Jun 30, 2016

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Could the U.B.I. ‘raise the floor’ for everyone?

by | Jun 30, 2016

The idea of a “guaranteed income” that would provide all citizens with enough money to meet their basic needs has garnered attention throughout the world and even within the United States recently. While the concept may sound new or radical, it’s worth noting that President Richard Nixon proposed a similar plan in 1969, known as the Family Assistance Plan. Nixon’s proposal even passed through the U.S. House of Representatives before it was killed in the Senate Finance Committee.

Fast forwarding nearly 50 years, the concept is now commonly known as the “universal basic income” (or U.B.I.) and is considered a hot acronym among those interested in addressing peoples’ basic needs amid an ever-changing economy. In May, startup accelerator Y Combinator announced that they will run a pilot U.B.I. program for 100 families in Oakland, Calif. Other pilot programs will soon be tested in Kenya, Finland, and the Netherlands.

Earlier this year, Judith Shulevitz, a contributing opinion writer for The New York Times, raised the feminist argument that U.B.I. could be a way to reimburse mothers and other caregivers for work they currently do free of charge. Charles Murray of the conservative American Enterprise Institute also made the case for U.B.I. in a new book and in The Wall Street Journal. Murray said if done right, U.B.I. represents the best way for the U.S. to cope with a radically changing job market while transferring wealth with limited government interference.

Adding to this flurry of attention, prominent labor activist Andy Stern extolled the virtues of U.B.I. in his new book, “Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream.” Stern will discuss U.B.I. and issues relating to health care and the U.S. workforce at CCLP’s Pathways from Poverty Breakfast, Oct. 6 at the History Colorado Center. While CCLP has not endorsed U.B.I., we appreciate discussions that explore fresh approaches to forging pathways from poverty.

As the former president of SEIU and a fellow at Columbia University, Stern is widely regarded as a visionary problem solver in matters of poverty and inequality. In making the case for U.B.I., Stern states that the U.S. political and economic systems have gradually built an economy defined by low-wage jobs, long work hours, a declining workforce population, large-scale income inequality and increasing financial insecurity for a substantial number of Americans. Furthermore, Stern maintains that the current social safety net has fallen short of eradicating poverty from the U.S., while fostering a culture that dis-incentivizes work and often humiliates those who need assistance to make ends meet.

Stern’s support for U.B.I. stems from his fear that future innovations and technological advancements will displace many American workers. He is convinced that these advancements will further the automation of many jobs and industries in the U.S. Thus, he maintains that U.B.I. could ease the effects of automation on the American workforce – particularly, for lower- and middle-income Americans who are at a higher risk of job loss. The percentage of U.S. jobs threatened by automation is a contested figure: some studies claim that 47 percent of U.S. jobs are threatened by automation whereas other studies show that only 9 percent of jobs are threatened. Whatever the true figure might be, there is a growing consensus among experts that many industries are at risk for automation and new jobs to employ the displaced workers will not necessarily follow the technological advancements.

Stern maintains that the underpinnings of the ideals of the American Dream are no longer possible in the 21st century economy because the fundamental component of the American Dream — middle-income jobs that enable social mobility — is threatened by technology. If technological advancements displace nearly half of American workers as some predict, Stern fears that the original ideals of the American Dream will no longer necessarily ensure Americans a better life. Stern believes that society is obligated to help those displaced by technology maintain a basic standard of living while they pursue other opportunities, such as retraining, starting their own businesses or other worthy pursuits.

But Stern has faith that U.B.I. in the U.S. would provide minimal economic security to displaced workers and give individuals more bargaining power for negotiating. Individuals and families could move from one city to another to seek new opportunities with U.B.I. funds. Individuals could stay home with their children or take care of their dying parents. Finally, individuals would have the freedom to pursue more fulfilling occupations or creative endeavors rather than settling for low-wage jobs with long hours just to be able to pay the bills. “The freedom to choose the life that you want for yourself and for your family,” Stern declares, is “the new American Dream.”

Despite its appeal, U.B.I. would likely face daunting hurdles in the U.S., namely because of its cost and its seemingly “un-American” characteristics. Stern’s proposal calls for $12,000 a year for every American citizen above the age of 18 with an estimated annual cost of $1.75 trillion to $2.5 trillion. To put this number in perspective, the federal government in the fiscal year 2015 spent $3.7 trillion in total. He would pay for his U.B.I. plan by terminating many of the current public benefit programs (however, Social Security would be maintained). He’d also eliminate most or all of the tax deductions in the tax code, raise taxes, and reduce the federal government’s discretionary spending on the military, farm subsidies, and subsidies for oil and gas companies.

In his book, “In Our Hands: A Plan to Replace the Welfare State,” Murray proposes $13,000 a year —$3,000 of which must go towards health insurance — for every citizen over the age of 21. Unlike Stern’s proposal, Murray calls for a reduction in benefits once an individual begins making $30,000 a year or more. To fund U.B.I., Murray wants to eliminate Social Security, Medicaid, Medicare, all so-called “welfare” programs, agricultural assistance and “corporate welfare” – a system he claims would actually save the government more than a trillion dollars by 2028.

Whether U.B.I. would save or cost the federal government money remains to be seen, and given there’s no “serious” discussion of the U.B.I. among elected officials in the U.S., any talk about these numbers and the sustainability of the U.B.I. is purely academic at this point. Furthermore, implementation of U.B.I. on a national level would entail a fundamental alteration of the U.S. economy and its public policies — perhaps to a greater degree than automation of the workforce.

Advocates for U.B.I. can, however, point to past experiments that offered glimpses of its potential. In the mid-1970s, for example, Canada conducted a U.B.I. experiment in a small town. The results are intriguing — poverty was nearly eradicated and hospitalization rates went down while high school graduation rates went up. While there is concern that U.B.I. would provide a disincentive to work, the Canadian experiment revealed that only adolescents and new mothers worked fewer hours. From the perspective of childhood development, though, that could be considered a positive finding.

Recently, the government under Canadian Prime Minster Justin Trudeau included in its party platform a commitment to conduct another localized experiment with U.B.I. This past June, however, voters in Switzerland overwhelmingly rejected a proposal to introduce a guaranteed monthly income to all residents. Respondents to exit polls who voted on the referendum cited its potentially high costs, disincentives to work, and potential to bring migrants to Switzerland as reasons for voting no.

Despite the setback in Switzerland, U.B.I. remains an intriguing and game-changing idea that enjoys surprising support from many on the left and the right of the political spectrum. Whether or not it becomes a reality in the U.S., talking about U.B.I gives us an opportunity to imagine how we might transform the 20th century safety net into a 21st century safety mat that no one can slip through.

Kris Grant

Recent articles

CCLP’s 2024 legislative wrap-up, part 2

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs. Part 2/2.

CCLP’s 2024 legislative wrap-up, part 1

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs.

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.