$12K/year is equivalent to a 50 week, 40 hour job at $6/hour after taxes. If employment and social security taxes come to 20%, that implies an equivalent minimum wage of about $7.20/hour.
The Federal minimum wage is $7.25/hour and is widely considered to be too low.
> The Federal minimum wage is $7.25/hour and is widely considered to be too low.
That's comparing apples and oranges. The Federal minimum wage is the wage below which it is illegal to pay an employee. If you're unemployed, you still get no wage. Basic income would, obviously, get paid to every single person regardless of employment. It makes sense for it to be lower than the wage someone would earn for working.
I'd also point out that not having to work has the potential to decrease expenditures quite a bit.
For starters, the post itself assumes that if you don't have to work, transportation costs decrease quite a bit. Keep in mind that people who have a hard time finding work often travel farther to find work or hold down multiple part-time jobs instead of one full-time job, which increases transportation costs. If you're living in the Bay Area and have to commute every day, e.g., San Jose to San Francisco, a Caltrain + MUNI monthly pass works out to an extra $300 / month in expenses that you wouldn't have to spend if you weren't working.
In addition, the fact that you don't have to work gives you more flexibility in choosing where to live -- if you're not concerned about employment, you can live where the cost of living was cheapest.
We're also assuming that that basic income will always be guaranteed. One reason the federal minimum wage might be considered too low is that it doesn't leave any income left over to save for unemployment, retirement, or other scenarios where your income source is lost. That becomes irrelevant if everyone gets a guaranteed income.
Finally, simply having an extra 8+ hours of free time each day makes it a lot easier to optimize your costs. You have more time to plan your meals, to research and compare prices on every kind of expenditure, to exercise and minimize long term health costs, etc.
What does "too low" mean? Does "too low" mean that some testable negative consequences will result, or is it merely a moral judgement?
If there are testable negative consequences, we should look and see if Bulgaria suffers those consequences. Bulgaria has a PPP-adjusted GDP/capita that is $1/year less than your hypothetical 50 week, 40 hour min wage job. There are quite a few nations (generally considered "developed") with similar levels of income.
Your comparison does not take into account the relative cost of living of those places.
Furthermore, why do you say "merely" a moral judgement? Is a moral judgement that optimizes for human happiness somehow worse than a logical one that optimizes for efficiency?
Negative testable consequences? How about not being able to buy basic goods like food? I believe that's quite testable, however cross-region comparison based solely on income is meaningless in this case as the cost of basic goods will vary. (http://www.novinite.com/articles/152387/20+of+Bulgarian+Hous...)
I've never been to Bulgaria so I have no opinion. From what I hear it's quite pleasant. I'm currently in India and have a consumption level well below that of the average poor American. I'm suffering no particular adverse consequences.
You haven't answered the question. Is there some concrete bad thing you believe happens below $14,500/year, or do you simply feel it is morally wrong?
I'm currently in India and have a consumption level well below that of the average poor American. I'm suffering no particular adverse consequences.
It doesn't make sense to compare the two. Basics costs are much lower in India and Bulgaria. I live on less than the average poor American too, but I also pay 80$/month to live alone in a large apartment.
I can only assume that the "concrete bad thing" that might happen below 14,500$ a year is some combination of malnutrition, homelessness, illness, etc. The number might be less than that, but it's not much less.
The only claim that GP made was that many people consider 7.25/hr or 14,500/year to be too low to cover for basic costs. Why are you taking such an obtuse and provocative tone?
I wish HN allowed formatting beyond italics - then whenever I discuss this topic I'd put the phrase "PPP-adjusted" in bold 18pt font.
...some combination of malnutrition, homelessness, illness, etc...
The mean Bulgarian does not suffer these problems. Neither does the upper middle class Indian who lives on far less. When I say "far less" I mean after adjusting for PPP, i.e. adjusting for "basic costs", or however you want to phrase it.
I don't know why you consider my tone "provocative". It's not obvious to me what the phrase "too low" or "basic costs" mean.
Incidentally, when I said "live on less than the average poor American", I meant in terms of material consumption. I have no car (75% of poor Americans do). I can't drink the water coming out of my tap. I have a small living space. Most poor Americans have more possessions than I do.
Incidentally, when I said "live on less than the average poor American", I meant in terms of material consumption. I have no car (75% of poor Americans do). I can't drink the water coming out of my tap. I have a small living space.
Americans believe everyone should have basic things like sanitation. Arguing that the poor somehow shouldn't just because India hasn't been as successful at infrastructure development isn't really a good argument.
To be explicitly clear, the question is this: Suppose there are concrete negative consequences to having ppp-adjusted ppp-adjusted ppp-adjusted ppp-adjusted income below $14,500/year. What are those consequences? Why don't middle class Bulgarians and upper middle class Indians suffer them?
(I overemphasize the phrase "ppp-adjusted" since you, llllllllllll, and many other people in other threads seem to repeatedly ignore it.)
You get this money without even working. Any money you earned while working (there would be no more minimum wage under this system) would be in addition to the $12,000 you got from the basic income. Also the basic income is presumably not taxed, as it's welfare income.
Note that the $12K/year is per person and excludes children. The federal minimum wage is considered to be too low, in part, because many of the people earning minimum wage have dependents.
The real answer is : it doesn't matter, unless you set it way too high. The economy will adjust until the value of basic income is equivalent to a particular value.
Now of course, what could happen is that you set it too high and we get massive inflation and dollar devaluation for a few months/years.
The reverse should also be true. Because fitting within basic income will massively expand client base for companies, there might actually be devaluation if it's set too low.
I think it's pretty obvious that one cannot choose the level of basic income. You can only do damage by choosing wrong. Given that it's currently zero, if you'd want to do this, start at a very low level (but still high enough to make companies want to provide services at that level), work out the kinks, and increase it over the course of a few years slowly until you see undesirable phenomena, then stop. Ideally, make this a state thing so regional differences can efficiently work.
Ideally, make this a state thing so regional differences can efficiently work.
The problem with this strategy is it creates massive disparities between states, as the burden of caring for the poor will be disproportionately shifted to the progressive states providing a basic income, while the conservative states don't need to pay for anything.
Furthermore, state governments don't have anywhere near the tax base or cash reserves to implement a basic income. This can only be done on the Federal level.
A UBI provides mobility to citizens by not trying their source of food to their location. If a UBI can't support you in San Francisco or New York, you have the ability to move to where it will.
There's no need to have this be a state thing, except to screw up the program.
One side note to the "move to where the BI will support you" is that jobs will move to those places too - not all jobs, but more jobs than are currently there, as there will be more people and they will have some financial resources. In general, along with everything else, BI moves money away from concentrations of wealth and toward concentrations of people, where there is a disparity between those densities.
Ideally you'd want to make it adaptive based on a variety of economic metrics -- set it to a particular level, watch the effects on the economy, and then adjust for the next year.
The Federal minimum wage is $7.25/hour and is widely considered to be too low.