A Conversation with Andy Stern on the Case for a Universal Basic Income

A Conversation with Andy Stern on the Case for a Universal Basic Income

With income from work increasingly unreliable and technology displacing jobs, do we need a citizen wage?

June 28, 2016

Andy Stern, the former president of the Service Employees International Union (SEIU), is author of a new book, Raising the Floor, on the case for a universal basic income (UBI). As wage and salary income become less reliable and as technology replaces human work, the debate about how to distribute the fruits of technology becomes more urgent. In this edited conversation, Prospect Co-Editor Robert Kuttner and Andy Stern discuss the place of a UBI and its relationship to other strategies for defending worker rights, expanding other social protections, and improving wage and salary income.

—the Editors

Robert Kuttner: Andy, Congratulations on your new book, Raising the Floor, on the case for a universal basic income. Your prologue is that there are too few Americans working or looking for a job, that college is less of a good investment than it used to be, that wages are too low, and there is an accelerating shift to freelancing and on-demand work.

The implication of all these workplace transitions is that we need to supplement labor income, with a guaranteed universal basic income. You also have a very nice chapter on what you call mitigator policies—the usual progressive list: infrastructure, innovation, higher minimum wage, shorter work-weeks. My first question is: Why can’t those policies, if taken to the right scale, solve the income problem?

Andy Stern: I think that is a totally reasonable question. My concern is that we’re in some ways building dikes for a major storm that has been brewing and will continue to brew. But what we really have is a tsunami on the way—one that is hard to imagine given the acceleration of technology and the way it will rearrange work and produce more and more low wage jobs. People will have work but not reliable jobs or incomes.

For me, the usual solutions are somewhat like saying “Can’t we juice up the agricultural economy to work a little better in the industrial economy.” And we could, but I think it’s insufficient, and at least we have to be prepared for the reality that it could be insufficient.

AP Photo

Prior to the "hyper full-employment" of World War II, many economists believed jobs lost to technological advances and economic upheaval could not be regained. Here, women work at Boeing Aircraft Company's factory on the Pacific coast, June 15, 1942. 

So the traditional approach of using macro policy to get to traditional employment and supplementing that with a public infrastructure program that produced decent jobs, and supplementing that with a higher minimum wage—we need to do all that, but we’re still going to have insufficient incomes.

And we have an additional problem: We have an idealized vision of infrastructure being something where white men in unions make good money producing bridges and roads and tunnels and public transportation. I don’t think we’ve even begun to account for how much more of that could be done technologically—by much different kinds of machines. We also forget that the union infrastructure jobs of the past are likely to be replaced with casual workers. We see that happen with street-corner hiring of day-laborers, or on non-union worksites even in union towns like New York City.

Other than infrastructure, people correctly point to the possibility for more work in fields like elder care or child care. But do we really want to take women and people of color and send them to jobs that they have historically been associated, and take all the white guys and put them in infrastructure? I don’t think so. If parents of college-educated kids are ready to have their kid change my feeding tube or clean my house, then I could understand how we could create enough jobs in elder care or child care. But we have this historic vision that somehow this is what women or people of color are going to do. If we do that, I just think we’re going back to the future, in the wrong sense.

Let me push you on that. Obviously, as the former president of the SEIU, you’re probably as well-positioned as anybody in America to talk knowledgeably about this. I once wrote a piece about the case for a high-wage human service economy, which you might call social infrastructure. It isn’t just child care or elder care. Maybe it’s tens of millions of people, not just women, not just people of color—the analogy is more schoolteachers, which includes a lot of white people and even some men—where you’re working in human services, very broadly defined, and you’re getting a good middle-class income. Some people would argue there’s infinite unmet needs in that realm of the economy. Why not put a lot more money into that, as a kind of 21st century counterpart to 20th century bridges and tunnels and railroads?

I think that’s fair. This is exactly the debate we need to have, to play out all the different scenarios: the cost of each, and the values that underlie them. Clearly, universal basic income, which is not a substitute for employment but a supplement to employment, has one set of values in that it gives people choices, it allows people to get paid for what is traditionally unpaid work, like raising children. So it offers its set of values; and clearly, pumping up social infrastructure has another set of values, which is it gives people meaningful things to do with their life.

My favorite historical example is World War II, where in 1938-1939, you had a lot of economists writing that technology was displacing jobs and this was inevitable and we might as well get used to it; that 13 percent unemployment is the best we can do. And then along came this massive unintended Keynesian stimulus via World War II, and a lot of good jobs were created blowing things up, and the economy returned to full employment—even hyper full-employment. Do you think there’s something fundamentally different about the nature of today’s technology, whereby even full-out macro public investment policy couldn’t catch up with technology fast enough to create enough good jobs?

That is the question that led me on my journey that I write about in this book. As Ray Kurzweil says, we think linearly, but when the world changes exponentially, we’re not really prepared. Andy McAfee wrote his book in 2005, with a whole bunch of experts at MIT and Harvard, which concluded that the last thing that could be done by technology is driverless cars in urban settings, because there were so many variables involved. That’s already happening. Ray Kurzweil said it would be 2029 until the so-called Turing Test was passed, where machines could confuse people as whether you were talking to a machine or a human being. That happened this year.

Driverless trucks—which I think will be deployed before driverless cars, because business likes to free itself of labor costs—will eliminate 3.5 million truck drivers over time, which is the largest occupation in 29 states. There are another 6.8 million people in insurance and auto repair, plus jobs in hospitals and giving speeding tickets and rest stops that rely on trucking. I think when we talk about this kind of massive change, there is little chance to catch up with it with new jobs or with much more substantial social investment. Even in the Industrial Revolution there was a horrible transition, until we got to the other side and we got unions and better distribution policies. So I don’t see the universal basic income as the end-all policy, but I do think it’s something we need to fully develop, so that if things get much worse than we expect, we are prepared with a universal basic income system. We can regulate the size of it to be able to stabilize the transition.

One thing we see right now is what I call parental basic income. There is a large number of friends of mine who are middle- or upper-middle class and are providing some level of support for their kids—cosigning for their apartment, taking them on vacation, helping them make a payment if they have an emergency, giving them some kind of gift periodically, letting them move back into their house. So I think we can see in that the stabilizing effect of the universal basic income. It may not be the best macroeconomic policy, but it could produce a lot of good during transitional times, it could be a tremendous supplement, and I think it offers a lot of different other considerations, for women and others in historically unpaid work. We need to juxtapose universal basic income against other well-thought out policies.

The analogy you just made is very powerful. I call it the family welfare state, and the only young adults who get the benefit from the family welfare state are kids whose parents families are roughly in the top 20 percent of the income distribution. And if you’re in the bottom 70-80 percent of the income distribution, you don’t have parents who are affluent enough to give that to you. Universal basic income is parental help for everybody else.

The other analogy that occurred to me is Social Security. I’m old enough that I now get a Social Security check. The psychology’s really interesting. A generation ago, the policy was that if you worked and also got a Social Security check, they reduced your benefits as way of deterring you from work. Now it’s “Hey, if you want to work, you go right ahead and do it,” and this $1,000 or $2,000 a month is like a basic supplement to your income. My reaction to that is, “Hey, this is cool.” Now granted, the premise is that I earned this by working for 40 years. But there’s also the psychology that you invoke with Peter Barnes’ idea of building on the Alaska Permanent Fund—that I get this check as an American, because I’m entitled to a piece of the pie. Could you say more about that?

AP Photo/Eric Risberg

Driverless trucks, which could appear in large numbers before driverless cars, will eliminate 3.5 million truck drivers over time, which is the largest occupation in 29 states. Here, an Otto driverless truck sits at a garage in San Francisco. 

I think it was Thomas Paine who proposed in the late 1700s that every American be given $20 a year. His logic was that we were about to create private ownership of land, but that the land could really be owned by the people; and therefore we should compensate everyone for the fact that we were, in essence, privatizing it. So to me, this goes back to the basic question of community and the ownership of natural resources such as your personal data being used without you receiving a payment and the public communication spectrum bands that are being sold. There are lots of resources that in essence belong to the country. What Peter Barnes and others are saying is there should be a way that they benefit everyone, as we do now in many cases by allowing the public to have free access to the shoreline in certain parts of the country, because that’s part of our natural resources. I do think there is a question, as a community, as a nation, about how do we share in the wealth that’s being created: everyone paying their fair share of taxes, or everyone benefitting from unique resources like natural resources or broadband wavelengths as a potential way to think about this. But interestingly, it goes all the way back to Thomas Paine. It was common sense back then.

This of course gets us to the politics. The Alaska Permanent Fund began with a sudden windfall and a quirky Republican governor, Jay Hammond. Then everybody got used to getting a check, so that even Sarah Palin wasn’t able to oppose this. Even the oil companies weren’t able to kill it. It’s a little bit harder as a matter of politics when there’s no obvious, sudden source of windfall to get this thing up and running. The Swiss just voted down a referendum—I think the margin was 77 to 23—that proposed something very much along these lines. I know in your last chapter you talk about building a movement for this, but how do we get this into second gear and into high gear?

I think we don’t try to fund it by diverting funds that can be better used right now to do other kinds of necessary things. Even raising the minimum wage requires government agencies to increase funding to pay more for their home-care workers and the nursing home workers that are being topped up to the minimum.

So, I don’t think it’s just about taxing the rich. But I do think there are whole series of resource-raising ideas that exist everywhere else in the world, like a value added tax, which could be adjusted so that it’s not regressive. I think there are ideas, like a Tobin tax on financial transactions, which are beginning to spread around Europe. I think that Peter Barnes’s idea about natural resources taxes, carbon tax, and asset taxes are probably a very healthy place to look.

As the labor and civil rights leader A. Philip Randolph liked to point out, power doesn’t yield without a fight. What we need to appreciate is that as the problem of the economy grows, which we see with the opening act of Donald Trump, people are going to be angrier and less patient. I think wealthy people understand, as they did in the civil rights era, when people were burning down cities, that we need to make concessions and provide stability. To me, the question is, can we build a movement around certain policies, whether it be physical infrastructure or social infrastructure policies, or a universal basic income? Can we develop new sources of income, so we’re not simply trying to fund something by taking away current welfare benefits (although there are some that could be appropriately cut if we had a universal basic income)?

So we need to prepare for a moment, and moments are both created by good organizing and hard work, but sometimes, also, are accelerated by a set of facts that come into play. I think that set of facts is going to come into play. The question is: Can we do the organizing and the base building to take advantage of the moment, and not let the moment be taken over by right-wing populists and racists?

Who are your potential allies in building this movement?

Clearly, on the right, are think tanks like Cato, which advocate for UBI but with very different specifics. Charles Murray is issuing another book on a universal basic income. A younger group of libertarians like Matt Zwolinski, who’s a professor, and Ed Dolan are conceptually taken with the idea. The Roosevelt Institute wants to center some of their progressive research work on this idea. In the U.K., the Royal Society of Arts did an economic model to plug in numbers and see what the results are. Then I think you have leading economic thinkers like Joe Stiglitz, Bob Reich, Rob Johnson, and Angus Deaton. These are people who arrived somewhat later—not by virtue of their being universal basic income devotees, but are aware of what’s about to happen to the economy; and they know we need preparation for what will happen to people’s incomes, if we are to avoid a very dangerous and troubling moment for America.

AP Photo/Dan Joling

The Alaska Permanent Fund has proven so popular that even Sarah Palin has not been able to oppose it. Here, acting Alaska Department of Revenue Commissioner Angela Rodell announces the amount of the 2013 Alaska Permanent Fund dividend of $900 at a press conference in the Robert Atwood Building on Wednesday, September 18, 2013, in Anchorage, Alaska. 

The right-wing version of this, going back to Milton Friedman, is basically we don’t like to do this but common decency and maybe economic efficiency requires it, but the trade-off is we will cash out most of the existing welfare state. I assume, given your politics, that those conservative supporters are allies of convenience and that you’re not sympathetic to cashing out the rest of the welfare state. You do lay out a menu in which that’s one option, but reading between the lines it sounds like that’s not your own preferred option.

I think there are certain things that, God willing, will not be necessary, like food stamps and unemployment insurance, at least not in the way we provide them now, because we will be giving people cash instead.

On the other hand, I think it’s impossible to imagine cashing out health care or Social Security as it’s currently done. It’s hard to imagine telling people who have paid in their whole life, “By the way, we’re just cashing out your Social Security or Medicare benefits.” A different question is what do you do with someone who starts a career and has never contributed to Social Security, whether there might be is a different way, but that’s a different set of questions. There is a marriage of convenience with some conservatives.

But as Michael Tanner of Cato said, the deal is very simple: Conservatives want to get rid of the state welfare apparatus and admit that the one thing government does well is write checks. Progressives are never going to cash out benefits simply as an exchange for what the current revenues are. So the question becomes: how do you construct a universal system that cashes out parts of the existing system and provides additional revenues? And how does the tax system interact with a UBI? If you wanted to claw back benefits at the higher levels, you could. There’s no reason to give wealthy people the full benefit.

You know, Michael Hilzik, a progressive columnist for the LA Times, calculated how much money very wealthy people get from Social Security, and it’s only about $1 billion a year. So the simple solution is to add a point or two at the top of the tax schedule and you get all of it back. That’s a lot better than means-testing benefits at the top.

I totally agree. That’s why it is not an honest debate when Eduardo Porter does his fuzzy math of giving all 300 million Americans a UBI grant of $10,000 a year which makes the costs seem unimaginable. A) That isn’t even how the tax system functions; B) you have to decide what you’re doing with people receiving Social Security because people are getting other payments; C) you have to decide what you do with children; and D) as you just said there are many ways to construct a tax system alongside this that still keeps it universal but not anywhere near as costly.

I was going to ask you about Porter. He wrote a rather dismissive piece in the Times in early June and he had two major objections to your plan for UBI. One you’ve just alluded to was cost, and I think there are some good some responses to that. The other was the supposed disincentive to work. My reaction as a reader was, “Come on, you’re talking about $12,000 a year, and that’s pretty minimal.” I can’t imagine all that many people saying, “Hey wow, I got a check from the government for $12,000, I think I’m just not going to work.”  

I think this view completely misunderstands what it’s like to live at the poverty level, which the federal government has established, which is about $12,000 for an individual and $24,000 for a family. Elites sitting far removed may think people won’t work. But I haven’t known a home-care worker, janitor, child-care worker making that little money while working, who doesn’t need a lot more money and who wouldn’t go out and try to find other work. Clearly, a universal basic income would be a real help for people who want to stay home with their family or an elderly parent. It may mean they don’t work, but isn’t that a value to society that people should provide assistance to family members or kids? I think there are other people who would want to go study. I think it’s great that students would have assistance that pays for their textbooks or pay for their fees, even if they have a scholarship or loans.

Kirby Collection of Historical Paintings, Lafayette College Art Collection/Public Domain

In the late 18th century, Thomas Paine proposed a universal basic income to compensate for the privatization of land as the nation developed. This 1795 portrait of Paine was done by Matthew Pratt. 

We need to account for the fact that a great many people in the future aren’t going to have a steady income. There’s going to be a lot more ups and downs and uncertainty—that people will continue to work if they can find work, unless they find that taking care of a child or a family member is a higher priority in their life. It’s crazy to imagine people just sitting home putting their feet up and saying, “I’m now living the good life for $12,000.”

And also, for all those young adults that you alluded to, who are in these unstable, on-demand jobs, the difference between making $15,000, catch-as-catch-can, and that plus $12,000, which gets you to $27,000, that’s the difference between being able to live and being on your parents’ couch forever.

Exactly right. And a guaranteed income in effect creates a national strike fund. So if you’re a union leader, next time Verizon goes on strike, your members are not going to be completely starved out, particularly if we ever take health care off of the employers, which I think would go hand in hand with this. You could get by. I’m not saying you’re going to live a good life, but you’re not going to be starved out.

Also, it would give individual workers more bargaining power. Kids could say to H&M, “I’m not working that shift anymore. I’m not waiting to call in the night before to see if I can work. I’m going to go find a better job. I think it will give workers power in the labor market that is never going to be a substitute for unions, but is certainly a substitute for having no power.

That’s a terrific point. You may or may not want to answer this question, but have you pitched this to senior politicians, and if so, what kind of reaction have you gotten so far?

I have not. The silence in the U.S. is somewhat deafening about the future and technology and jobs. To the credit of the candidates, they’re very focused on today’s problems. It’s interesting when you juxtapose the American political scene with Justin Trudeau, the new premier of Canada. His Liberal Party platform proposes experimentation in universal basic income. He has a minister of the federal government working with Quebec and Ontario constructing experiments. They are at least trying to conceptualize a potential future that tries to make their welfare system more efficient and try to take the bumps out of the current economic system. The comparison to what is not happening in the U.S. is pretty striking.

In the U.K., Labour’s shadow chancellor is now seriously studying some version of a universal basic income. One of the interesting polling results that was done with the Swiss referendum is 70 percent of all voters—not just “yes” or “no” voters but all voters—think the universal basic income will occur within the next 25 years. They just thought it was premature and there was not an effective explanation about how you would finance it.

I think that’s why in our country it’s significant that people are beginning to do a little more in-depth thinking and a little planning to get more economic research done. Supposed we had a $1 trillion surplus and could spend it, what would you do? Would it be universal basic income, would it be building up the infrastructure, would it be providing supplement wage insurance, or would it be something completely different? We’re very good at saying the catechism of infrastructure, unions, and raising the minimum wage is the answer to problems, or breaking up the banks, but there’s got to be real work here to figure out—‘cause what I said about universal basic income is very much what Churchill said about democracy, which is, it may be a terrible idea, except when you compare it to everything else. I think we owe it to ourselves as progressives to explore these ideas, not in a politically correct way or at a rhetorical level, but to really think hard.

I think what’s valuable here, Andy, is you’re thinking way beyond the bounds of conventional politics and then figuring out how to lead conventional politics to it, and asking what’s possible within the usual assumptions of very limited incremental gains, which are not going to get us to where we need to be.

I appreciate Bob Greenstein’s theorem, that once we start opening up bigger questions on the safety net, we can risk getting worse results. I would just say, I think the labor movement suffered tremendously from the defeat of labor law reform under Jimmy Carter until the Employee Free Choice Act efforts. We were scared to open up the National Labor Relations Act because we thought it would get worse. But it gets worse whether you want to open it up or not. I think the country would do well to have progressive people try to prepare responsibly for the huge changes that are coming and that are already happening. As I like to say, this is the United States of Anxiety now, and it’s only going to get worse.

I want to say this delicately because I like Bob Greenstein and I admire him, but I think when you play that sort of role and you’re calculating what sort of incremental gains are possible within the constraints of politics right now, you can become a prisoner of your own incrementalism at the expense of your own imagination. I think it’s very important to have the tacticians, but have the tacticians complemented by the dreamers. And I don’t mean that to say that you’re being utopian—I think sometimes the dreamers are the most practical people around.

As you can tell by the book, I don’t think I necessarily have the best answer, but I do believe there is a big problem coming. We can argue about whether it’s transitional or permanent—economists can talk glibly about, “It’s never happened before.” The problem is, they’re not going to pay the price. If they’re wrong people suffer—all the people I’ve worked with my whole life. That’s why we need to think bigger.

This article has been updated. 

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