political level: town, city, county, state, or country or region.
The impact of UBI and guaranteed income on labor and government assistance
The second defining feature of a UBI is that the amount is tied to a certain living standard. The value of the payment should be enough to survive. A UBI would have direct and very intense impacts on the labor market of the economy where it is being deployed. Assuming that the private sector does not have the power to erase the purchasing power of the payments by increasing prices, the sense of economic security offered by the payments could encourage many to quit their jobs. Low-wage workers would be better positioned to demand better conditions now that they can rely on their UBI to cover their basic needs. A UBI of this nature could be liberating and transformational and, as such, requires intensive economic planning.
Government assistance and work requirements
A guaranteed income, while a step in terms of welfare reform, is not designed to be such a dramatic action. The amount distributed as a part of these pilots aims to keep an individual or family above the poverty line. The state has encouraged those running pilots to use enrollment in other social assistance programs like CalFresh (the state’s Supplemental Nutrition Assistance Program (SNAP)) in their eligibility requirements. CalFresh has work requirements that beneficiaries must meet. However, these requirements they are much lighter in California compared to other states, and some recipients are exempted. The existence of work requirements for many welfare programs took off in the 1990s under President Bill Clinton.
The California Budget and Policy Project argued in a recent report that lawmakers should reevaluate their understanding of the impact of work requirements on welfare eligibility.
“The share of public support that is only available to people who are working has increased in recent years, blocking access for many individuals and families at the highest risk of experiencing homelessness, hunger, and other hardships,” said Alissa Anderson and Sara Kimberlin, the authors of the report. For Anderson and Kimberlin, the idea that work should be required to receive assistance is a racist and deeply flawed argument, with the authors noting “that most California households with low incomes are already working.” It is not their lack of work that leaves millions in poverty. Although perverse, it is their work and the wages they earn that keep them poor and, as will be discussed below, dependent on government assistance.
Corporate profit-seeking and the welfare state
The US Census reported that in 2018, “of the 3.4 million married-couple families receiving SNAP benefits, 84% had at least one worker. Nearly half (49%) had two or more workers.” The notion that individuals who receive government assistance sit at home idly all day, spending big on the public dime, paints an incorrect and damaging view of welfare recipients and the structural factors perpetuating their dependence on the state. A guaranteed income is not a ticket out of poverty; it is a chance to escape it. The only guarantee is a certain amount of money for a certain amount of time. Whether those conditions are enough to build the economic resilience of a household to the level necessary to climb out of poverty is what is being tested through these programs.
The fact that many recipients of SNAP benefits, and other welfare programs, do work is indicative of a larger issue present in the US economy. It also raises an important question: should taxpayers subsidize the private sector, which refuses to pay a living wage to its employees? If the purpose of a guaranteed income program is to replace the current welfare model, then many voters would hope that corporations would not reduce pay for workers knowing that the state will step in.
However, those who share the concern that corporations will exploit the implementation of a guaranteed income program to pay workers less should know that this already happens. So, rather than attacking the social programs aiming to improve economic resilience, it may be a good time to examine how poor labor protections increase dependence on governance assistance.
Corporate dependence on the welfare state
In 2020, the Government Accountability Office (GAO), one of the agencies that provide non-partisan research to Congress, reported that in the United States, there are “millions of wage-earning adults enrolled in Medicaid or living in households that received SNAP food assistance.” The millions of workers in this group are joined by many more who earn just above the limit required to receive these benefits. The GAO detailed a profile of the average worker enrolled in SNAP and Medicaid, saying that most work full-time in the private sector in the leisure and hospitality industry or food service or food preparation.
The fact that corporations take advantage of poor labor protections in the US to pay their workers wages that require them to depend on government assistance highlights many issues with how welfare reform is discussed in Washington. Guaranteed income, like SNAP or California’s rental assistance programs, may reduce economic vulnerability and allow for workforce reentry. For those already in the workforce, the likelihood that the program is able to reduce dependence on government assistance has a lot more to do with the jobs available than the structure of their welfare benefits. If the wages for these jobs are so low that they keep workers reliant on government assistance, perhaps it is time the conversation shifted toward what the public expects the minimum standard of living available to someone working minimum wage.