What does it mean to eliminate poverty? Very generally, it means that everyone can afford some basic minimum of nutritious food, housing, clothing, healthcare, and transportation. Guaranteeing every adult a basic income (the Basic Income Guarantee, or BIG) may be one way to eliminate poverty. How big would the BIG have to be to accomplish this lofty goal in the US? And is a BIG the best way to help people afford all of life’s basic necessities - food, housing, clothing, healthcare and transportation - or just some? Let’s take each category of expense one at a time.
Starting with food, I’m thinking the BIG would not be the best way to insure that everyone has the resources to buy nutritious food. Why? Because in my ideal scenario (and we’re talking about the US only), SNAP would continue to be available for low-income households. Applying for SNAP benefits is not particularly complicated or burdensome. The SNAP program is well-run with low administrative costs and keeping the program would insure children and poor money managers would have access to sufficient food to stay healthy. Federal expenditures for healthcare is a huge part of the federal budget (24%) and SNAP is a way to contain public health costs by insuring the poor are able to meet their nutrition needs. In other words, SNAP already pays much of its budget through improved public health. A healthy population is also a more productive population, which is essential to economic growth and maintaining a tax base to fund the BIG in the first place.
Housing would be the main expense that a BIG would help with. But what do we mean by ‘housing’? Should people have the right to afford a place where they don’t need roommates to pay the rent? Some individuals have mental health or temperament issues that prevent them from living with others; others have children and may not be able to rely on relatives or significant others for living arrangements. These individuals may very well need their own place in order to avoid poverty.
On the other hand, you’ve got your single and childless 20-somethings with no serious mental health or social issues preventing them from living with others – should they also receive sufficient income to live alone? As a one-time 20-something myself, I lived quite happily for several years with up to 12 housemates (often sharing a bedroom and for a couple years living in an unshared storage room). Should the BIG be large enough so that such living arrangements would be a matter of choice and not financial need?
According to the US Census Bureau, in 2012, nearly 57 percent of U.S. households were childless. Many of these individuals could take on roommates to help with housing expenses. Of course, some people just can’t live with others. But should the needs of a small subset of the population dictate the size of BIG payments for the vast majority? In other words, let’s say 10% of adults are simply unsuitable for living with anyone else. Should a BIG be large enough to accommodate them, even though 90% of adults could take reasonable measures to reduce housing costs by living with others?
And what about region or neighborhood? Should everyone be able to afford to live anywhere? Or should the standard be the cheapest areas in the city, county or state in which they already live? Given the cost of housing varies hugely throughout the US, should there be a single standard for what is deemed a sufficient amount for housing? Should the BIG be adjusted according to regional cost of living indices (mainly housing)? Should there be the assumption that every person has the right to live where they want (within a certain radius), because they have the right to live near family, friends, and jobs? Should the government make it easier for people to stay in expensive areas by giving them additional income for housing in these areas?
One problem with giving people a bigger BIG in more expensive housing markets is it could exacerbate housing shortages, resulting in higher housing costs and leading to even bigger BIG payments – a vicious circle. And the BIG doesn’t address an important cause of pricey housing: insufficient supply to meet demand.
For instance, housing stocks are often limited in desirable urban locations because of local opposition, zoning laws, and cumbersome approval processes. Should the government really encourage people of limited means to move or stay in these areas by giving them extra money? I think not. The cost of housing has to be addressed on the supply side. Increasing demand when supply can’t flexibly respond to increased demand would trigger a price spiral.
Just getting started….