Everyone Gets $1,000 a Month in Andrew Yang's America
Every Democratic candidate running for president supports a higher federal minimum wage -- everyone, that is, except Andrew Yang.
(Bloomberg) -- Every Democratic candidate running for president supports a higher federal minimum wage -- everyone, that is, except tech entrepreneur Andrew Yang.
The long-shot outsider proposes giving $1,000 a month in cash to every American instead -- a policy known as Universal Basic Income, which was a major talking point for Yang during Thursday night’s candidate debate.
“It would be the trickle-up economy from our people, families and communities who would spend the money," Yang said Thursday in Miami. “And it would circulate through our regional economies and neighborhoods, creating millions of jobs, making our families stronger and healthier."
UBI is among the radical economic ideas gaining traction in the U.S., where prosperity and security eludes many people even after a decade-long expansion. The concept has been around for centuries, and lately it’s picked up supporters including Silicon Valley types -- like Facebook Inc. co-founder Chris Hughes -- and a Nobel-prize winning economist.
Yang has made it the centerpiece of a campaign propelled by social-media-savvy millennials and Generation Z. He says it’s a way to reduce inequality and ensure there’s a safety net for millions of Americans who risk losing jobs to automation. It also offers a supplement for wages that have been slow to increase since the 2008 financial crisis.
Hayek Liked It
Peter Diamond, one of the labor researchers awarded the Nobel prize in economics in 2010, has said that guaranteeing cash to all citizens regardless of their income would help tackle systemic poverty. It has backers across the ideological divide: economist Friedrich Hayek, a hero to free-marketers, supported a version of the idea.
Here’s how UBI would work under Yang’s program.
Monthly cash payments would go out to every American over the age of 18. They’d get the same dollar amount regardless of where they live and how much, if anything, they earn by working.
The government would charge a 10% value-added tax on goods and services to pay for the program, as well as raising taxes on high earners and polluters, and finding savings elsewhere, according to Yang’s website.
Cost is the biggest obstacle. The Center on Budget and Policy Priorities pegs it at more than $3 trillion a year for a program smaller than the one Yang envisions -- dwarfing even Medicare For All or free college.
The proposal has been criticized on other grounds too. Research has found it would disproportionately help childless, younger or healthy people who are already in the middle class.
Robot Threat
Some progressives say a UBI wouldn’t cover health care and food expenses for the poor, if it’s paid in lieu of other government benefits, as Yang proposes. They also argue it would undermine wage growth, giving corporations an incentive to cap pay.
That’s why many prefer a higher national minimum wage, or in some cases a job guarantee where the government would provide work to everyone who wants it, at a living wage. Cory Booker, one of Yang’s Democratic rivals, has backed such a plan.
Still, UBI may appeal to Americans who feel left behind and haven’t seen their incomes grow in recent years -- a group that Democratic candidates in the first debates on Wednesday and Thursday seemed eager to engage.
And it offers an antidote to the future envisaged by McKinsey, which says tens of millions of U.S. jobs are under threat from robots and artificial intelligence.
While there’s some U.S. precedent for a jobs guarantee in the New Deal of the 1930s, a UBI hasn’t been tried on a national scale -- though some regions and cities have conducted local experiments.
Either way, the odds it’ll happen under a President Yang are long. He trails in national polls, struggling to get past 2% support.
To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Ben Holland, Margaret Collins
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