I’ve been reading a lot lately about the idea of a Universal Basic Income, or a UBI for short. (Here’s a great primer on the whole idea, who supports it, and why. It’s actually a very bipartisan issue.) In really broad strokes, the idea is this: If you guarantee every citizen in the United States a minimum income, regardless of their employment or any other status, you could make a significant dent in poverty, if not end it entirely.
Which sounds pretty good. Of course, giving everyone money is expensive, and that cash has to come from somewhere. So taxation would have to correspondingly increase by a pretty large amount, especially on the very rich.
There’s also the question of macroeconomic effects. How would work habits change? How would that affect the economy’s growth? Would it create undue pressure on the system as people are (potentially) more reliant on UBI?
Those are valid and important questions, and there are some considered opinions you can read here, here, and here, but the question that underpins it all got me curious: How far could you get on UBI alone?
Let’s assume a UBI of $10,000
One of the figures that’s been pushed around is guaranteeing every adult in the United States $10,000 per year in basic income. That amount would create a safety net for middle class families facing unemployment, help elevate poorer people out of poverty, and with even a halfway decent job, amount to a decent standard of living in all but perhaps the most expensive cities in the country. (And even then you’re probably looking ok.)
But what if you tried to live on a $10,000 UBI alone. Would that be enough to cover basic needs?
Let’s start with a place to live. Per a CBSNews.com report:
A high-end, one-bedroom, one-bathroom apartment with nearly 800 square feet of living space in the heart of Kansas City, Mo., will run about $1,000 per month, while the same kind of space in San Diego — the 10th-most-expensive city to rent an apartment in the country — will cost you around $1,700.
But we’re looking for cheap living. I live in Los Angeles, which the same report lists as the fifth most expensive city in the U.S. and I know that even here, with a couple roommates you can get a decent place for around $700-$750/month once you factor in utilities. That’s in line with the median rents for the nation’s ten cheapest cities (which “range from $623 to $730”).
So $700 seems like a good monthly average considering the entire nation. That would be $8,400 per year, which is a huge chunk of our $10,000. So while that gives us a good idea of what a UBI might help people who do have jobs achieve, let’s assume that our theoretical person living on UBI alone chooses a cheaper apartment in a cheaper city and still lives with a roommate or two. That gets our rent comfortably down to about $300/month.
Rent: $300/mo x 12 months = $3600 per year, including basic utilities
Next, something to eat.
We’re definitely ruling out luxuries like sodas, alcohol, and eating out (including fast food), all of which can run up a bill really quick. But we’re not going to make our UBI-only person subsist entirely on ramen noodles either.
Most people estimate anywhere from $100-$300/month per person for groceries. Assuming our person has at least a microwave, we can get a lot of mileage out of instant oatmeal, canned soups, sandwiches, frozen veggies, and beans and rice. We can even make a pretty healthy diet on the cheap, taking those (roughly) as the staples and mixing in a few other luxuries. We can estimate each meal, then, at somewhere around $2.00.
Food: $2/meal x 3 meals/day x 31 days/month x 12 months/year = $2232
So we’ve covered the absolute basics, food and shelter, at just $5832 per year. From there we can start adding in things like healthcare (probably the next most important thing, and one which would probably take most of the rest of that yearly sum), transportation and clothing (still in the A-tier of needs), and maybe a little entertainment, a cell phone, or some education.
By the way, this isn’t a purely hypothetical exercise. There are people (often climbers living the “van life,” but not always) who make an ultra-frugal life work, usually with the goal of saving lots of money or facilitating specific other goals (like climbing or traveling or a creative endeavor). But it would certainly be possible, in the right city and with no major changes to existing costs (which, by the way, isn’t a given due to the economic shakeup a UBI might cause) for an adult to live on a UBI alone.
That doesn’t mean it’s ideal – people need something to do every day to avoid going stir crazy, and only so many people will become daily visitors to the local library – but it does seem possible.
A brief digression from the main question of this article:
Particularly when you couple a UBI with entry-level work, it would seem that a lot of avenues for people to chase dreams and interests open up, something that isn’t without long term economic value.
A UBI would be expensive, especially for the very rich, and it might allow some people who really wanted to do it to coast on the work of others. But I tend to think people want to work. I believe people are curious by nature and don’t like being bored, and that enabling creative and inventive endeavors has lots of positive long term effects for both individuals and the nation alike.
I’m not sure a UBI is the best way to achieve these goals, and there are a lot of unanswered economic questions that won’t be answered until someone takes the plunge and tries out a UBI economic paradigm. But the idea of eliminating poverty and relieving more people from the grind of underemployment seems like way too great a benefit not to give a UBI a lot more consideration.