On Nov. 4, Nebraskans will vote on Initiative 425, which would increase the minimum wage from $7.25 an hour to $9. Politicians on both sides are framing this as a way to help members of the American workforce. However, raising Nebraska’s minimum wage is a 20th century solution to a 21st century problem. The real answer to reducing poverty is to enact a basic minimum income.
A basic income grants each citizen a guaranteed yearly income. The idea would be that every eligible citizen, 18 years and older, would be able to meet their basic needs, such as food and housing. The fundamental difference between a basic income and a minimum wage is a basic income guarantees income regardless if you have a job. A minimum wage only applies if you have job. In Switzerland, this issue will be on a future referendum. Under the Swiss proposal, each citizen will receive 30,000 Swiss Francs, which is approximately $34,000 per year. While the United States need not have such a high level, Switzerland has taken the initiative to serve its citizens.
Why is a basic income the solution? The proliferation of technology, which facilitated civilization’s reach toward its highest quality of life, may lead to its demise. The prevailing economic theories of our time may soon face a crisis due to technological advancements that lead to automated jobs replacing human workers.
Carl Benedikt Frey and Michael A. Osborne of the University of Oxford authored a study that said about 47 percent of total U.S. employment is at risk of job automation. Imagine if nearly half the jobs in this country suddenly vanished. It’s a frightening thought, especially when we consider that it’s already difficult to secure a job in one’s field of study.
The U.S. Commerce Department found that the percentage of the GDP for corporate tax profits is at its highest levels ever. The percentage of GDP for wages and worker compensation such as health insurance and pensions is at its lowest level since 1948. In simpler terms, corporations have record high profits, and their employees have record low wages.
Furthermore, according to the Federal Reserve, median incomes have dropped for every income bracket in the last three years, except for the richest 10 percent of Americans. The last five years have seen the economy recover steadily from most the recent recession. The Standard & Poor Index, the Dow Jones Industrial Average and NASDAQ have all seen healthy increased. In fact our unemployment levels have decreased consistently as well. Yet not all jobs are the same. According to the Bureau of Labor statistics, lower-wage industries have had a net increase of nearly 2 million jobs since the beginning of the recession. Medium and high-wage jobs have had a neat decrease of nearly 2 million jobs. So, while employment levels have recovered, good jobs have been replaced by lower paying jobs.
And it’s these lower paying jobs that are most susceptible to job automation. Fast food workers, retail, manufacturing and other similar industries will likely be automated within the next decade or two. But it isn’t only these relatively low skill jobs that will become automated. Since we’ve shifted from a manufacturing based economy to a services economy that requires higher skills, we’ve adapted. In the past we’ve been able to replace manual labor jobs with high skill jobs. The majority of our workforce used to work in agriculture. But we domesticated horses and engineered tractors. Machines now build other machines, yet we’ve always had demand for higher skilled jobs. But now lawyers, pharmacists, sports reporters and even college professors are in danger of witnessing their professions becoming automated.
Some people might insist I’m some nutty socialist who supports a policy that will inevitably encourage laziness and unproductivity. Well my friends, in my corner of the ring, I’m backed by Friedrich August von Hayek and Milton Friedman, two of the foremost economists of the 20th century and both University of Chicago alumni. The University of Chicago has a rich history of producing neoliberal economists who strongly advocate for free market policies and restraint of the government to intervene in economic policies. Basically, they’re the opposite of socialists. von Hayek allows for a basic minimum income in his writings, and Friedman proposed a negative income tax where persons who meet a certain threshold would receive money from the government.
Traditionally, many conservatives have opposed social welfare programs such as food stamps, subsidized housing and Medicare. Instead of many programs, we could have but one program that actually increases liberty and decreases government reach in an individual’s life. In the 1972 presidential election, Republican nominee Richard Nixon and Democratic nominee George McGovern both endorsed a guaranteed minimum income. This idea isn’t some outlandish socialist propaganda. It’s rooted in conservative economic theory, and it might be our only hope to mitigate the paradigmatic shifts that will occur with job automation.
Raising the minimum wage will likely have negligible impact at first. No, increasing it by 75 cents an hour won’t implode the Nebraska economy. We have seen many other states and cities enact minimum wage laws that are much higher than what’s on the ballot for November here, and they’ve remained solvent. But there’s a risk that a minimum wage increase might expedite job automation if enacted at a federal level. Part of the strategic goal for the Nebraska minimum wage initiative is to increase voter turnout. Particularly in a midterm election where many young voters don’t turn up, a minimum wage initiative might incentivize them, many of whom work minimum wage jobs, to vote this November. As a strategy, it’s effective. But as a policy, the minimum wage initiative isn’t what this country needs going forward.
I will vote yes on the minimum wage increase. However, we need to be prepared for a future where chronically high unemployment is the norm. What good will a minimum wage be if there are no jobs? Our society must be judged by how we treat our most vulnerable citizens. A basic minimum income is the real solution to our rapidly evolving world.
Oliver Tonkin is a senior political science, Latin American studies and global studies major. Reach him at firstname.lastname@example.org or follow him on twitter @thebrutalwolf.