It is time to add universal basic income to the public conversation. I support UBI+ which compliments other investments we must make rather than substitutes for them. As I and many others have argued, automation - which now includes generative AI - means that wages will continue to stagnate in real terms, even if there are jobs. The best and simplest way for us to reduce income and wealth inequality, and for us all to share in the fruits of productivity, is through a modest income transfer that leaves the rich wealthy but that nearly doubles the income of the working poor.

Today’s short post is about two activities we are testing to help spread the word about UBI, and we need your help!

The first is a poll to find out what people think about universal basic income: do they know about it? What inclines them toward it? What concerns do they have? We will use the results to help us frame the case for UBI, possibly for different audiences. The poll is anonymous. You can fill it in here.

The second activity is a movie night! I attended the BIEN basic income conference in Toronto this August and was at the opening of a couple of really well done and emotionally engaging documentaries which followed the lives of households receiving a modest basic income supplement. This coming Thursday, November 12, we’ll be having a watch party for one of these documentaries, It’s Basic , which was produced by Mayors for a Basic Income. The virtual showing is at 7PM EST and will be preceded by a short intro and followed by an open discussion and Q&A. Please register here and we’ll send you the info you need to join. Here's the movie's trailer.

We’d really appreciate your taking these actions and it would be great if you could share this post and also maybe post this on other social media sites. Comments and shares always welcome!

See you Thursday!

Like many things economic, how Social Security works is often misunderstood. You might think that it works like an annuity: you put in a given contribution which is calculated to give you an income stream at some point in the future. Right? Wrong. Social Security is “pay as you go”. Your payroll taxes actually pay for Social Security checks to current retirees. That is an income transfer. Any money left is placed in the Old-Age and Survivors Insurance and Disability Insurance Trust Fund. What makes it seem like it’s your money is that under the law you are “entitled” to a benefit in part based on your lifetime contribution. But the size of those benefits and the rules regarding when you get them are subject to change, unlike an annuity. It really is a transfer from current workers to retirees, not insurance in the common meaning of the word.

That system works well when the economy is growing and there are lots of younger workers and few retirees. It doesn’t work well when the baby boomers retire. Then we must draw money from the Trust Fund. Turns out that there wasn’t nearly enough put away in the trust fund and, further, that it didn’t earn much of a return.

We consider the return on the Social Security trust fund only briefly here since it has limited relevance to UBI. The trust fund can only legally buy special-issue U.S. Treasury securities that pay low interest rates. Over the last ten years the effective yield on these bonds has been close to zero when adjusted for inflation. Meanwhile Canada’s trust fund, which is invested in the market and managed by professionals, earned over six and a half percent annually, inflation adjusted. Canada’s fund is solvent for at least the next 75 years while ours is projected to run out of money in 2032^[1].

The second funding problem we have with Social Security is that we haven’t been putting enough away, although a decent return would have greatly helped. Social Security is funded by a tax on wages. But the tax is limited: above a certain cap, you no longer pay any additional Social Security taxes. Currently covered earnings above $184,500 are not taxed. There is no lower limit on wages subject to the payroll tax. In addition, interest income, dividends, capital gains, and pass-through business income are not subject to the Social Security tax. In short Social Security, the largest Federal expenditure, is financed by a regressive tax on wages paid mostly by the poor and middle class. A regressive tax takes a larger percentage bite from the incomes of poorer folks than richer ones.

What can we learn from Social Security when it comes to the design and funding of a universal basic income?

The first lesson is that we should pay for it using the general income tax. If we look around the world, many countries pay for their retirement system from general tax revenues, and UBI could be financed that way. Total income in the US grows along with the economy and exceeds the rate of inflation. If we finance UBI through an increased income tax as in the Shares in America model UBI proposal, revenue will grow automatically and so would benefits - keeping ahead of inflation.

Some countries, especially in Europe, use both general income tax revenue and what is called a value added tax, or VAT, to fund their retirement systems and some UBI proponents such as Andrew Yang have called for doing that here. A value added tax is a national sales tax, and if applied to everything would be regressive. To make it less regressive, common everyday needs such as groceries, healthcare, prescription medicine, public transportation, and children’s clothing are exempted. In addition, luxury goods face a higher VAT.

The main argument for a value added tax is that it is harder for rich people to wriggle out of than the Swiss cheese of our current income tax. Personally, I prefer a complete reform of our tax system to drastically simplify it and remove the loopholes. Income is income from whatever source as Patriotic Millionaires points out. I can’t imagine that instituting a VAT in the US would require any less political muscle than enacting meaningful tax reform.

A third approach is to invest public funds in income-producing assets. Canada does this with its pension fund, and Norway invests its oil revenues in a sovereign wealth fund. Why couldn’t we use a similar approach to help finance universal basic income? Bernie Sanders has called for an American AI Sovereign Wealth Fund which would hold the stock of AI companies. Sam Altman of ChatGPT suggests an American Equity Fund financed by an annual tax of 2.5% of large companies’ market value, paid in shares, plus a 2.5% tax on privately held land values, paid in cash.

I like the idea of an independently managed sovereign wealth fund as in Canada. We missed the boat on doing that here with the Social Security trust fund. To avoid constitutional issues, it would probably be necessary to create such a fund using income tax revenue, and have it run by an independent organization. I suggest possibly earmarking a portion of our universal basic income as a contribution to the sovereign wealth fund. Everyone would get the same universal basic income and the same percent of that UBI would flow into the public wealth fund. As we know, the stock market’s long-term return is around 10%. Rich people live on their investment income, and wealth accumulates at a much faster rate than wages grow. As I mention in my book, four men in the US have as much wealth as the bottom half of all Americans.

For generations, the wealthy have accumulated fortunes through their ownership of stocks and other productive assets, while most Americans have depended primarily on wages. Why shouldn’t everyone share in the returns from America’s growing wealth? A publicly owned investment fund could make that possible, providing income for future generations rather than leaving them entirely dependent on the wages and payroll taxes of tomorrow’s workers.

To summarize: we should learn from Social Security and fund universal basic income using general income-tax revenues as suggested in the Shares In America model UBI proposal. We could dedicate part of our universal basic income to funding a US public wealth fund which in time would pay handsome dividends.

^[1] https://www.cppinvestments.com/for-canadian/the-success-of-the-canadian-pension-fund-model/

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Both the left and the right seem to be focused on short term, often reactive politics and policies. Let’s take a moment to look at the big picture. This is mine.

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Sharing of Our Wealth

Let’s start with the economy. People are starting to realize that the economy of the US, and indeed the world, has fundamentally changed and we’re not going back. So, what is the new reality and how do we deal with it?

Already back in the 1960’s articles came out noting the tremendous increase in productivity – the ability to produce more with less labor – in US manufacturing and agriculture. These articles speculated that “soon” people would only have to work six months out of the year for us to have an economy that produced all we needed. They suggested investing in the stock of companies catering to leisure activities.

These rosy predictions didn’t come to pass. Yes, we produced more than ever, but instead of working fewer hours, many people ended up working more hours for less money as they lost their jobs. The statistics on this are clear. Since the 1970’s the economy has kept on growing but wages for most types of work have stagnated. Artificial intelligence (AI) continues this trend. The growth in the economy went almost entirely to the top. The bottom half of US workers share ten percent of national income pretax and benefits. People simply cannot get more for their work when there is a surplus of labor thanks to automation.

In my vision of the future, we distribute the benefits of increased productivity more evenly. We all share in the wealth created by our amazing technology. That doesn’t mean we don’t “work” but rather that we get a productivity dividend and can perhaps spend time on activities that are more meaningful to us. Universal basic income is the simplest and best way to make sure we all share in the growth of our economy as we did in the period after World War II. It can help guarantee that technology change benefits us all regardless of how many jobs it displaces. Think how great it would be to share our growing prosperity—and have more choice about how we spend our lives!

That’s one pillar of my vision of the future.

Climate Change Action

A second pillar is dealing with climate change. Basic economics is already doing the heavy lifting on that. Wind and solar are the cheapest sources of energy. Electric cars have lower lifecycle cost than gas ones. The transition away from fossil fuels is happening by itself, despite the concerted attempts of fossil fuel companies to put up political roadblocks. But government clearly has an interest in dealing with this threat to our future – a threat that is far greater and more damaging than any military threat could possibly be. The Biden administration did great work on this and it needs to continue after the Trump/Heritage Foundation interruption. Think how great it would feel to build a sustainable world—and leave that to our children!

Universal Healthcare

A third pillar of my vision is dealing with healthcare in the US. I’m a big proponent of the managed capitalist market economy but there is virtually no “market” in healthcare. You can’t shop for healthcare the way you shop for groceries, and we can’t import healthcare the way we do clothes. It is only the 800-pound gorilla of the Federal government that can bargain effectively on healthcare costs. There is a reason that Medicare pays the lowest rates for services. Healthcare coverage needs to be universal in the US as a human right and as the only effective way to control costs. Think how great it would be if none of us had to worry about healthcare and it cost less!

Limiting Money in Politics

Money in politics is fundamentally corrupt. A constitutional amendment to limit political spending is a great long-term goal but not likely to happen anytime soon, if ever.

But there are actions that can be taken now. One is public financing of campaigns. New York, both state and city, has a great program whereby smaller in-district contributions are matched at rates up to eight to one (one dollar of contributions gets up to eight dollars of matching funds). Combined with raising taxes on wealthy donors, this would help to level the electoral playing field. The election of Mamdani shows how popular political outsiders stand a chance when the money playing field is somewhat levelled. Think how great it would be if people could get elected because of what they say rather than what big money says about them!

Taxing the Rich

Income inequality and even more so wealth inequality is at historic levels in the US and world. I already mentioned sharing some wealth through universal basic income (UBI), and that will require the well-off to pay more. In my vision, we don’t need a wealth tax. We just need to treat all sources of income as income, regardless of whether it comes from wages, capital gains, dividends, or an inheritance. Once we do that - using a steep progressive income tax rate like we had after World War Two - inequality will decline. Of course, we also need to drastically simplify our byzantine federal tax code to eliminate as many of the loopholes as we can. Wouldn’t it be great if rich people paid their taxes!

Summary

So, there you have it. Part of my vision for the future. Political parties are free to adopt it!

Since 1900 we have seen vast increases in wealth brought about by industrialization and incredible strides in science and medicine and technology. We really all could live better now than ever before, despite the naysayers. We are living in an age of plenty. Let’s make it feel that way for us all. As Captain Picard says, ‘Make it so!’

Certainly, we’ve heard the reverse - that what is good for business is good for the people. The US Chamber of Commerce and National Association of Manufacturers both opposed Social Security in the 1930’s saying it would be bad for business and the economy, as well as socialism. It didn’t pan out that way of course. Countless billions have been spent by the business community, especially since the 1970s, to reinforce the second message and to tar the first.

Business organizations have often treated social legislation as a burden. Yet much of that legislation—from Social Security and public education to unemployment insurance and public health—has helped produce the healthy, educated, more financially secure workers and consumers on whom business depends. In a time of increasing economic change and insecurity there are plenty of reasons to think that universal basic income will benefit the economy, business, and all of us.

What does economic theory say about basic income and business?

Here are four ways basic income is likely to affect business and the economy based on economic theory:

• Increases economic activity: The less well-off spend more of their income than the rich. Income transfers from the wealthy to lower income households increase consumer spending, which drives the economy and increases consumption. That benefits business.

• Encourages entrepreneurship: A guaranteed floor reduces the personal risk involved in starting a business, freelancing, or becoming self-employed. We’ve often heard how important small businesses are to the economy, and gig and contingent work has ballooned.

• Creates a more stable economy: UBI acts as an automatic stabilizer. Payments continue during recessions, helping businesses retain customers when wages and employment decline.

• Leads to a more secure and stable workforce: Workers have greater ability to manage health problems, childcare, transportation, and job transitions. Lower-wage workers get a boost to their incomes. All of this can lead to a more stable workforce.

In short there are several theoretical reasons to believe that UBI, or any income supplement financed by taxing high incomes, would benefit people, the economy, and business. A recent study of the economic effects of Social Security, our largest existing income transfer program, estimates that each dollar of Social Security payment generates over two dollars of economic activity.^[1]

What do basic income trials show about business effects?

The theoretical arguments that UBI helps business, especially local ones, are quite strong and backed by other “macroeconomic” data. For example, we know that stimulus checks increase spending and help businesses and the economy^[2]. But is there direct evidence from basic income trials? There is, but quantifying the effect is difficult because most studies of income supplements enroll only a small percentage of the population and consider the effects of the payments on the recipients rather than the larger communities. The studies that have been conducted show encouraging results.

Study showing that cash payments increase business revenue, especially local businesses

A compelling study comes from rural Kenya. Researchers distributed a one-time payment of approximately $1,000 each to more than 10,500 low-income households across 653 randomly selected villages. The payments amounted to more than 15% of the local economy—a very large economic intervention.

Recipients spent much of the money locally. That increased revenue for nearby businesses and subsequently raised the income and spending of people who did not receive payments. The researchers estimated that every dollar transferred generated approximately $2.50 in additional local economic activity, with little measurable inflation. Source

Study showing that Alaska’s dividend supports locally oriented businesses

Since 1982, nearly every Alaska resident has received an annual Permanent Fund dividend. It is the closest longstanding American example of a universal cash payment.

A major study found that compared to projections the dividend did not reduce employment overall. Employment effects were more positive in “non-tradable” industries—businesses such as retail stores, restaurants, and local services whose customers are predominantly local. The authors concluded that the results were consistent with the dividend stimulating consumer demand and therefore labor demand. Part-time employment increased by 1.8 percentage points, while total employment was unchanged. Source

OpenResearch’s basic income trial demonstrates that recipients spend a substantial share of monthly payments, which benefits business.

OpenResearch conducted a three-year randomized experiment involving 3,000 lower-income Americans in Illinois and Texas. One group received $1,000 per month and the control group received $50.

The larger payment increased measured household spending by at least $300 per month. Spending rose across numerous categories, meaning that a significant portion of the money became revenue for businesses. Source

This does not demonstrate an economy-wide multiplier because only selected individuals received payments. Nevertheless, it supplies current American evidence for the first step in the mechanism: people with limited incomes spend a substantial portion of additional cash.

Counter arguments

There are three main economic counter arguments to UBI being a benefit to business:

1. Businesses, especially those relying on low-income workers, might have to pay higher wages to attract workers.

2. The taxes needed to fund UBI could hurt businesses by reducing after-tax income.

3. Shifting income from higher income households to lower income households would reduce overall savings and thus reduce investment in the economy.

The second two objections are dealt with quite easily. Business income is only reduced if the funding source for UBI includes direct taxes on businesses, but under Shares in America, the funding source is entirely the progressive personal income tax, not business taxes. The third objection is likewise easily dealt with. There is no sign of a lack of investment capital in the economy, in fact speculative asset bubbles indicate the reverse. The main threat to investment is the enormous federal deficit which has been fueled by huge tax cuts, mostly for the well off.

The first objection, that low-wage businesses may have to pay higher wages in some cases might very well be true. Labor, especially at the low end, has very little bargaining power in today’s economy, so any such increases would be small. But compensation for some low-paid work might very well go up. Would that hurt businesses? Would McDonalds and Walmarts and local restaurants go out of business? No. Probably any wage increases would be passed on as small price increases.

There is some empirical evidence on that score. Canada had a trial of minimum income for 5 years in the 1970’s in the township of Dauphin near Winnipeg. A recent paper found that some employers accustomed to hiring workers at low wages complained about having to offer higher wages. That is genuine evidence for the labor-cost objection. But it is evidence of changed bargaining power—not evidence of aggregate business damage. The study did not demonstrate increased business failures, declining total profits, or reduce overall economic activity. Some employers were worse off because labor became more expensive; workers receiving higher wages were correspondingly better off. Source

Alaska provides an instructive counterweight. Its universal dividend produces no significant reduction in aggregate employment over predicted growth as would be expected if UBI were “bad for business.” Source

Summary

There has never been an increase in the minimum wage that big business organizations didn’t say would cause job losses for low-wage workers and hurt low-wage businesses but we currently have more low paying jobs than ever. We were told that Social Security would be a disaster for business and nothing of the sort happened. Income supplements such as UBI will if anything help small and local businesses and drive growth of the overall economy. There is no evidence or theoretical basis to suggest otherwise.

If you support any form of basic income, it would be great if you could add your name to our list and optionally subscribe to this newsletter.

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Related posts:

The inflationary impact of UBI
UBI and gig and contingent work
How we can pay for UBI with a sample progressive income tax

^[1] https://www.nirsonline.org/articles/new-research-economic-impact-social-security/ This report comes with the caveat that Social Security taxes are regressive and hence the net benefit is much less than if a truly progressive payroll tax were used.

^[2] I’ve discussed UBI inflation fears in another post, in the book, and on the website. See related posts.

I recently discovered that there is a bill in the US House that calls for a universal income supplement. The BOOST Act of 2025 (H.R. 6236), introduced by Representative Rashida Tlaib, would provide $250 per month to most adults ages 19 through 67. The payments would not be taxable or counted in determining eligibility for programs such as SNAP or housing assistance. The bill would help finance the payments through an additional tax on higher incomes.

The BOOST act would be a modest but important step toward basic income. It would establish the principle that regular, broadly distributed cash payments can provide greater economic security—and that the benefits of our economy should be more widely shared.

The bill is designed as a “refundable tax credit” so that everyone gets the payment even if they have no income. The income tax used to (partially) fund the program starts to exceed the benefit at around $150,000 of taxable income. In short, it is like the negative income tax proposed by Nixon that actually passed the House in 1970.

You can read Representative Tlaib’s summary of the BOOST Act here

There are 11 cosponsors of the bill, including

• Eleanor Holmes Norton (D-DC)

• Ayanna Pressley (D-MA)

• Summer Lee (D-PA)

• Ilhan Omar (D-MN)

• Shri Thanedar (D-MI)

• Ro Khanna (D-CA)

• Kweisi Mfume (D-MD)

• LaMonica McIver (D-NJ)

• Troy Carter (D-LA)

• Bonnie Watson Coleman (D-NJ)

No other Representatives are publicly on record as supporting the bill as far as I can tell. Let your Congress person know you support the it! Bills are never perfect but are subject to considerable revision during the legislative process, and this one is an excellent starting point.

You can find your representative and contact information here.

Ask your representative to cosponsor and support H.R. 6236, and let them know that you support basic income. Whatever form of basic income you ultimately favor, building visible support for concrete legislation is how we begin moving the idea forward.

No companion bill exists in the Senate, but Kamala Harris, without cosponsors, introduced the LIFT the Middle Class Act (S.3712 in 2018 and S.4 in 2019) which was quite similar in content.

You might contact your Senator to let them know you support unconditional income support legislation in the era of AI! That would include progressives like Bernie and Warren. Income transfers are much easier to implement than wealth taxes or complex AI equity deals. And far more effective.

If you do contact your representative or Senator, please send me an email at rich@sharesinamerica.com. And if you receive a response, leave a comment with what they said! Comments in general are much appreciated.

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One of the objections to universal basic income that one encounters is that it would cost too much and we can’t afford it. For example, an article in Business Insider notes that distributing $10,000 per year to all adults would “cost” $2.5 trillion a year. This is based on a fundamental misunderstanding of the basic math involved, a trap even some proponents fall into. Let me explain.

1. UBI is an income transfer, not government consumption

Total disposable (after tax) personal income in the US was around $22 trillion in 2024 according to BEA NIPA Table 2.1

If we had a UBI of $2.5 trillion the total after tax personal income in the US would be… still $22 trillion. Why? Because all the money collected in a fully tax-funded UBI would be distributed to individuals and available for personal consumption or saving as before. Unlike spending on defense or highways, the government is not using those resources itself. UBI changes the distribution of after-tax income, not its total amount.

That is the first glaring logic error in the argument.

2) For better off people, the UBI payment is balanced by the UBI tax

The second flaw in the “too expensive” argument is the failure to recognize that, for better-off households, the additional tax is partly or entirely offset by the UBI they receive. So, if an upper-middle-class-household has to pay $20,000 in UBI taxes but gets $20,000 in UBI benefits, how much “extra” are they paying? The household’s net additional cost is zero.

A properly designed UBI tax – for example a progressive income tax surcharge balanced by UBI – would work exactly like a negative income tax.

In my book Shares in America: The Case for a Universal Basic Income, I use a simple progressive income tax to show how we could generate enough revenue to fully fund $1,000 per month UBI for all working-age adults 18-64.

The chart below shows the personal income distribution after UBI and this sample tax surcharge.

The bars are grouped by household income, the lowest 10%, the next 10% etc. You can find the source of this data and exactly how it was created in complete detail - including a downloadable spreadsheet - at https://www.sharesinamerica.com/sharesillustrations, Figure 21. The underlying data is from the Bureau of Economic Analysis (BEA) which uses various data sources to allocate aggregate US personal income across households.

“Shares in America,” the black rectangle, is a UBI of $1,000-per-month per working-age adult. The yellow areas are taxes: federal, state, local, and UBI tax. The blue bar plus Shares UBI is disposable after-tax income. Explaining this graph fully is not possible in a reasonable size post, but the key takeaway is that under the illustrative tax schedule in my model, the bottom 70 percent of households receive a net benefit, households somewhat above that point experience relatively small changes, and the largest net tax increases fall on the highest-income households but they are still disproportionately well off. In the BEA analysis, households in the lowest decile had average income of approximately $26,000 in 2019, including government benefits. Under my modeled UBI and tax schedule, their average income would have risen to approximately $45,000.

Using the tax schedule in my model, a $1,000-per-month UBI limited to adults ages 18–64 would be fully financed and would produce approximately $4.5 trillion in additional revenue over ten years beyond the UBI payments.

This additional revenue could be used to reduce our ballooning deficit, but I now favor UBI for all adults, including retirees. Using approximately two adults per household, that version produces an estimated ten-year funding gap of about $1.8 trillion. One possible way to address both that gap and at least part of the Social Security funding shortfall would be to remove the Social Security payroll-tax cap without increasing maximum benefits; my estimate indicates that this would raise approximately $3.4 trillion over ten years.

3) There is plenty of income

In the US, personal disposable income was about $170,000 per household in 2025 after all federal, state, and local taxes are subtracted. This leaves plenty of room for some income to be shifted through the tax system from very high-income households to poorer households as shown in the chart. We’re not suggesting leveling incomes, just making them slightly less skewed. The “pain” involved at the upper end is minimal, one can live very nicely on, say $400,000 a year. Meanwhile it is very tough for a family to live on $26,000 per year, and some extra income will make a huge difference.

Summary

Claims that a universal basic income (I prefer to think of it as an income supplement) would “cost too much” often fail to consider that UBI is a transfer that doesn’t change overall personal income and does not add to government consumption. That addresses the issue of whether we can “afford” UBI at the national level. Claims that we can’t afford UBI are often really about whether the tax increase required on the well off would be “too much”. Critics often fail to note that for higher income households, any UBI related tax increase would be partially offset by the UBI payment itself. I show that a simple illustrative progressive income tax could fully fund a working-age UBI—and come close to funding an all-adult UBI—while only modestly changing the overall shape of the income distribution. The wealthy would still be wealthy.

If you’re a supporter of universal basic income, please sign on here. Only a grass roots movement will get us there!

Stern’s book is a tour de force based on his observations on the changing work landscape in the US and around the world. After a visit to MIT’s “Media Lab,” Stern speculates that we are at an “inflection point”; technology will displace the need for human labor at an increasing, possibly exponential, rate. That in turn will drive the further rise of gig and contingent work, the subject of today’s post.

Perhaps the best way to quantify the change in the labor landscape is to talk about the number of workers who do not earn a living as long-term permanent employees. That includes temporary workers, gig workers, contractors, and others whose jobs are not assured by employment contracts. By this measure, about 30 to 40 percent of the US workforce is contingent and growing.

Nor is this uniquely American. Stern notes that worldwide, roughly three-quarters of workers are employed in temporary jobs, short-term contracts, or informal work without permanent employment.

Stern points out that this is the historical norm:

The job market as we know it—the one that evolved in the early 20^th century—depended on two factors: a strong nation state that could enforce economic policies, and strong unions that could organize entire companies and industries and negotiate for higher wages and benefits. Before that, the relationship between employers and employees was one sided and feudal, with the owners having all the rights and workers doing piece work jobs to cobble together a meager and uncertain living indeed the majority of Americans worked in crafts and trades and had multiple sources of income.

Stern goes on to note that “work” and “job” are again no longer synonymous.

Is this a good thing or a bad thing? Some well-paid contractors will do just fine until technology comes for them the way AI has for programmers, but in general contingent workers earn less, don’t have benefits, and have little security or opportunity for growth. Stern cites many such cases in his chapter on “The Dark Side of the Gig Economy.” Gig work sites such as Upwork and Amazon Mechanical Turk are open to the world with US workers competing with workers from lower-wage countries. US labor laws do not apply to these workers or indeed domestic workers such as janitors and Uber drivers who are classified as independent contractors.

Rather than trying to recreate the labor market of the past, it makes more sense to adapt our social contract to the economy that is emerging.

Social Security already follows the individual rather than being tied to employment. Health insurance should too. More broadly, many of the benefits we now associate with permanent employment should instead belong to people, regardless of where—or whether—they work. Some projections suggest that as many as half of all workers could be contingent by mid-century.

Moving these benefits into the social contract could actually strengthen traditional employment. Today employers can save money on benefits and payroll taxes by replacing permanent employees with contractors. If health insurance and other basic protections followed the worker instead of the job, that cost advantage would largely disappear. Businesses would be more likely to hire permanent employees whenever long-term staffing made sense.

How does universal basic income fit into this mix? Moving benefits into the social contract is necessary, but is not adequate to address the problem of employment and wages. Contingent workers really have no bargaining power unless unionized. As technology reduces the demand for labor, wages will continue to fall relative to the growth of the economy. Income inequality will continue to grow. Returns to capital (stock dividends, etc.) will grab an increasingly large slice of national income. As this column and my book, Shares in America, have discussed at length, only large income transfers will let workers share the benefits of economic growth. Technology is good: we produce more with less labor. But we need to realize that labor will, for the indefinite future, be in excess supply and deal with that reality.

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I’m enthusiastic about the future. The promise of technology has never been simply that it allows us to produce more. Its real promise is that it can give us more time and greater freedom: more time with our families, more opportunities to learn, create, volunteer, start businesses, care for loved ones, and participate in our communities.

If you’re a supporter of universal basic income, please sign on here. Only a grass roots movement will get us there!

Our politics are money-soaked, and that goes for both parties. As I point out in Shares in America, the better-financed candidate in US House races now wins over 90% of the time, and 70% to 88% of the time in Senate races. Candidates and parties are beholden to those who finance their campaigns. In 2024 megadonors giving over $5 million each provided more than 75% of the funding to super PACs supporting major presidential candidates. And it’s not just federal campaigns. “Outside” money can be even more influential in local and state elections. What to the rich are relatively small amounts of money can completely dominate local elections. Unbelievably, only 18% of the money spent in US Congressional House races comes from within the Congressional district now, meaning over 80% comes from outside the district. Twenty-five years ago, most of these funds came from within the district.

Politicians must keep their wealthy and big corporate donors happy if they are going to win. That means that powerful monied special interests almost always get their way, whether it’s tax cuts for the wealthy or the oil industry’s successful efforts to block a transition away from fossil fuels. Of course, in addition to directly and indirectly influencing political outcomes, such interests engage in extensive public relations campaigns to mold public opinion. The federal government itself has been one of their prime targets since the mid-1970s.

People understand the inherent corruption of money in politics. Politicians don’t have to take traditional bribes to influence their positions; they are well aware of who finances their campaigns and even more crucially aware that special interests can spend unlimited amounts of dark money to help defeat or elect them “separately” from their campaigns.

Most Americans support limiting money in politics. A 2023 Pew study found that 72% of US adults believe there should be limits on the amount of money individuals and organizations can spend on political campaigns. This view is held by comparable majorities in both the Democratic (76%) and Republican (71%) parties. But thanks to the Supreme Court ruling that limiting money in politics is an infringement of free speech, such limits cannot be enacted without a Constitutional amendment or a different Supreme Court. We’re not likely to get either in the foreseeable future.

I asked ChatGPT, “What proposals are there to limit money in politics, how easy are they to achieve, and how effective are they likely to be?” The answer was, as usual, analytical and interesting. You can read it here. Measures to directly limit campaign spending will require a constitutional amendment or a different Supreme Court, so the most “implementable” measures that can level the electoral playing field include public campaign financing, “Democracy vouchers,” which allow ordinary citizens to support campaigns, and of course tax increases on high incomes combined with increased disposable income for those lower down the income scale to somewhat level the playing field. Universal basic income in other words.

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As ChatGPT put it: “If one person has $50 billion and another has $50,000, the wealthy person will inevitably have greater political influence.” As I point out in Shares, a powerful feedback loop has developed over the last several decades: wealthy individuals and corporations invest in politics, reap substantial financial gains from favorable policies, and then reinvest a portion of those gains into even greater political influence.

Rebalancing income and wealth would not only restore a fairer distribution of economic gains; it would also reduce the resources available for concentrated political spending. Many campaign-finance reformers focus on how money enters politics, while Shares focuses on why money becomes politically dominant in the first place: the growing concentration of income and wealth. Reducing inequality through progressive taxation and Shares UBI may ultimately be as important as campaign-finance reform itself. Money in politics is not just a cause of inequality; it is also a consequence of inequality.

I would add another important effect of Shares UBI: it would strengthen the labor movement. Between 1998 and 2025, businesses spent $70.8 billion on lobbying, while labor spent just $1.2 billion. If individuals had at least $1,000 per month—and families at least $2,000 per month—to fall back on, workers would have more freedom to organize and strike. Employers would find strikebreaking more difficult because workers would be less financially vulnerable. Gig workers and other contingent workers would also be in a stronger position to organize.

Unions were one of the forces behind the great post–World War II equalization of incomes. Shares UBI would help them grow again in a post-industrial economy. Individual citizens rarely have the resources to create sustained political movements. Unions do.

In short, Shares UBI cannot solve the problem of money in politics by itself, but it can weaken one of its root causes: the growing concentration of income and wealth. When it comes to money in politics, we should concentrate on what we can get done with simple legislative majorities rather than pie-in-the-sky proposals such as overturning Citizens United or directly taxing wealth, both of which would likely require constitutional amendments.

Here’s the chart of proposals to address money in politics along with my summary assessment as to feasibility.

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This week we turn to two additional concerns: workforce participation and the possible dilution of targeted welfare programs. One concern comes more from the political right, the other more from the left. In my view, both are misguided.

But before we dive into them, I mentioned last week that the AI barons support UBI. Here’s a recent post from Musk. I’m pretty sure he’s thinking of a UBI well over $1,000/month.

Musk may have his faults, but he has certainly shown an ability to see the future coming.

Now on to the objections.

Objections to UBI: Disincentive to work

As is often the case, this objection is more theorical than based on observation. But even in theory, this objection falls short.

One of the major shortcomings of traditional means-tested welfare is that as recipients earn more, their benefits are reduced or disappear entirely. That creates a real disincentive to work. With Shares, people keep every dollar they earn plus the Share. Work always pays.

What does the evidence show?

There have been dozens of recent tests of UBI in the US alone, and many in other countries as well. One of the largest, $1,000 per month per family for a period of 3 years, was financed by Sam Altman of ChatGPT. While these tests have varied in the length of time and amount they pay, the results are quite consistent. Employment either stays the same or declines slightly, and working hours also tend to decline modestly. In the Altman study, these two effects amounted to about 8 fewer workdays per year between the group receiving UBI and the control group. Hardly the collapse in work effort critics predict.

That kind of reduction in hours will not to create a labor shortage, while it might drive up wages slightly. Not a bad thing. What did people do with the extra time? They spent more time with their children. They pursued more education. They started businesses. All these things tend to drive up productivity over time. People were also happier and less stressed and had greater control over their lives. An unexpected car repair was no longer a disaster.

It is entirely reasonable for people to trade income for time, and a modest UBI allows people to do so. But the financial incentive to work is still strong. Furthermore, people work not just to make money but because it provides purpose and order in their lives. According to a paper published in the Review of Economic Studies “market hours worked are approximately flat across the wealth distribution.” As automation and AI reduce demand for repetitive labor, a UBI could also help people transition into more creative, meaningful, or flexible work rather than forcing them into economic desperation.

Finally, UBI has been shown to drive job increases. Simply put, more income drives demand which in turn increases employment¹.

Conclusion: UBI does not lead to a significant drop in paid employment

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Objections to UBI: Dilution of targeted social welfare

This concern which comes mostly from the political left, helped derailed Nixon’s attempt at UBI in the early 1970’s. The concern is that UBI might replace current welfare benefits such as housing vouchers, SNAP, and even Medicaid leaving the poor worse off in some cases. This is not an unreasonable fear. These programs are means-tested: if you make more, they pay less. The idea of UBI is to raise all boats so to speak, not to punch holes in them, so Shares In America, my vision of UBI, explicitly says that everyone’s Share will not count as income for either benefit or tax calculation.

In the chart above, all current incomes are raised by Shares in America. For example, the bottom 10 percent of households in 2019 received roughly $26,000 in disposable income and benefits. Under Shares, they would keep every dollar of that income and receive an additional basic income supplement of roughly $19,000 per household. Taxes increase almost entirely on the top 10%.

Over time, a successful UBI might reduce dependence on some targeted programs—but only if wages plus the Share make those programs less necessary. That would be success, not retrenchment.

And some targeted support will always remain necessary. People with serious disabilities, severe illness, or intensive care needs will still require specialized assistance.

Some critics also worry that UBI could weaken the will for public programs like healthcare, childcare, education, or housing. I suspect the opposite may be true. Social Security did not weaken the political support for Medicare. Getting to UBI will take massive grass roots involvement. It will set us back on a course where government is seen as providing essential services rather than grudging and demeaning handouts. Labor can more confidently demand a reasonable share of earnings when strikers can count on their UBI. That may be why Andy Stern, former head of the Service Employees International Union wrote Raising the Floor, a book calling for UBI.

In short, UBI can help reverse the damaging and divisive Reagan Revolution in how people feel about government. The idea of UBI will help will set the stage for a new assertiveness on the part of working Americans. It is part of a popular program that includes greater unionization, higher taxes on the wealthy, and limiting the role of money in politics. The gluttonous corruption and legislative overreach of the current regime give us a unique opportunity to make the case that government is there to serve the people writ large as our founders intended and not solely the interests of the rich and powerful. This message has widespread appeal.

Conclusion: Shares UBI compliments social welfare programs rather than replacing them

America is rich enough to ensure that everyone shares in the prosperity our economy creates.

The objections to UBI sound serious at first—but under closer examination, they don’t hold up very well.

And despite the concerns of the tech leaders about automation and AI, UBI will not come easily.

We will need a grassroots movement to make it happen.

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“Silicon Valley is bracing for a permanent underclass”

The blurb read:

The people building A.I. fear that we have only a short time before it disrupts the labor force, writes Jasmine Sun in Times Opinion. Some even believe it could create a permanent underclass.

Many economists think we’ve had a permanent underclass for several decades already. We clearly need universal basic income as some of the tech “bros” say. But not everyone is on board. In this newsletter, we will briefly look at some of the objections to universal basic income.

Google’s AI comes up with this list: prohibitive cost, potential to trigger inflation, disincentives for workforce participation, and the dilution of targeted social welfare.

I’ll look at the first two of these here. The next post will look at the second two.

Objections to UBI: Prohibitive cost

This argument exposes a major misunderstanding. People hear that UBI might cost several trillion dollars and assume the government would somehow have to “come up with” trillions in new spending. But UBI is not like military spending, Medicare, or interest on the national debt. Those are expenditures. UBI is a transfer.

Money goes from one household to another. A dedicated UBI tax could be revenue neutral with every penny collected from households going back to households. In short its net cost would be zero overall.

The United States generated roughly $16.4 trillion in after-tax personal income in 2019. Under Shares UBI, total personal income would still have been roughly $16.4 trillion. What would have changed is how it is distributed.

In the last newsletter, and in the Shares in America book and website, we show a simple example of how a hypothetical progressive income tax surcharge could finance a $1000 per month UBI. Here’s how that would have affected income shares in 2019. The wealthy pay the most but remain wealthy. Upper-middle-income households see only modest tax increases, and everyone else comes out ahead. The bottom half of households see the largest percentage gains. Everyone, rich or poor get their Share.

What people often really mean when they say “UBI costs too much” is this:

“Taxes would have to rise too much.”

Since the large majority of Americans would benefit on net from Shares, that argument is essentially saying that taxes would have to rise too much on the wealthy.

But that argument also falls apart when you look at the numbers. The wealthy remain very wealthy after paying their share of the sample UBI tax used to create the right pie chart above.

And the required tax rates on the wealthy would still be well below the highest marginal tax rates under Presidents Eisenhower and Kennedy, during one of the strongest economic periods in American history. Furthermore, the required income tax on the well off would be far lower if we close the many loopholes that let the superrich get away with paying almost no income tax. (I plan on doing a post on those loopholes in the future.) No family making less than $300,000 per year would be likely to see a net tax increase if we tighten the tax code on the very wealthy.

Conclusion: We Can Easily Afford Shares/UBI

Objections to UBI: Potential to Trigger Inflation

The argument on inflation boils down to this: if people have more money, they will buy more stuff and drive up prices. At first glance, that sounds plausible. But remember: under a tax-funded UBI, total personal income in the economy stays the same. The money is redistributed, not created.

Under Shares, income will be distributed differently across households and people will spend the money differently. There will be less spent on yachts and more on food and housing. Will this cause inflation?

During covid we saw that handing out money seemed to cause inflation. But studies concluded later that supply side issues related to the pandemic were behind most of the price increases[1]. Under Shares, demand will increase for some goods and services but there will be no comparable supply shock. The free market is great at matching supply and demand, and with so many consumer goods to choose from price spikes will be minor and supply will quickly adjust to accommodate demand.

The bigger problems we have with inflation right now all have to do with supply limitations we have to deal with in any case, UBI or no. Housing prices are high because we haven’t built enough housing in places where it is in high demand[2]. Oil prices are high right now during the war on Iran because of supply disruptions (long term the obvious way to fix that is to switch to different energy sources).

In short, Shares/UBI would likely have modest inflationary effects at most, especially if phased in gradually. We could even allow people to automatically save a portion of their Share if policymakers wanted a slower rollout.

Conclusion: Shares/UBI Will Have Minimal Inflationary Impact

America is rich enough to ensure that everyone shares in the prosperity our economy creates.

The objections about cost and inflation sound serious at first—but under closer examination, they simply don’t hold up very well.

And despite the concerns of the tech billionaires themselves, Shares/UBI is not going to happen automatically.

We will need a grassroots movement to make it happen.

How You Can Help

Spread the word: Share this post.

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Volunteer: We need all the help we can get. Just reply to this post or visit SharesInAmerica.com and sign up.

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Donate: Shares in America is a registered 501(c)(3) nonprofit organization, and contributions are tax deductible. By subscribing you donate to it.

Let me know what you think of this post by replying directly or by leaving a comment. I really appreciate feedback!

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[1] https://sites.lsa.umich.edu/mje/2024/11/27/an-analysis-of-pandemic-era-inflation/

[2] Why hasn’t the market produced sufficient housing to meet demand? There are many constraints on housing production including limited land supply, restrictive zoning, and changes in lending.

Short recap: these three charts show why we need Shares in America—and how we can afford it. The first shows how our economy has grown in a straight line since the 1940’s but that wages for workers have flatlined since the 1970’s.

The huge difference between worker income and what the country produces has almost all flowed to the top. Basic economics explains part of the story: as automation reduced the need for labor, especially in agricultural and manufacturing, demand for labor fell, and with it wages. That’s simple supply and demand. But this growth in inequality was helped along by tax policies and union busting favoring the wealthy.

The next two charts show current income distribution by household and how that would change with a Shares supplement of $1,000 per adult per month financed by a simple income tax change.

Before

After

As you can see Shares almost doubles the income of households at the low end but leaves plenty of income inequality. The middle class mostly gains too. You can see a fuller explanation at Shares in America: can we afford a universal basic income.

So much for the review.

Today’s newsletter is about how AI will accelerate these trends unless we act.

I subscribe to the Economist Magazine, a venerable British journal established in 1843. The Economist is strongly pro-market and pro-capitalist, and hardly alarmist, but in the latest issue their lead editorial was titled (actual size):

Prepare for an AI jobs apocalypse

It is not here yet. But governments should lay a safety-net

They go on to say:

Exactly. In Shares in America, the book, I have a chapter which looks at why wages have stayed stagnant even with low unemployment. US Net National Income is huge, over $190,000 per household, and that creates enough demand to keep everyone employed. But the top tenth of households in the US account for about half of income and consumer spending. Unless you have special in-demand skills, you, as a worker, are competing against everyone else and automation. The bottom half of US households share one tenth of national income before taxes and government benefits.

And now, even skills that were in high demand and well-paid just a short time ago are being threatened by AI. I made a very decent living in IT for much of my life, but AI can program and keeps getting better at it.

Meanwhile the economy, income, and wealth keep growing, but so do income and wealth concentration.

The Economist goes on to say:

Eventually humans could, like horses in the age of the car, become uneconomical. Income may go mostly or entirely to owners of capital, who then go on to spend it on things that are made by AI and robots using natural resources that they monopolise.

This dystopian possibility is behind Silicon Valley’s admonitions that state intervention, and perhaps a universal basic income, will be necessary. That remains a long way off, if it ever happens.

The article examines a number of ideas to ease the coming shock, including partial public ownership of AI firms. Many of these ideas are good but lack the simplicity of universal basic income, and so are ripe for the kind of manipulation by money we’re all too familiar with.

Universal basic income —Shares in America—is simple and direct. We all share in the fruits of greater productivity. Like Social Security, once in place it can be easily adjusted to deal with whatever technology does to wages and employment. And like Social Security, once in place, it will become inviolable.

We can get to Shares. In a mere two years we could replace all our Representatives in Congress and in six we could replace all the Senators. But it will take a grass roots movement. Monied interests will muddy the waters at every turn. And that’s where you come in. Movements grow person by person. You can help:

• Share this post. Forward it to friends. People can subscribe to this newsletter at Shares in America Newsletter

• Volunteer: We need help with simple but important tasks—from outreach to sending out copies of the Shares in America book. Reply to this post if you’d like to help in any way!.

• Spread the word! Shares in America, our non-profit website, provides much more information about universal basic income and how we get there.

Thanks!