As part of an ambitious overhaul of society, job offers in under-staffed public sector industries could be combined with a universal basic income to lift the most vulnerable out of povertyby Felix FitzRoy and Jim Jin / February 27, 2019 / Leave a comment
The idea of a universal basic income (UBI) has attracted increasing attention, particularly since the recession. Fear of unemployment due to artificial intelligence and automation, austerity, welfare cuts, and precarious, low wage employment, as well as under-employment (including involuntary part-time work), are all relevant as they increase alongside rapidly rising inequality.
In addition, the manifest failures and injustice of many existing targeted welfare schemes and related sanctions—including the disastrous new “universal credit”—have strongly encouraged the search for a radical alternative approach to welfare.
In the US, a public sector job-guarantee with a ‘living wage’ of $15 per hour or twice the current federal minimum wage is favoured by many progressives, including presidential candidates Bernie Sanders and Elisabeth Warren. But such a generous job-guarantee would disrupt the labour market, forcing many private employers to raise wages and prices, and unleashing very restrictive fiscal and monetary policy to forestall the inflation that would otherwise offset wage hikes. It would also be difficult to include all the currently unpaid home care and other work done mainly by women in such a scheme.
A basic income as a more promising, affordable first step towards urgently-needed reform has recently been developed in detail by Stewart Lansley and Howard Reed in their Final Report for Compass, Basic Income for All. They propose a modest UBI of £60 per week for all working-age adults, with £165 for pensioners and £40 for children.
This would supplement irregular earnings and offer some compensation for all the unpaid work in the home. It would also be added to other income in calculating means-tested welfare measures, the cost of which would then decline. It would double the income of the poorest income decile while reducing the top decile’s income by 6 per cent—a useful step towards greater equality and social justice.
Doing the maths
UBI could be funded by abolishing the personal income tax allowance of £11,850, which mainly benefits higher earners, taxing lower incomes at 15 per cent, and raising existing income tax rates by 3 per cent. Taxing capital gains like other incomes, and reducing widespread tax avoidance by individuals and international corporations, are also obvious reforms, but face strong political opposition.
Moreover, modest UBI cannot raise a single adult living alone above the poverty level…