The final day of the Future of Everything Festival focused on new income options and how to manage displaced workers. These are necessary considerations for the near future, after the widely-predicted Robot Apocalypse puts millions of people out of work. Two plans were discussed: a Guaranteed Job plan, and a Universal Income plan.
Guaranteed Government Job
Jay Coen Gilbert took the stage in a session on creating better companies. The discussion eventually evolved into one about a federal plan to guarantee everyone a job. The premise, as discussed, is that there will be a government work program open to anyone. Any U.S. citizen could enter and leave the program at will, and the program would guarantee a job for a day, a month, or a lifetime. The suggested wage was $15 per hour; anyone who wanted to opt in could do so, with legitimate work required in order to be paid. What was not addressed was what to do with those who – for whatever reason – refuse to work. No one has yet stated what the jobs would be, or what the cost of the bureaucracy would be to administer such a program. It was inferred that this program would replace current social safety nets.
Another plan was described in depth by Democratic presidential candidate Andrew Yang. Under his plan, the government would pay every U.S. adult citizen $1,000 per month for doing absolutely nothing. He was clear that everyone – from the least employable up through Jeff Bezos and Bill Gates – would be eligible to get a monthly “wealth dividend” check. When asked about existing programs, his response was essentially that if you like your welfare you can keep your welfare and if you like your social security check you can keep your social security check. He assumes that those who are getting an entitlement payment of less than $1,000 per month will choose the $1,000 over the lower amount, and that those who are getting more will stick with the program they have.
Yang took a show of hands at both the beginning and the end of the discussion. At the beginning, it appeared that less than half were supportive of universal income; the supporters looked to be the young people in the room. He took another show of hands afterward and only a few had changed their minds either way. Yang did state that his plan will not involve the creation of a new expensive bureaucracy, as opposed to the Guaranteed Job proposal.
Cost of New Income Options
Neither speaker was forthcoming with the cost to implement the plans, so I got out my trusty iPhone and did some arithmetic. In the case of the Guaranteed Job plan, with roughly 70 million able-bodied Americans not currently working, the $15 per hour plus benefits would amount to $2.9 Trillion per year. That cost is for the wages alone, and does not include the cost of the bureaucracy.
To compare the cost of the Guaranteed Job plan to the cost of a Universal Income plan, I made calculations based on 206 million working-age people (Federal Reserve Bank of St. Louis). The cost of the Universal Income plan would be about $2.5 Trillion. On top of that cost would be the program administration cost, as well as the cost to increase the amount paid to those who currently receive less than $1,000 per month in government assistance.
It is safe to assume that the cost of doing either program will amount to an incremental cost over current spending of roughly $3 Trillion per year. The only difference is in whether or not the “wealth dividend” is earned through working. When discussing how to fund either of these new income options, taxation was not discussed.
A Sidebar on Modern Monetary Theory
Stony Brook University’s Professor Stephanie Kelton, an advisor to Senator Bernie Sanders, had previously opined that federal debt does not matter. If Professor Kelton is correct, then today’s outrage about the level of the federal debt is moot, and the party can continue forever without concern for the financial chickens coming home to roost.