Universal basic income schemes have been tested in numerous places around the world, without ever graduating from those pilot studies into anything more meaningful.  Nonetheless, they remain central to the ideas of many for how we can build a degree of buffer in these most turbulent of times to help people adapt to changes in the labor market.

Critics of UBI fear that it will inevitably lead to fecklessness as people stop striving and settle into a life of relative luxury.  It’s a concern that has been somewhat debunked by a notable study on the pilot of UBI in Alaska in 2018, which showed no such consequence.

The Alaska Permanent Fund Dividend program has been in place for the past 25 years, with the money distributed from the oil reserve royalties earned in the state.  The unconditional cash payments amount to $2,000 per Alaskan resident.

“It is reasonable to expect an unconditional cash transfer, such as a universal income, to decrease employment,” the authors say. “A key concern with a universal basic income is that it could discourage people from working, but our research shows that the possible reductions in employment seem to be offset by increases in spending that in turn increase the demand for more workers.”

Slow progress

Despite such positive results, the progress has been slow with the rollout of any kind of UBI-based scheme.  More evidence is coming in all the time, however, the latest of which is from the Stockton Economic Empowerment Demonstration (SEED), which highlights how a guaranteed income significantly improves the job prospects of people.

SEED consisted of a randomized control trial that saw $500 distributed every month for 2 years to 125 people.  The cash came with no strings attached and with no work requirements.  All of the participants were selected from neighborhoods that sat below the average household income in the Stockton area.

The program was assessed by independent evaluators from the Evidence for Action program of the Robert Wood Johnson Foundation, with results gathered from the first year of the program, which ran from February 2019 to February 2020.  The results showed that recipients were twice as likely to obtain full-time work as nonrecipients.  Recipients also reported feeling less anxious and depressed than their peers.

With Covid prompting a rethink of welfare systems around the world, these kind of results will be hugely important in driving evidence-based policymaking.