Could a basic income treat the symptoms of social and economic problems or really address the causes?
Reading some simplistic characterisations of basic income, you could be forgiven for thinking that it alone can fix myriad social and economic problems at a stroke. Indeed, many critics of basic income attack it on this basis: because it’s not a universal panacea it’s not worth pursuing. But any implementation of basic income wouldn’t exist in a policy vacuum, and would need to take account of and work in combination with its broader context if it was to be successful.
I recently led a discussion about basic income in Bristol with council staff, elected members and the Mayor. One of the questions we debated was whether a basic income would just treat the symptoms of social and economic problems or really address the causes. So, for example, could it be part of systemic changes to address in-work poverty, or would it just subsidise employers who pay low wages?
The potential of basic income to support those in in-work poverty is one of its most often cited benefits. It could help workers to reach a better standard of living and economic security, and ameliorate some of the problems associated with the growth in low paid work in the UK. We know that too often people get stuck in low paid work, rather than it being an entry point into the labour market. from which they quickly move on. Basic income would supplement the income of people in low paid work, whether through reasons of under-employment, low wages, or insecure and unpredictable shifts and contracts. So it would have the immediate effect of increasing household income and providing more security and stability in income levels.
However, it would be open to the same arguments that apply to tax credits and housing benefit currently – that they are subsidising employers, enabling them to maximise profits by paying low wages, knowing that state benefits will pick up the slack. If employers can’t or won’t pay wages high enough to keep workers above the poverty line, paying a basic income might lift people out of poverty, but would it also have any impact on the structural issues in the labour market? In theory a basic income would empower low paid workers to turn down the worst quality and lowest paid work. However, the cost of a basic income high enough to truly enable this rebalancing of power may well be prohibitive. There is then a risk that the low paid are made better off by basic income but are no more likely to be able to escape poor quality jobs or to progress in their careers. It may even push wages down further by enabling employers to reduce wages whilst maintaining the state safety net.
Policy attention must therefore be focused on addressing low paid work in the broadest sense, and identify where a basic income might act as a powerful enabler of the success of other policies. Firstly, addressing the reasons for the growth in low paid work. UK businesses might be creating new jobs, but a significant proportion of them are in low paid roles, so problems of in-work poverty are not going away. How can the conditions be created to support business to create better quality, better paid jobs? Embracing the positive potential of automation and AI to release people from some low paid, low skilled work is an important avenue to explore. However, this needs to be coupled with comprehensive support and funding for people to re-train to benefit from the new jobs created by new technology, including investment by employers in training and progressing their own staff. The emphasis is too often placed solely on individuals to be responsible for their journey out of low pay, rather than also holding employers to account for the wages they pay, or for the amount they invest in upskilling their staff.
People looking to progress in the labour market may have been in low paid work for years, decades even, and so can lack skills and confidence in job seeking, knowledge about suitable jobs, and what skills are relevant now and in the future. Current provision for skills progression for those in work is woefully inadequate; they need advice, labour market information and in many cases financial support. If you’re struggling to pay the rent, investing in training is nigh-on impossible, and the low take-up of advanced learner loans suggests an understandable reticence to take on debt; a basic income could relieve some of this financial risk and provide a more stable financial basis from which to progress.
The threat of sanctions for those in low paid work through Universal Credit’s in-work conditionality is surely counter-productive. Stress and poverty both affect decision-making, our ability to focus on long-term goals, and to navigate through challenging circumstances; hardly a good position from which to make decisions about career aspirations, or to be able to commit to and succeed in retraining. Far better to provide properly funded progression advice and support, and a benefits system built on basic income principles, without punitive sanctions (for which there is little evidence of efficacy).
Returning to our discussion in Bristol, we concluded that whilst basic income on its own isn’t a magic bullet, it could be one part of a comprehensive programme of change to address some of our most pressing problems. We’ll be exploring whether something could be piloted in Bristol to add to the growing body of basic income knowledge and evidence – watch this space.