Columbia Business School

Money for Nothing: A Bold Plan for the Future of Work

Presented by Columbia Business School

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An unlikely alliance is growing between the right and the left, Silicon Valley and the Rust Belt, in support of an unusual policy — universal basic income, a free check for every American man, woman, and child.

Within a decade or two, if a growing consensus of futurists and technologists are correct in their predictions, robots will greet us when we enter stores, serve us in restaurants, diagnose our illnesses, and even write our news and design our products. America’s roadways will be filled with self-driving trucks and cars, transporting goods safely and cheaply and taking people wherever they’d like to go. Except, that is, to work, because there may not be any jobs left.

According to Andy Stern, former president of the Service Employees International Union, recent technological advances are poised to change the face of labor, making millions of American workers obsolete. It may sound like science fiction, but Stern has data to back his predictions. A recent study by the McKinsey Global Institute finds that more than 45 percent of all work performed by Americans could be automated via existing technologies. That number roughly matches the results of a 2013 study by a pair of Oxford professors, who concluded that 47 percent of US jobs are in jeopardy of being eliminated by machines.

columbia-business-schoolThis chilling vision of the future is one reason Stern has become an advocate for “universal basic income,” or UBI — a monthly check given to all Americans, regardless of whether they hold a job. In his new book Raising the Floor, Stern argues that a UBI of $1,000 per month — a number based on the federal poverty line — would allow individuals who can’t find work to meet their basic needs without removing the incentive to work for those who can.

Not everyone, though, shares Stern’s fears of the coming robotic future. After all, despite persistent anxiety to the contrary, for at least the past 140 years every technological advance has created more jobs than it has displaced. Stern refers to these well-meaning non-alarmists as “mitigators.” Currently, they make up the majority of policy makers, advocating for investment in infrastructure and education, particularly in STEM, to offset tech-related job loss. But Stern believes their numbers will begin to dwindle as more and more workers are pushed out of their jobs.

“Most people have every reason to believe the problems today can be solved by mitigation,” Stern adds. “But it’s hard to look at the research by McKinsey and others and not at least account for the very strong possibility that something far more disruptive is going to happen.

“If you look at what’s happening in this year’s election, it’s fueled by economic insecurity,” says Stern, who began his research into UBI while a senior fellow at Columbia University’s Richman Center. If Stern is right about where employment is headed then, 2016 could be just a foretaste of the vitriol and chaos of election cycles to come.

“Think about what happens when we start to lose a good portion of the 3.5 million truck drivers and 6.8 million people that provide services like auto repair, rest stops, and motels,” Stern continues. Jobs like these are presently among the few remaining options for workers without a college degree. If they alone were to be affected by the rise of the machines, mitigation policies would likely be sufficient to stave off any crisis. But advances in machine learning and artificial intelligence have the potential to impact a much broader swathe of the population — from hedge fund managers and doctors, to designers and computer engineers themselves.

It’s perhaps little surprise then that the idea of universal basic income has attracted particular attention in Silicon Valley. Back in January, Y Combinator, the incubator behind some of Silicon Valley’s most famous startups, including Airbnb, Dropbox, and Reddit, launched a research project to study the idea. “I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale,” Sam Altman, the company’s CEO wrote in a blog post announcing the project.

Even if we humans survive the robot invasion with most of our jobs intact, there might still be a case for UBI. That’s because today’s workers not lucky enough to be in the upper echelon of earners have it plenty hard, with the machines already breathing down their necks. While wages in America rose alongside productivity and GDP for much of the 20th century, pay for most workers stagnated in the mid-’70s and has actually fallen since 2000. That’s true for all categories of American workers, including those with college degrees.

In the wake of the Great Recession, we’ve become what Stern calls a “low-wage nation.” Nearly 8 million Americans with steady paychecks live below the poverty line. While unemployment has reached record low levels, the vast majority (58 percent) of the jobs created since the recession are in low-wage occupations, according to the National Employment Law Project, while the majority of jobs lost in the crisis were in middle-income occupations. This shrinking of the middle class has further exacerbated the mounting gap between the rich and poor — in 2014, the nation’s top 10 percent of earners took home 46 percent of America’s income.

In the absence of decent full-time jobs, an estimated 53 million Americans have become freelancers, moonlighters, contingency workers, or players in the emerging “gig economy.” Companies like Uber and TaskRabbit have created a new class of entrepreneurs, while crowdsourcing projects like Amazon’s Mechanical Turk allow people to cobble together livelihoods by performing simple online tasks for pennies.

While these kinds of opportunities have given workers unprecedented freedom, it’s also left them without steady incomes or the kinds of protections Stern used to fight for at the SEIU. Uber has faced a steady stream of lawsuits from both passengers and drivers since its launch, recently agreeing to pay $100 million to settle a lawsuit with drivers seeking employee status. TaskRabbit has also faced withering criticism for its treatment of workers, particularly following a decision in 2014 to shift from allowing workers to bid on projects, to determining a rate for them and assigning them projects.

“So far, no one has figured out exactly how to apply the minimum wage or social security or other potential floors that people would be entitled to,” Stern says. He admits there might eventually be algorithms that set appropriate wages and protect workers from being exploited, but he finds the UBI to be a simpler, and therefore more attractive, solution. And it’s not just progressives like Stern who see the beauty in guaranteed income.

In 1962, five years before Dr. Martin Luther King Jr. wrote about universal income as a means of eliminating poverty in America, famed conservative economist Milton Friedman proposed a “negative income tax” that functioned much like UBI. In Raising the Floor, Stern suggests paying for UBI — the cost of which could top $2.5 trillion — by eliminating all or most of the 126 federal welfare programs already in place. That makes the program particularly attractive to advocates of small government and those who believe that the design of current programs produce distortions in markets for labor, healthcare, and even marriage.

“Libertarians think people, as a basic right deserve freedom — not only from the government, but from employers,” Stern says. “They see that when the government sets up these regulatory schemes to determine who’s qualified and who’s righteous, it doesn’t give people the freedom they believe everyone should be entitled to.”

But even with a broad coalition of strange-bedfellow supporters ranging from Occupy Wall Street protesters to Michael Tanner, head of the libertarian think tank the Cato Institute, UBI won’t be an easy sell. Earlier this month, voters in Switzerland rejected by a landslide a proposal that would have guaranteed each adult citizen about $2,250 per month. If the idea won’t fly in Europe, where social safety nets are far more extensive, what hope is there in the United States, where handouts are stigmatized and hard work is woven into our national identity?

“People like myself grew up in a world where work was central to our life,” Stern says. “Getting a college degree was pretty much a ticket to the middle class, if you worked hard. That makes it really hard to imagine a world where more and more people can do what’s expected of them—go to school, find a job, work hard—and not succeed.”

And yet that’s the reality he’ll emphasize between now and 2020, when he hopes to support candidates who favor UBI in primary elections for all 535 seats in Congress. Stern also aims to mobilize UBI advocates in the 23 states where citizens’ initiative processes allow voters to draft legislation and — with the proper support — get their bills placed on ballots. The goal is to put constitutional amendments for UBI — or demands that states lawmakers draft similar policies — on the ballots in each of these states.

Those are just two of the tactics Stern outlines in the final chapter of the book, where he argues that UBI offers “more security, bargaining power, and flexibility as the economy keeps changing.” Whether you want economic justice today or protection from the labor-saving innovations of tomorrow, Stern says, UBI is one way to preserve the American Dream.

“This isn’t an issue of hard work or ethics,” Stern says. “It’s about the economic reality that workers are going to face.”

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