Has the Pandemic Forged a New Path for UBI?

August 26, 2021 • Christina Woo

In March 2020, COVID-19 caused the world to shut down. Overnight, businesses were forced to close their doors, resulting in millions of jobs lost, which effectively started a chain of economic devastation. Within a matter of weeks, families were struggling to pay their rents and mortgages, standing in long lines at food banks became the norm, and small businesses began to close their doors for good. The government needed to help its people, and the quickest way to do so was to put cash in their hands.

In a relatively swift reaction to address the situation, cash was distributed in the form of increased unemployment insurance and stimulus checks. During the period of economic aid between late 2020 and early 2021, financial instability fell by 45%, food insecurity fell by over 40%, and mental distress fell by 20%. When this government aid stopped, more than eight million people fell below the poverty line [1].

The argument for additional stimulus checks, unemployment checks, and cash relief, unbeknownst to many, are arguments for an economic idea that started with our founding fathers: universal basic income (“UBI”). The overall sentiment is the same — putting cash in the hands of people will go a long way towards eliminating the angst that comes with economic hardship.

As early as 1792, Thomas Paine proposed a basic income for every U.S. citizen. Milton Friedman and Martin Luther King Jr. endorsed the idea in the 1960s as a way of fighting poverty. In 1971, a basic income for poor families almost became law under President Nixon. In 2020, presidential candidate Andrew Yang brought the idea back into the public consciousness. He reintroduced the concept of UBI as a “Freedom Dividend,” proposing it as a solution to the impacts that automation would inevitably have on the American workforce. Yang challenged us to rethink our value as citizens, boldly suggesting we are the shareholders of the wealth of the nation, and to consider this Freedom Dividend as our fair share of the abundance that comes with technological productivity and automation.

Prior to Yang’s candidacy, universal basic income was dismissed by our government. It had become, more or less, a fringe economic theory. It was generally relegated as a topic to be debated among academics. On one side, mainstream conservatives ideologically opposed the government giving every citizen a monthly check with no strings attached, dismissing it as a “handout”. On the other side, many liberals were concerned UBI would divert resources from means-tested programs for the poor.

Awareness of UBI as a viable economic solution has quickly grown since the global COVID-19 pandemic caused a mass shutdown last year, mostly because it accelerated the economic divide between the poor and the wealthy. Twenty million Americans lost their jobs during the pandemic, while U.S. billionaires collectively became $1.2 trillion richer [2]. While many working class individuals lost their jobs, or were forced to work in dangerous conditions, many white collar workers were able to work from home.

More recently, technology and business leaders have begun discussing this widening of the wealth gap, and many have proposed UBI as a way to counteract the impact of automation on society, including its utility in alleviating the impacts of job loss due to technological advancements. Mark Zuckerberg’s commencement speech to Harvard’s graduating class suggested the need to “explore ideas like universal basic income.” Elon Musk at the 2017 World Government Summit in Dubai told world leaders, “some kind of universal basic income is going to be necessary.” The idea is also catching on among high profile political figures. President Obama, in his 2018 speech at the Nelson Mandela Lecture, spoke of UBI as a subject that will need to be considered over the next 10-20 years. Multiple congressional candidates in the 2022 elections had UBI in their platforms, and that number is sure to increase in 2024.

As the economy begins to open up again and restrictions are lifted, the acceleration of technology during the COVID-19 shutdown will soon become even more apparent. Businesses and employees have become accustomed to virtual work, potentially challenging the previous norm of the 9 to 5 work day and five day work week. Many brick and mortar shops have moved their businesses online, eliminating the need to rehire retail workers; and worker shortages in other sectors are not unusual, since many are hesitant to re-enter the workforce due to a combination of factors such as COVID-19 risk, lack of childcare options, or heightened personal and professional standards.

All of these factors have accelerated the need to find a viable economic approach to mitigating the financial hardships resulting from COVID-19, automation, globalization, and other trends. It has led many economists, thought leaders and politicians to revisit UBI, and to move forward with pilot programs in order to prove its economic effectiveness against current social programs. There are now many versions of UBI being implemented, although few of these are truly universal in nature, with the most recent example at the federal level being the Child Tax Credit (“CTC”). The CTC can be seen as a “UBI for kids” because the CTC payments given to children are unconditional with no restrictions on how the money is spent. While the rate of economic recovery may be unknown, one thing is certain: the economic Overton window has shifted, and it is time more of us join the conversation around universal basic income.

[1] (2021, June 10). Stimulus checks helped reduce food insufficiency and financial insecurity, study finds. WXYZ. https://www.wxyz.com/news/coronavirus/stimulus-checks-helped-reduce-food-insufficiency-and-financial-insecurity-study-finds.

[2] Peterson-Withorn, Chase (2021, April 30). How Much Money America’s Billionaires Have Made During the Covid-19 Pandemic. Forbes. https://www.forbes.com/sites/chasewithorn/2021/04/30/american-billionaires-have-gotten-12-trillion-richer-during-the-pandemic/?sh=734f8c51f557