Is a $11 an hour wage good for workers?

Crushed by the weight of rising housing costs, stagnant wages, and mounting student loan debt, the new American normal is one in which most working-class families can no longer afford to raise a family, or even support themselves.

According to the Working Poor Project, nearly one out of every four U.S. workers earns less than $12 an hour—the common benchmark for what is considered “low-wage work” and what qualifies a household for public assistance programs such as food stamps and Medicaid.

That’s why economists are now beginning to consider whether a universal basic income (UBI) program could be implemented at the national level as part of a solution to help reduce poverty and stimulate demand for goods and services across all income brackets. A UBI is essentially an annual cash grant that unconditionally provides every citizen with enough money to meet their basic needs—regardless of their employment status or family situation. It also eliminates other assistance programs like SNAP (food assistance), housing vouchers, and so on.

Why is a $15 an hour minimum wage important?

As part of the “Fight for 15” movement, more than 200 cities have already implemented an “increased” minimum wage and many states have followed suit. While it’s expected that a $15 an hour minimum wage will bring many benefits to the economy, one of the biggest is that it encourages people to stay in the workforce.

And since most low-wage workers are responsible for supporting a family, a higher minimum wage protects their ability to earn enough money to feed, clothe, and house their loved ones. A $15 an hour minimum wage, combined with a UBI program, can help all working families earn a decent living without having to rely on government assistance programs.

What’s wrong with the American economy?

Over the past 50 years, the cost of living has increased at twice the rate of income growth, leading to a significant decline in the standard of living for many American families. Out-of-control healthcare costs, housing and childcare expenses, and growing student loan debt are some of the most common financial burdens pushing working-class families into poverty.

Meanwhile, the middle class has been contracting since the 1970s, and many people who work in professional fields are finding it increasingly challenging to earn enough to survive. While economic bubbles, financial crises, and market corrections are nothing new to the markets, we are now beginning to see signs that this is also negatively impacting the real economy.

How will a Universal Basic Income program work?

Economists estimate that a UBI program would replace most of the current social welfare programs, including food assistance, housing assistance, health insurance, and other forms of public assistance. The UBI program would provide each American with enough money to meet their basic needs—regardless of age, employment, family situation, etc.

Many economists believe that a UBI program could help the economy by stimulating demand, increasing workers’ purchasing power, and reducing government administrative costs. A UBI program could ensure that every American has enough money to meet their basic needs and would likely reduce overall government spending, as many people would no longer qualify for existing assistance programs.

The benefits of a UBI program

Proponents of a UBI program argue that it can help reduce poverty and increase economic security, while improving health outcomes and reducing inequality. A UBI program would likely reduce poverty rates across all age groups. For example, in the U.S., the poverty rate for children younger than 18 is approximately 18%. If a UBI program were implemented in full, the poverty rate for the country’s children would drop to 3%, which is significantly lower than the current childhood poverty rate of 7%.

A UBI program would also eliminate the stigma associated with public assistance programs, as it would allow everyone—regardless of age, employment, or family status—to earn a livable income. UBI would also reduce economic inequality by giving each individual the same amount of money, regardless of their financial situation.

Other conditions you should know about

Of course, no economic program is perfect and a UBI program would have its challenges. For example, it’s unclear whether a UBI program could be implemented at the federal level, or if it would have to be implemented at the state level. Some states may want to keep their assistance programs intact, while others may want to implement a UBI program.

The cost of implementing a UBI program also remains a significant economic challenge. For example, an annual UBI program for all U.S. adults would cost an estimated $3.7 trillion, which equates to roughly one-third of the U.S. gross domestic product (GDP).

Ultimately, a $15 an hour minimum wage and a UBI program are both effective ways to help the American economy. However, the best way to implement these programs may be to do so simultaneously. In this case, the $15 an hour minimum wage would help low-income workers earn more money, while a UBI program would provide each American with enough money to meet their basic needs.