Training: Universal Basic Income

Some time back, in a discussion on the changing nature of work, we introduced the concept of universal basic income (UBI). The idea is that the government (federal, state, local) provides citizens with a fixed income. A number of factors appear to have been responsible for the resurrection of this quirky idea: the snail’s pace of wage growth in recent years (less than the GDP per person), fears that digital technology—primarily robots and artificial intelligence—will be causing significant job loss in the not too distant future, and continually rising income inequality.

In our initial report, we noted some of the pluses and minuses on either side of the argument for this kind of arrangement. First, there’s the question of where the money would come from. Second, and important for those of us concerned with training and employee development, there’s the issue of how these free handouts will affect attitudes about work. (Would people who effectively get something for nothing even want to bother with work as we currently know it, especially if their jobs aren’t particularly rewarding or fulfilling?)

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Whereas traditional challenges for employers have been selecting the right candidate for the job (and then perhaps training them up), if UBI proponents have their way, future trainers and employee development specialists will be challenged with developing programs that make jobs attractive enough to draw qualified candidates out of their UBI haze. This is not to mention that work as we currently know it is fundamental to the allocation of spending power in our capitalist society: I work, providing goods or services, I get paid and spend it on goods and services that you provide, and the economy keeps humming.

On a different level, sociologists argue that work provides us with structure, with meaning and identity. One of the first questions we ask when we meet someone new is, “What do you do?” To that, UBI advocates argue that without the necessity of earning a living and without the draining drudgery of a daily job, creativity will bloom, to the benefit of individuals and society—and we will all feel better.

And so it was that the idea of a universal wage drew my attention when it was batted around during the 2016 presidential campaign. Then after the election, during the debate about the money that the average US taxpayer would recoup from the 2017 tax reform legislation, I came across an article about the state of Alaska handing out annual stipends to residents. That’s to every man, woman, and child in the state and it’s been going on for almost 40 years. The money comes from the Alaska Permanent Fund (APF) as a cash dividend regardless of age, employment, or social standing. The amount has varied over the years, from as low as $800 to as much $2,072 a person (a hefty $8,288 for a family for four). The money comes from the marketing and sale of the state’s petroleum resources.

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The APF’s guaranteed annual payment is in line with standard UBI criteria. The payments are universal, unconditional, uniform, regular, and are provided in cash. Where it strays from the ideal is the annual fluctuations, which are dependent on the APF’s performance. Plus the dividend amount is too small to be considered meaningful income in the absence of other sources.

Nonetheless, Alaska’s experiment has interested both economists and sociologists (and undoubtedly not a few politicians). Researchers at the University of Alaska, for example, took a look at the sociocultural effects of the state’s experiment. They found that in the area of income distribution, the dividend program accomplished one of the things that UBI is supposed to do: balance out income. Between the 1980s and early 2000s, Alaska was the only state in the country where income in the bottom 20% of the population grew at a faster rate (25%) than the top 20% (10%). Both economists and state officials credit the fund with keeping thousands of residents from falling below the poverty line and reducing their dependence on traditional forms of government support. The researchers also noted that the dividend payments have been an incentive for people to remain in the state, helping to stabilize the population, as well attracting new residents.

More interesting for training and employee development purposes is research out of the University of Chicago and the University of Pennsylvania that investigated the criticism that giving people “free” money is a disincentive to work. Specifically, the researchers wanted to assess the effects of Alaska’s cash payments on trends in employment against a background of the effect on the state’s economy. What they found was that the universal dividend “had no effect on employment” as compared to a hypothetical control—that is, there was no difference between Alaska and the control in “workforce participation,” meaning the share of the population either working or unemployed and seeking work. Where the researchers did find a difference—and this has potentially interesting workforce implications—was a 1.8 percentage point increase in people working part-time. They suggested two potential reasons for this increase:

A) The dividend made it possible for people who wanted to shift away from fulltime employment and shorten their work hours to do so.

B) The extra money made it possible for people who wanted to work but couldn’t afford child care or transportation the dollars to cover these expenses.

The researchers report that while there was evidence to support option B—that people who wanted to work now could, they also found some evidence that the dividend payments did reduce work hours “on the margins.” This was offset, however, by the increased spending made possible by the dividends, which in turn caused businesses to hire, which gave a boost to the economy.

Credit: iStock/gmast3r

One thing that’s important to note is that Alaskans don’t see the dividend program as a handout, something to feel embarrassed by. They consider the PFD their due as the owners of a publically held resource and in fact, are talking about channeling some APF dollars into state programs threatened by revenue shortfalls. This kind of thinking suggests that UBI Alaska-style has worked its way into the state’s institutional consciousness as a sanctioned solution to workforce fluctuations, negating the stigma often associated with government handouts.

Two research projects obviously don’t provide the definitive word on an issue, but when their results are aligned with recent workplace developments, specifically the influence of technology, the picture becomes more substantive. I am thinking, for example, about the Oxford University study that estimates that in the next two decades as many as 47% of the jobs in this country will be candidates for automation. Other researchers suggest that things aren’t quite that bad. Many jobs involve “bundles” of tasks, many of which machines can’t handle, which would make them more difficult to automate.

Single or bundled jobs, we are encouraged to believe that the computers that have become ubiquitous in the workplace increase our individual capacity to perform discrete and essential skills with the net effect of making each of us more expert at what we do (and hopefully less disposable). The kicker is that we will have to be constantly updating those skills, and at a more rapid pace, suggesting that the nature of expertise will morph from a static state to a constant game of catch-up.

Under these circumstances, the challenge for training departments would seem to be how to sell the value of developing and maintaining this constantly evolving expertise in the marketplace and then deliver it in the workplace, particularly if there is another socially sanctioned alternative out there like UBI. Why work with all that stress—and against the background possibility that your job could be eliminated with little notice—when you can sit home and eat bonbons on the couch?

None of this may be a problem for millennials and whatever handle we apply to the generation coming up, but for bridge people who are bottom-line technology literate but weren’t born with a smartphone in their hand, such probabilities might not seem so enticing. Not that any of this is going to happen overnight, of course, and the challenge for trainers, et al. will be how to be managing the transition as one group fades out and the other ascends. And this may well mean merging the two cultural groups at a time when an expanding group of workers who, free of one of the typical benefits of work by UBI or some related alternative, decide to opt out, taking their knowledge and experience with them. Or given the stress of the technology-dominated workplace, decide that a part-time work is more to their liking. How will we keep the first group on the job until the millennials et al. catch up? How will we train an expanding part-time workforce to keep up with the mandate to be constantly acquiring new skills?

So yes, we are looking at a future where jobs may be “redefined” rather than “destroyed” but also one where work has become just too much of a hassle to bother with.