The Dutch city of Utrecht plans to give 250 citizens €960 ($1,025) per month, while trials are also moving forward in Ontario and Uganda. In Oakland, Silicon Valley incubator Y Combinator is constructing a basic income pilot to address income inequality in the Bay Area. If the trials suggest promising results, they might be the first step toward basic income being rolled out in large populations.
Automation and more
Why the sudden interest in basic income? Most of the new pilots cite the rapid rate of automation, which is threatening job security in industries from manufacturing to media. According to research from Oxford University, 47% of jobs could be automated within 20 years.
“So many of the things that humans do can be done more cheaply by machines,” says Karl Widerquist, co-chair of the Basic Income Earth Network and an associate professor at Georgetown University. “We seem to be doing this at a rate faster than we can think of more things for humans to do. And it’s very possible that the most common occupation in the United States—driver—is going to be entirely replaced by machines…There’s either going to be massive unemployment, or there’s going to be really low wages in the sectors where we can afford people.”
In several industries, automation is already a reality. Otto, the Uber-owned self-driving truck, is testing deliveries. Amazon Go, the “grocery store of the future,” suggests that unstaffed stores could become a future model for retail. And in December, iPhone manufacturer Foxconn announced a plan to replace nearly every human worker at its Chinese factories with robots.
In recent political debates in the US and the UK, job loss has been more often blamed on trade and immigration than on automation. But if, for example, drivers are rapidly replaced by self-driving cars and new jobs fail to materialize, public perceptions could begin to shift, making ideas like universal basic income seem less radical.
The nature of work
Champions of universal basic income argue that the system is more efficient to administer than welfare. Past trials showed promising effects: hospital visits declined, mental health and graduation rates improved.
Proponents of universal basic income see a clear explanation for these effects. “When you provide a person enough money to not be anxious that they or their family will survive, they’re more incentivized to work than ever before,” said John C. Havens, executive director of The IEEE Global Initiative for Ethical Considerations in Artificial Intelligence and Autonomous Systems, via email. “The universal basic income gives them purpose. It’s the desperation of living in debt or poverty that renders people hopeless and inactive.”
Critics are concerned about the program’s cost, as well as its effect on national output. If citizens have their basic needs taken care of, would a majority still work? Past trials showed a slight drop in the workforce. Workforce participation is certainly one of the metrics today’s trials will look out for.
What might society look like if our days were not structured around work? Supporters of universal basic income welcome the chance to find out. Some, including Elon Musk, suggest that the increased leisure time would allow for more high-level innovation and complex problem solving. Others believe a comprehensive safety net would spur more risk-taking and entrepreneurialism.
“Do people sit around and play video games, or do they create new things?” wrote Sam Altman, president of Y Combinator, in a 2016 blog post. “Are people happy and fulfilled? And do recipients, on the whole, create more economic value than they receive? … Fifty years from now, I think it will seem ridiculous that we used fear of not being able to eat as a way to motivate people.”
Consumer landscape
What effect would a basic income have on businesses and consumers? Although the question seems far-fetched in today’s political climate, the business case for a universal basic income is fairly straightforward: More income means more consumers. Effects of a full-fledged program are impossible to predict now, but experts say a universal basic income would at the very least give lower-income consumers more buying power.
“For companies focused on long-term sustainability, they should be actively exploring how a universal basic income could help the customers they’re selling to today stay afloat in the future and have disposable income to buy their goods and services,” says Havens. “If you automate enough people out of a job, then a lot of people won’t be able to afford the items you’ve created faster via automation.”
As the economic landscape shifts, companies may need to market to broader segments of the population. And as work–life balance and financial priorities change in response to an automated society, brands would need to find new ways to communicate their products’ value to consumers.
“Everyone has a greater option to say, well, if I wanted to take a month off and do this, I could do that, because I have a greater basic income,” explains Widerquist. “People are going to travel more, because it’s something lower income people can do. To be able to sell things that you could never imagine selling to a low-income person now, you can start imagining you could find a way to sell to them, if you could package it as affordable.”
If society’s relation to work changes drastically, businesses will also face internal challenges, such as how to address employee wellbeing in a rapidly automating society or how to better engage lower-income workers.
Although a universal basic income may still be far from reality, today’s trial runs show there is growing interest in understanding how it would work in the real world. For businesses, it’s worth paying attention as automation and policy response shape consumers’ relationship to work in the coming years.
