A Universal Basic Income Approach

It's been a while since I've written about the idea of a universal basic income. So I figure an update is in order.

The typical UBI proposal you see picks a certain dollar amount and then declares that it should go equally to all adults. I disagree with this in two ways. First, I think that children should also receive a basic income (paid to their parents). Second, I think that UBI payments should vary based on age. 

Neither of these additions negates the chief administrative advantages of the UBI because they don't introduce means-testing. It's trivially easy to vary payments based on age given that government databases already know everyone's date of birth.

So what I have in mind looks something like this:

The dollar values are not that important here. They could go up or down depending on what we find out about the effect of the UBI and to keep up with overall national income growth over time. The focus of my post here is the age-based pattern. I think we should divide people into three basic groups: 1) children, 2) adults, 3) elderly.

Children

Children will receive a specific grant that is less than adults and elderly people get. Here, I give children ages 0-5 somewhat more than children ages 6-17. This is because younger children are more expensive than older children on account of child care needs and such.

Adults

Young adults ages 18-24 will receive a pretty substantial grant. Here it's $8,000. Adults between these ages are generally in a transitional stage where they are working towards becoming permanently attached to the labor force in a decent job. Some are in college and can use the grant for living expenses or other costs. Others are not in college and can use the grant to help them make it through low-earning apprenticeships or low-earning entry-level positions where they are gaining experience, skills, and knowledge.

It's also worth noting here that these are the ages at which an enormous amount of violent crime occurs in this country, largely by men who are poor and have employment difficulties. It's entirely possible that filling this gap with income would cool this down a bit.

Starting at age 25, I phase out the UBI by $100 per year. So by age 64, it is down to $4,000. I do this because we know earnings increase over the lifecycle, and so this would help smooth that out and reduce inequality. I also think it might help to encourage labor mobility somewhat more than paying an equal amount across all ages.

Elderly

The elderly will receive the highest basic income grant, serving as the minimum old-age pension.

Other Benefits

As I've noted before, I do not see the UBI as totally replacing all other welfare incomes. You still need disability benefits, unemployment benefits, and probably even supplemental old-age benefits. You still need leave benefits for sickness and childbirth and such. But these benefits would work in concert with the UBI as top-offs.

So, for instance, the UBI provides a basic old-age pension of $12,000 per year and then Social Security might come in and provide an extra $1 to $18,000 per year based on an earnings record. I am not saying you have to provide the supplement to the old-age UBI this way, but I am saying you could and that you probably need to have a least some strategy in mind for how the $12,000 is going to be supplemented (even individual retirement accounts are constructed by policy).

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