The rate of technological advance in automation is likely to cause businesses to jettison huge numbers of jobs in the near future. Robots are getting programmed to flip burgers, drive cars and trucks and act as self-serve cashiers. The McKinsey Global Institute predicts that as many as one-third of U.S. workers could be displaced by automation by 2030.
McKinsey suggests one solution to assist workers that lose their jobs due to automation is to provides a wage supplement or replacement, universal basic income (UBI).
UBI likely could take many variations. It could be a wage supplement for low income workers. It could provide support for workers that are displaced by automation. It could be a basic payment provided by the government that establishes an income floor for all workers.
Proponents of UBI point to the success of Alaska’s dividends, derived from oil revenue, that are paid to all residents of the state. The payments from the Alaska Oil Investment Fund typically amounts to about $2000 per year. There is no work requirement to get the dividends. The dividends supplemented the income of 640,000 Alaskan residents in 2017.
The country of Finland is running a two-year test giving each of 2000 unemployed Finns about $700 a month. They can spend the money anyway they want and will never need to repay it. The free money is an experiment to test replacing the bureaucratic welfare system by giving recipients more flexibility while providing work incentives.
Many of America’s entrepreneurial leaders are predicting that automation, robots and Artificial Intelligence (AI) will force governments to legislate a UBI. A growing number of executives from Silicon Valley companies are proposing a UBI safety net to protect workers from future job losses.
Richard Branson, CEO of Virgin, recently wrote, “most countries can afford to make sure that everybody has their basic needs covered. One idea that could help make this a reality is a universal basic income. This concept should be further explored to see how it can work practically.”
Elon Musk, the founder of Tesla, Solar City and SpaceX predicts that UBI is inevitable as automation replaces workers. In a recent interview on CNBC, Musk explains why he believes UBI is the only option for displaced workers.
“There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” Musk tells CNBC. “Yeah, I am not sure what else one would do. I think that is what would happen.”
“I don’t think we’re going to have a choice,” he said. “I think it’s going to be necessary. There will be fewer and fewer jobs that a robot cannot do better.”
Facebook founder Mark Zuckerberg and co-founder Josh Hughes have both endorsed the idea of a UBI.
“The greatest successes come from having the freedom to fail,” Zuckerberg said. “Now it’s our time to define a new social contract for our generation. We should explore ideas like universal basic income to give everyone a cushion to try new things.” Zuckerberg said the (Alaska’s) state’s cash handout program “provides some good lessons for the rest of the country.”
Hughes suggests a national UBI would reduce income inequality by raising the income of millions of Americans. Hughes would tax the top 1 percent at a tax rate of 50 percent to fund his UBI. He described a $500 monthly payment for those who earn less than $50,000 a year. “It could help 90 million people in the U.S. get a fair chance … We have the power to rebalance our economic system and provide more opportunity to all — we just have to develop the political will to do it.”
Last month Gallup polled Americans on UBI. They found 48% of Americans support a UBI program, 46% of supporters would pay higher personal taxes to support it and 80% of supporters say companies should pay higher taxes to fund the program.
UBI is gaining recognition as a possible solution in assisting workers as they adjust to future job losses from technology.
by Rick Smith
Photo via Flickr