3 ms·

Caveat: Not a professional analysis, and not the OP. There's 248 million people ages 16 and older in the US, of which 63% are in the labor force[1]. So 156 mi

by chiph 13y ago

Caveat: Not a professional analysis, and not the OP. There's 248 million people ages 16 and older in the US, of which 63% are in the labor force[1]. So 156 million people are available for work (not all of whom are employed). Total population is about 330 million. If each of them were to get a basic monthly stipend (this is everyone, including infants) of $1200, that's $396 billion per month in payments. Per working individual, that's a tax burden of $2538 per month. And that's just for this program - there's also the rest of government to pay for. Military, roads, police + fire protection, and so on. This also assumes that the basic stipend replaces all other existing entitlement and welfare programs. Which isn't likely, because politics. Yes, the working individual will also receive a stipend payment, reducing their net tax burden to $1338. But for an hourly employee, that comes out to about $8.35 per hour worked that goes to tax. Even with the new $10.10 minimum wage proposal, that leaves them just $1.75/hr as incentive to work, vs. just staying home and living off the stipend. [1] http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_12_1YR_S2301&prodType=table http://factfinder2.census.gov/faces/tableservices/jsf/pages/...

smsm42 13y ago
Note also if you living on the dole, you get free housing, free healthcare, free phone, free childcare services, free education, etc. etc. All of which you'd have to pay for if you were stupid enough to work. So actual initiatives are even worse. Even now, welfare already pays more, if benefits are counted, than a minimum-wage job: Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.[1] In fact, in 33 states and the District of Columbia, welfare pays more than an $8-an-hour job. In 12 states, including California, as well as the District of Columbia, the welfare package is more generous than a $15-an-hour job. In Hawaii, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, Vermont and Washington, D.C., welfare pays more than a $20-an-hour job, or more than 2.75 times the minimum wage.[2] [1] http://www.cato.org/publications/white-paper/work-versus-welfare-trade http://www.cato.org/publications/white-paper/work-versus-wel... [2] http://www.cato.org/publications/commentary/why-get-welfare http://www.cato.org/publications/commentary/why-get-welfare Of course, there are incentives to work still, but $1200/month and accompanying tax raise may kill them for many more people than now.
- loup-vaillant 13y ago
  Of course, a sufficiently high ABI would have welfare gotten rid of: no more free housing, schooling, nothing: just live with your ABI. To really calculate the cost of ABI, you need to subtract the cost of welfare.
  - smsm42 13y ago
    That won't work. If it worked, we woudn't need free housing, schooling etc right now - giving people money would be much easier. The problem is that money is fungible - if you give people money instead of free housing, they'd just by some crap on it and then will come back to you and complain they have nowhere to live, and you're back to square one. That's why there are so many non-monetary benefits - because you can't sell free schooling and buy beer or fancy shoes or a lottery ticket on it. Some benefits - like free phones - can be sold, and they are actively abused and sold.
    - dllthomas 13y ago
      "The problem is that money is fungible - if you give people money instead of free housing, they'd just by some crap on it and then will come back to you and complain they have nowhere to live, and you're back to square one." That's the fear that leads to all the specific help, but the experiments with unconditional cash show that is not what happens.
      - smsm42 13y ago
        So far I've seen all the experiments conducted in remote places with extremely poor people having no experience with welfare state. What I'd like is to see something like that somewhere in Chicago. I.e. remove all fringe benefits, monetize them and convert to cash payments, and see how that goes. I suspect the result would be much different.
        dllthomas 13y ago
        You've missed several relevant studies. First, the Mincome experiment in Manitoba (confusingly, while "Minimum Income" is something different than "Basic Income", the experiment did test "Basic Income"), which ran for five years in the 1970s and found that only new mothers and teenagers worked substantially less. http://en.wikipedia.org/wiki/Mincome http://en.wikipedia.org/wiki/Mincome Second, there was a case in London recently where a large lump sum was given to each of 13 long-term homeless men. http://www.washingtonpost.com/opinions/free-money-might-be-the-best-way-to-end-poverty/2013/12/29/679c8344-5ec8-11e3-95c2-13623eb2b0e1_story.html http://www.washingtonpost.com/opinions/free-money-might-be-t... Third, unconditional income on an Indian reservation (derived from Casino profits) showed a substantial improvement in the welfare of children from poor families: http://opinionator.blogs.nytimes.com/2014/01/18/what-happens-when-the-poor-receive-a-stipend/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1 http://opinionator.blogs.nytimes.com/2014/01/18/what-happens... You can absolutely find nits to pick about all of these, but they are not "remote places with extremely poor people having no experience with the welfare state". I'd love to see an experiment conducted in Chicago or wherever else, but if people in all of the above, diverse situations (some of whom certainly have experience with a welfare state) behave one way it starts to be perverse to expect something different for an arbitrary new group of people (which isn't to say we couldn't be surprised or shouldn't do more research, to a point).
dllthomas 13y ago
Your math assumes we're paying for it with an employment-contingent head-tax, which would be totally crazypants. Most income is earned by high earners, most earners are not high earners.
- dllthomas 13y ago
  From another perspective, the total income of US persons in 2010 was over $12 trillion/year[1]. People are currently paying a total of $899 billion in federal income tax. Assuming we distribute the burden evenly per dollar earned, assuming incentive to work is linear in dollars, and assuming there are no other effects we would see incentive to work drop by something a little over one third. This leaves dramatically more incentive than the above numbers would indicate. For the record, though, $14k/yr is about twice the BI level that I personally (tentatively) favor. [1] https://bber.unm.edu/econ/us-tpi.htm https://bber.unm.edu/econ/us-tpi.htm [2] https://www.jct.gov/publications.html?func=startdown&id=4363 https://www.jct.gov/publications.html?func=startdown&id=4363

by chiph 13y ago

smsm42 13y ago

Note also if you living on the dole, you get free housing, free healthcare, free phone, free childcare services, free education, etc. etc. All of which you'd have to pay for if you were stupid enough to work. So actual initiatives are even worse. Even now, welfare already pays more, if benefits are counted, than a minimum-wage job: Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.[1] In fact, in 33 states and the District of Columbia, welfare pays more than an $8-an-hour job. In 12 states, including California, as well as the District of Columbia, the welfare package is more generous than a $15-an-hour job. In Hawaii, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, Vermont and Washington, D.C., welfare pays more than a $20-an-hour job, or more than 2.75 times the minimum wage.[2] [1] http://www.cato.org/publications/white-paper/work-versus-welfare-trade http://www.cato.org/publications/white-paper/work-versus-wel... [2] http://www.cato.org/publications/commentary/why-get-welfare http://www.cato.org/publications/commentary/why-get-welfare Of course, there are incentives to work still, but $1200/month and accompanying tax raise may kill them for many more people than now.

loup-vaillant 13y ago
Of course, a sufficiently high ABI would have welfare gotten rid of: no more free housing, schooling, nothing: just live with your ABI. To really calculate the cost of ABI, you need to subtract the cost of welfare.
- smsm42 13y ago
  That won't work. If it worked, we woudn't need free housing, schooling etc right now - giving people money would be much easier. The problem is that money is fungible - if you give people money instead of free housing, they'd just by some crap on it and then will come back to you and complain they have nowhere to live, and you're back to square one. That's why there are so many non-monetary benefits - because you can't sell free schooling and buy beer or fancy shoes or a lottery ticket on it. Some benefits - like free phones - can be sold, and they are actively abused and sold.
  - dllthomas 13y ago
    "The problem is that money is fungible - if you give people money instead of free housing, they'd just by some crap on it and then will come back to you and complain they have nowhere to live, and you're back to square one." That's the fear that leads to all the specific help, but the experiments with unconditional cash show that is not what happens.
    - smsm42 13y ago
      So far I've seen all the experiments conducted in remote places with extremely poor people having no experience with welfare state. What I'd like is to see something like that somewhere in Chicago. I.e. remove all fringe benefits, monetize them and convert to cash payments, and see how that goes. I suspect the result would be much different.
      - dllthomas 13y ago
        You've missed several relevant studies. First, the Mincome experiment in Manitoba (confusingly, while "Minimum Income" is something different than "Basic Income", the experiment did test "Basic Income"), which ran for five years in the 1970s and found that only new mothers and teenagers worked substantially less. http://en.wikipedia.org/wiki/Mincome http://en.wikipedia.org/wiki/Mincome Second, there was a case in London recently where a large lump sum was given to each of 13 long-term homeless men. http://www.washingtonpost.com/opinions/free-money-might-be-the-best-way-to-end-poverty/2013/12/29/679c8344-5ec8-11e3-95c2-13623eb2b0e1_story.html http://www.washingtonpost.com/opinions/free-money-might-be-t... Third, unconditional income on an Indian reservation (derived from Casino profits) showed a substantial improvement in the welfare of children from poor families: http://opinionator.blogs.nytimes.com/2014/01/18/what-happens-when-the-poor-receive-a-stipend/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1 http://opinionator.blogs.nytimes.com/2014/01/18/what-happens... You can absolutely find nits to pick about all of these, but they are not "remote places with extremely poor people having no experience with the welfare state". I'd love to see an experiment conducted in Chicago or wherever else, but if people in all of the above, diverse situations (some of whom certainly have experience with a welfare state) behave one way it starts to be perverse to expect something different for an arbitrary new group of people (which isn't to say we couldn't be surprised or shouldn't do more research, to a point).

dllthomas 13y ago

Your math assumes we're paying for it with an employment-contingent head-tax, which would be totally crazypants. Most income is earned by high earners, most earners are not high earners.

dllthomas 13y ago
From another perspective, the total income of US persons in 2010 was over $12 trillion/year[1]. People are currently paying a total of $899 billion in federal income tax. Assuming we distribute the burden evenly per dollar earned, assuming incentive to work is linear in dollars, and assuming there are no other effects we would see incentive to work drop by something a little over one third. This leaves dramatically more incentive than the above numbers would indicate. For the record, though, $14k/yr is about twice the BI level that I personally (tentatively) favor. [1] https://bber.unm.edu/econ/us-tpi.htm https://bber.unm.edu/econ/us-tpi.htm [2] https://www.jct.gov/publications.html?func=startdown&id=4363 https://www.jct.gov/publications.html?func=startdown&id=4363