Seyfarth Synopsis: From Mark Zuckerberg to the mayor of Stockton, the concept of Universal Basic Income is catching fire. What is this newfangled concept, and what can employers expect in the new emerging economy?

UBI – What Is It?

Universal Basic Income—“UBI”—is a form of social security, or a citizen’s stipend, to ensure everyone with a basic income from the state. The idea is to provide a basic degree of economic security: the recipient need not work or look for work, and the payment would come regardless of the individual’s other income. Countries like Finland and Canada have started to test UBI programs in certain jurisdictions, with some success.

Although the idea of UBI dates the way back to the 18th century, the idea has received a lot of attention and support recently. Numerous Silicon Valley big game players have embraced the concept. Mark Zuckerberg of Facebook fame advocated for the concept during his Harvard commencement speech in 2017. Elon Musk of Tesla fame is another big supporter, opining recently that “we’ll end up doing universal basic income. It’s going to be necessary.”

Why has the concept been so revitalized? It all comes down to the future emerging job market. Elon Musk was very clear on this point: “there will be fewer and fewer jobs that a robot cannot do better. I want to be clear. These are not things I wish will happen; these are things I think probably will happen.” Indeed, back in March 2017, former President Barack Obama warned Congress that several reports found that as much as 50% of jobs could be replaced by robots by 2030. If that truly is the case, the diminished capacity for human workforce will leave many people without a job, and therefore without any other form of income.

Stockton Economic Empowerment Demonstration

It all seems very futuristic and distant—until we realize that UBI is already being tested right here in California! And, where better than in Stockton, California? Stockton has already faced great economic difficulty: as a city plagued by a loss in job opportunities and low wages, it even had to declare bankruptcy in 2012.

Beginning in the second half of 2018, the Stockton Economic Empowerment Demonstration (SEED) will pay $500 a month to a few hundred lower-income individuals. The money will come with absolutely no strings attached and will originate from the Economic Security Project (an organization aiming to raise awareness on UBI in the United States).

Stockton Mayor Michael Tubbs, Stockton’s youngest mayor in history, has been a prominent supporter of the program, seeing it as a way to alleviate some of the poverty pains the city has been experiencing with the growth of Silicon Valley and an increasingly heavy reliance on automation. The hope is to track the benefits of the distributions and use this as a pilot program for potentially expanding its use in other areas of California. Indeed, this hot topic of UBI is regularly discussed already by California state legislators and by gubernatorial candidates in California’s 2018 election.

What Does It All Mean?

Should we all just kick our shoes off and wait for the money to roll in? Probably best not to. UBI is meant to provide some security, but is in no way meant to replace working entirely. The program is just in its initial testing stages, and it is impossible to predict with any assurance the benefits and costs of running a UBI program on a larger scale.

Some studies indicate that people receiving a UBI would likely keep some form of employment, or take on part-time work. Indeed, researchers found that rather than decreasing employment, in areas using UBI, people in part-time work increased by a significant 17%. Like the surge of independent contractors in the new and emerging “gig economy,” employers could see a shift in the type of workers, particularly in low-wage positions that UBI tends to affect, and their expectations for benefits, flexibility, and pay.