Abstract: According to the United States Census Bureau, more than one in ten Americans – nearly 40 million people – is in poverty (2022). Federal and state governments have established programs such as TANF, WIC, and Medicaid to assist these individuals in fulfilling their basic needs, including access to food and healthcare. Using these programs, however, can be exceedingly challenging for those with disabilities, limited education, or simply busy schedules, and the stigma associated with the programs as well as their restrictive regulations can prevent them from guiding impoverished individuals out of poverty. Even for those who successfully make use of the programs, poverty reduction is only moderately successful. Universal basic income (UBI) solves the shortcomings of current policy by replacing these inefficient programs with a simple, fixed cash payment distributed by the US government directly to citizens. As the name suggests, the program is universally offered to all citizens, regardless of income level, but a progressive tax structure ensures that the funds are allocated efficiently. In offering this benefit to everyone, the government eliminates the social stigma associated with accepting social safety net benefits while allowing those in poverty or with low incomes to make their own rational decisions on how best to invest in their future. Opponents of the program cite high costs and negative labor market effects as a barrier, but both effects are much smaller than often believed. Thus, the benefits of the emerging program outweigh its costs; it offers a true pathway out of poverty toward greater opportunity for the millions of people it would serve.
Labor Economics Policy Brief
Universal Basic Income: The Key to Ending Poverty and Enhancing Opportunity in the US