What happens when you give people a no-strings-attached monthly check? Finland thought it would lead to more people working. Boy were they wrong. Here’s what happened.
Universal basic income (UBI) is the hot policy solution that government leaders worldwide are proposing – even experimenting with. It guarantees each citizen a regular payment regardless of whether or not they work.
How is it different from unemployment assistance? You don’t have to try to find a job or prove you’re looking for work. That sounds like incentivizing laziness.
The government of Finland wanted to test that theory and experimented with a basic income program that gave 560 euros (about $633) to 2,000 randomly selected unemployed people aged 25 to 58 for two years. Even if they got a job, the check kept rolling in.
The Finnish government hoped to promote more active participation in the workforce and a stronger incentive to work than their current unemployment assistance program.
Countries worldwide including policymakers here in the U.S. have been paying close attention to the results of the first nationwide experiment like this.
The results are out and confirm what one might expect. Those receiving a no-strings-attached check were no more incentivized to work than anyone else. There were some surprising positive impacts on well-being though.
Researchers found when comparing basic income recipients to the control group:
Basic income recipients were no better at finding work (and no worse)
Basic income recipients who did work, worked slightly more, but earned less in wages
Basic income recipients experienced significantly fewer problems related to health, stress and ability to concentrate
Basic income recipients were more confident in their own future and their ability to influence societal issues
Bureaucratic red tape was also reportedly cut as individuals didn’t have to submit paperwork documenting their work search.
We don't know how much it would cost to scale this program nationally or how a national program would be financed. Those are major considerations.
However, a new working paper from the National Bureau of Economic Research estimates that giving each U.S. adult $12,000 annually would cost $3 trillion per year. By the way, the government receives about $3.4 trillion in revenue. So virtually every dollar in would go right out displacing spending on other assistance programs, defense, education and every other priority.
Could we really justify raising taxes (likely substantially) to bankroll an employment program that doesn’t get Americans to work, but does make them feel better about themselves?
Just measuring the results to the intended goal, this experiment would seem to be a failure. The left is hailing failed experiment as still a win because it makes people feel happier. Giving someone cash every month to do nothing would make anyone feel good, that doesn’t mean our hard-earned tax dollars should be hauled out of our paychecks for that purpose.
In the end, the pain from the costs will leave more people angry than the good feelings it inspires for a few.