Meet a single mom who transformed her life through a guaranteed income program that gives her $1,800 every 3 months. It helped her get a car, a new job, and move into a better neighborhood for her daughter.

Skyline view of Compton, California
The Compton Pledge is the largest city-based guaranteed income program in the United States.

  • Christine, a woman from Compton, California, gets $1,800 every three months through a basic income program.
  • The guaranteed income program is the largest one in the country, and helps 800 low-income families like Christine’s.
  • She told Insider it helped her get a car, a job, rebuild her credit, move into a new neighborhood, and get her kids into childcare.

Christine and her daughter both got COVID in January. It was bad timing.

The 45-year-old native of Compton, California, told Insider that her five-year-old had a preexisting respiratory illness, and the risks were just too high. She had to take an indefinite medical leave from her job as a bus driver for the LA Metro. That also meant school wasn’t an option for her daughter. 

“I was going through this time when I had no money, we were stuck at home, and I couldn’t pay any bills,” Christine told Insider, asking that her last name be withheld for privacy reasons. “And I still hadn’t received an unemployment check.” 

But in January 2021, Christine got an email that changed everything. It was from something called the Compton Pledge and it said that the city would send her $1,800 every three months, no strings attached. She remembered that while seeking treatment for drug addiction years earlier, she had put her name down on an email list, but she had no idea it would be for Compton’s version of a universal basic income. 

“I asked my pastor, ‘is this real?'” she said. “And he said it was legitimate.”  

The Compton Pledge, an initiative from the Compton mayor’s office, is the largest city-based guaranteed income program in the US. The group has dispersed $4 million in funding so far, out of the $9.2 million they’ve raised. Currently, they’re supporting 800 low-income households in Compton through a lottery program, each of which will receive funds for two years. 

“I was finally able to pay rent and have money in my pocket for necessities,” Christine said. “It was such a blessing.”

After years of economic need, some relief

Long before she got COVID, Christine needed economic assistance. After a boyfriend was killed in a drive-by shooting, she struggled with drug addiction and long hours working as a waitress. She started seeing a man who cooked meth, and became hooked on it herself. She got pregnant and had a son. 

Christine got clean, and remained that way for five years, before she relapsed with a partner who began trafficking her. She felt exploited and overwhelmed, eventually leaving him and becoming homeless. She left her son in the care of a friend with the intention of retrieving him a few weeks later. By the time she rehabilitated herself years after, however, she’d lost custody of him, and he wasn’t interested in being reunited. 

While homeless, Christine had a second child, her daughter. She contacted a caseworker and started a program called Shields for Families, a community-based nonprofit that provides housing, counseling, and other social services to families in need.

While Christine was at Shields three years ago, former Mayor Aja Brown came to visit. That’s when Christine put her name down to apply for the Compton Pledge.

With the help of her Pledge money, Christine has managed to keep her head above water — and take real steps toward financial security. 

She was able to buy a car, for instance, which she uses to earn money as an UberEats driver in her new neighborhood of Koreatown. Christine said that given her financial background, no one would have loaned her money before Compton Pledge gave her a foot in the door. 

“I was able to put down $4,000 after saving a few of my Compton Pledges,” she said. “No one cares about your financial history when you can put down that much. They gave me the loan for the car, and in effect, my credit is actually better.” 

The group behind Compton Pledge argues that guaranteed income funds are vital to addressing the problems with government welfare programs, which it says are often underfunded and come with strings attached. 

“Guaranteed income makes a case for investing in our undocumented neighbors and formerly incarcerated residents,” Nika Soon-Shiong, a Compton Pledge co-director, told Insider. Not all formerly incarcerated and undocumented people have access to welfare benefits. 

“In doing so, it addresses the reality of the nation’s fragmented, punitive welfare structure,” she said. 

This year, guaranteed income programs like Compton Pledge have seen a surge in popularity throughout the US. At least 11 direct-cash experiments will come into effect by the end of the year, Bloomberg CityLab reported in January. Dozens of US mayors, for instance, joined Mayors for a Guaranteed Income this year.

Funds from the Compton Pledge do not impact one’s other benefits, and its payments aren’t taxable. The payments also aren’t considered to be “public charge,” which affects some immigrants’ abilities to become American citizens.

Because Christine’s access to food stamps and other welfare benefits weren’t affected, she had more disposable income. In addition to providing for her own family, Christine has been helping others in her community by starting a nonprofit — Compton Homeless Outreach. She and her church provide food and toiletries to the homeless population of Compton, as well as life coaching for people transitioning out of homelessness. 

“There are people who look at the Compton Pledge and think, ‘Why are you helping people who won’t help themselves?'” Christine said, but she’s living proof that isn’t true. “This is helping me help other people.” 

Do you have a story to share about guaranteed income? Reach out to Jason Lalljee at jlalljee@insider.com.

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Chicago just approved one of the US’s largest basic-income pilots: $500 monthly payments for 5,000 people

chicago worker
Marquisha Byrd makes face shields for frontline responders at Dimo’s Pizza in Chicago, April 16, 2020.

Chicago just became the latest city to offer residents monthly cash payments, no strings attached.

The city council voted Wednesday to approve one of the largest basic-income programs in US history – a pilot that will give 5,000 low-income households $500 per month for one year. Participants will be chosen at random, but individuals must earn less than $35,000 per year to qualify.

The council authorized nearly $32 million for the pilot as part of the city’s 2022 budget. The program’s funding comes from $2 billion in COVID-19 relief dollars allocated to Chicago through the Biden administration’s American Rescue Plan.

The pilot specifically aims to relieve financial burdens on families hard-hit by COVID-19. Hundreds of thousands of Chicago residents lost their jobs during the first six months of the pandemic, and around 18% of Chicago residents live below the federal poverty line.

“Growing up, I knew what it felt like to live check to check,” Chicago Mayor Lori Lightfoot wrote earlier this month on Twitter. “When you’re in need, every bit of income helps.”

Several other Democratic mayors similarly see cash stipends as a promising way to address poverty in their cities. More than 50 have joined the coalition Mayors for a Guaranteed Income, the members of which all pledge to start basic-income pilots in their cities. The founder of that coalition is the former mayor Stockton, California, Michael Tubbs. He launched one of the US’s first guaranteed-income pilots in 2019, a program that gave 125 residents $500 per month for two years.

Other cities have followed his lead. Saint Paul, Minnesota, approved a basic-income pilot last year, in which 150 low-income families get $500 a month for up to 18 months. Oakland, California, is now accepting applications for its basic-income pilot, which gives $500 monthly payments to 600 low-income families for 18 months. In Compton, California, 800 residents are already receiving a guaranteed income of $300 to $600 a month for two years. And Richmond, Virginia, is distributing $500 per month to 18 working families.

Critics worry that basic income can’t address large-scale poverty

chicago thanksgiving
People wait in line to receive a free turkey ahead of Thanksgiving in Chicago, November 23, 2020.

Critics of basic income argue that free stipends would reduce the incentive for people to find jobs or encourage them to make frivolous purchases. Several studies, however, have suggested that cash benefits don’t keep people from entering the workforce.

After Stockton’s program ended in January, researchers found that it reduced unemployment and increased full-time employment among participants. Stipend recipients also reported improvements in their emotional wellbeing and decreases in anxiety or depression. Most of them spent their money on basic necessities like food and merchandise, including trips to Walmart or dollar stores.

Chicago Alderman Gilbert Villegas told The Washington Post that his city’s pilot will monitor how participants spend their stipends for the first six months. Depending on the results, the city may direct the stipends toward specific uses, such as covering heating bills or food.

Still, some members of the Chicago City Council were hesitant to back the program. Members of the Chicago Aldermanic Black Caucus argued that the money could be better spent on violence prevention or a reparations program. Alderman Nick Sposato, meanwhile, told Politico earlier this month that basic income is “a socialist idea that doesn’t consider the mainstream.”

Critics of basic income also sometimes point to the mixed results seen in larger-scale attempts at cash-transfer programs. A 2018 report found that the Alaska Permanent Fund, which has been distributing cash to state residents since 1982, increased part-time work by 17%. But the cash transfers had no effect on overall employment numbers (the share of people who had jobs).

Finland’s basic-income trial, meanwhile, also found that employment rates between stipend recipients and those in the control group were about even. But the results of that program, conducted from January 2017 to December 2018, were complicated by the fact that participants had to give up part of their standard conditional benefits – things like housing allowances and illness compensation – to receive the monthly stipends.

Proponents of basic income still think it has the potential to reduce poverty on a national level.

“I am so proud of all the pilots, but I’m ready for policy,” Michael Tubbs told Insider in March. “I’ve got all the evidence I need.”

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Los Angeles is launching the US’ biggest universal basic income pilot. The scheme will pay $1,000 a month to 3,000 families.

California Gov. Gavin Newsom.
California Gov. Gavin Newsom. Los Angeles is launching a universal-basic income program, set to be the biggest in the US so far.

  • Los Angeles is launching a universal-basic income (UBI) pilot program with $1,000 monthly payments.
  • Around 3,000 families will get the money for a year, and there are no rules for how they spend it.
  • A council member said it would be the largest UBI program in the US’ history.

Los Angeles is launching a universal-basic income (UBI) pilot program, set to be the biggest in the US so far.

The scheme will give about 3,000 families in poverty $1,000 a month for a year, and there are no rules for how the families spend the money.

To be eligible, applicants need to live in the City of Los Angeles, be at least 18 years old, have an income at or below the federal poverty level, have at least one dependent minor or be pregnant, and have experienced either financial or medical hardships related to the COVID-19 pandemic.

The federal poverty level depends on the size of a household. For a four-person household, a family earning less than $26,500 would fall under the federal poverty line. Poverty affects two out of every 10 residents in the City of Los Angeles – most of them people of color, according to a website for the program.

The program is called the Basic Income Guaranteed: Los Angeles Economic Assistance Pilot (BIG LEAP).

It has nearly $40 million in funding, South LA Councilman Curren Price said at a City Council meeting Tuesday, where council members approved the program.

Price said that the program would be “the largest guaranteed income economic assistance pilot program in our nation’s history,” and called it a “life-changing initiative.”

The city said that the program would consist of “unconditional, regular, and direct cash payments,” with “no restrictions on how the money can be spent.” The payments would supplement existing welfare programs, the city said.

The concept of UBI dates back to at least the 16th century, when Spanish-born humanist Juan Luis Vives advocated for a system of unconditional welfare. Since then, Dr. Martin Luther King Jr. has declared his support for the concept, and it went on to become a cornerstone of Andrew Yang’s run in the 2020 Democratic Party presidential primaries

More economists and lawmakers, including a coalition of US mayors, have been calling for the introduction of UBI schemes as the pandemic both exacerbated and exposed huge income inequalities.

“The idea of a guaranteed pilot program is one my office has been following for some time, and it gained momentum as we witnessed our country examine the racial disparities and social injustices during the COVID pandemic,” Price said on Tuesday.

Other cities across the US have trialed UBI programs.

Stockton, California, ran a UBI scheme for two years which gave 125 residents $500 per month. After just a year, full-time employment among the participants had increased, and depression and anxiety had decreased, according to the results of the scheme.

Price told the City Council that the “positive results” from the Stockton program made it clear that one in Los Angeles was needed, too.

“It’s my hope that following the conclusion of this pilot program, that it’ll be replicated at the state and federal level,” Price said.

Los Angeles Mayor Eric Garcetti had said in his annual “state of the city” address in April that the city was looking at launching a $24 million UBI program to support the city’s poor residents.

Applications open on Friday and close on November 7.

The recipients of the funding will be chosen at random from the eligible candidates by the Center for Guaranteed Income Research at the University of Pennsylvania, and will be contacted by the city in January.

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Universal basic income could become a reality in South Korea under a presidential candidate who once likened himself to Bernie Sanders

FILE PHOTO: South Korea's Gyeonggi Province Governor Lee Jae-myung speaks during an interview with Reuters in Seuwon, South Korea, May 15, 2020. REUTERS/Daewoung Kim
South Korea’s Gyeonggi Province Governor Lee Jae-myung speaks during an interview with Reuters in Seuwon.

  • Lee Jae-myung, a South Korean presidential candidate, is pushing for universal basic income.
  • The candidate touted a five-year plan to give residents 500,000 won, or $420, each month.
  • Universal basic income is rising in prominence in the US, with some cities implementing similar programs.

South Korea could become the first Asian country to implement universal basic income if the Democratic presidential candidate wins the upcoming election.

Lee Jae-myung, who won the Democratic Party’s primary race this past weekend and once said he aspired to be “a successful Bernie Sanders,” touted guaranteed monthly payments, no strings attached, for South Koreans should he win the presidential election. Under his five-year plan, South Koreans would initially receive a 1 million won, or $840, annual payment that would be expanded over the years until residents would get monthly payments of 500,000 won, or $420.

“Real freedom is possible only when basic life conditions are guaranteed in all areas including income, housing and financing,” Lee said during his acceptance speech on Sunday.

He added that he will work to “root out unfairness, inequality and corruption” and restore economic equality in the region.

The 57-year-old is currently governor of South Korea’s most populous Gyeonggi province, which surrounds Seoul, and during the pandemic, all residents in his jurisdiction received regular payments to help them remain financially stable in the midst of COVID-19.

But some critics are unsure how plausible implementing a universal basic income would be in South Korea, with some economists telling the Financial Times that guaranteed monthly payments would produce a “steroid effect,” but might not help root out economic inequality in the long-term.

Still, universal basic income is picking up steam globally. Insider previously reported on the growing number of cities and states in the US implementing versions of guaranteed payment programs, with California recently launching the nation’s largest statewide universal basic income program prioritized for pregnant people and those aging out of the foster system.

Some lawmakers in the US want it to become a permanent feature of America’s economy.

After the pandemic spurred Congress to approve three stimulus checks for Americans, some Democrats called to continue those checks well beyond the end of the pandemic, and in late March, amid infrastructure negotiations, 21 Democratic senators urged President Joe Biden in a letter to include recurring direct payments in his infrastructure plan, saying that when checks ran out after the CARES Act, poverty rose.

Tesla CEO Elon Musk even joined the conversation, saying during an August presentation that the rise of robots might compromise jobs that humans currently do, necessitating a form of guaranteed income.

“Essentially, in the future, physical work will be a choice,” Musk said during the presentation. “This is why I think long term there will need to be a universal basic income,” he added.

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Andrew Yang is founding a 3rd political party aimed at centrists and breaking up the ‘duopoly’ of Democrats and the GOP: source

Andrew Yang speaks with a microphone in front of a blown up portrait of his face.
Former presidential and NYC mayoral candidate Andrew Yang.

  • Andrew Yang is starting a third political party, a source close to him confirmed to Insider.
  • Yang’s new party, first reported by Politico, remains unnamed.
  • In his forthcoming book, Yang argues a political “duopoly” is keeping the US in the past.
  • See more stories on Insider’s business page.

Andrew Yang is forming a third political party, a source familiar with the plans confirmed to Insider on Friday.

The new party, first reported by Politico, will be aimed at moderates and centrists fed up with America’s two-party system.

Yang did not respond to Insider’s request for comment.

The source close to Yang confirmed the formation of the party is real, but did not divulge a name for the outfit. More details on Yang’s party will be rolled out with his upcoming book.

Set for an October 5 release, “Forward: Notes on the Future of Our Democracy” was written in the fall of 2020 before Yang waged his unsuccessful bid in the New York City mayoral race.

While Yang’s name recognition from his dark horse presidential run made him the early favorite, an erosion of his support among college-educated and affluent white voters led to a third-place finish. His mayoral run showed some of the potential of ranked-choice voting, benefiting from a late quasi-alliance with former NYC Sanitation Commissioner Kathryn Garcia.

Yang’s presidential campaign centered around a $1,000 per month universal basic income program, but he ran on a more limited direct payment policy during the mayoral race.

The new book delves into what Yang argues is a “duopoly” of Democratic and Republican rule that is keeping the US’s political system stuck in the past.

Modernizing legislation and government agencies is also a focus in the book, which Yang ties to what he describes as the “priests of decline” among both major parties.

Yang’s upcoming book will be published by Crown, following up on his 2018 best-seller “The War on Normal People.”

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California lawmakers just approved the nation’s first guaranteed income program

dollar bills
  • California lawmakers approved a program that would provide monthly checks to residents.
  • This guaranteed income program will prioritize pregnant people and those aging out of the foster system.
  • The state is the first to implement this type of program, which many Democrats have been pushing for.
  • See more stories on Insider’s business page.

In the first-of-its-kind state initiative, California just approved a program to distribute monthly checks to its residents, marking a step toward a universal basic income in the country.

On Thursday, California’s state legislature unanimously passed a $35 million guaranteed income program funded by taxpayer dollars, in which residents can receive up to $1,000 monthly checks. According to the text of the bill, the program would prioritize residents who age out of the foster system and pregnant individuals, and it does not contain any restrictions on how the monthly payments should be spent.

“I’d like to thank my colleagues for partnering with me on this important work and investing in this concept that will uplift the lives of so many,” California State Senator Dave Cortese, who advocated for the program, said in a statement. “I’m excited that 40 million Californians will now get a chance to see how guaranteed income works in their own communities.”

Cortese added that this program is modeled after a successful universal basic income program passed in Santa Clara County last year, which offered $1,000 monthly checks for a year to young adults who were no longer eligible for foster care.

The California Department of Social Services will administer the funds equitably for both rural and urban applicants, and the bill now heads to California Gov. Gavin Newsom’s desk for approval.

The idea of a universal basic income is becoming increasingly popular. After the pandemic spurred Congress to approve three stimulus checks for Americans, some Democrats began to call for those checks to continue well beyond the end of the pandemic.

On March 31, in the midst of infrastructure negotiations, 21 Democratic senators urged President Joe Biden in a letter to include recurring direct payments in his infrastructure plan, saying that when checks ran out after the CARES Act, poverty rose.

Insider also previously reported that a fourth and fifth stimulus check could cut the number of Americans in poverty in 2021 from 44 million to 16 million while helping close imbalances in poverty, income, and wealth between white Americans and Americans of color.

Biden has not yet commented on if recurring direct payments will become a reality, but California might have paved the way for other states to follow suit and amplified Democrats’ calls to give every resident guaranteed monthly payments.

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The former head of Y Combinator wants to distribute UBI via cryptocurrency – and is testing an eye scanner that would identify recipients

In this photo illustration of the litecoin, ripple and ethereum cryptocurrency 'altcoins' sit arranged for a photograph
Jack Taylor/Getty Image

  • A new cryptocurrency is aiming to distribute wealth to everyone on earth, Bloomberg reported.
  • Y Combinator’s Sam Altman thought of the concept of Worldcoin in 2019.
  • Now, the creators have developed a way to scan people’s irises to assign the cryptocurrency.
  • See more stories on Insider’s business page.

A new cryptocurrency aims to distribute wealth to “every single person on earth” with the help of an orb-shaped device that would scan people’s irises to identify them, according to a new report from Bloomberg.

Sam Altman, the former president of Y Combinator, a seed-money company that helped grow Airbnb and Dropbox among others, thought of the concept of Worldcoin in 2019 in the hopes of capitalizing on the economic idea of universal basic income, Bloomberg reported.

According to an online job listing, the new cryptocurrency is “free, frictionless and not controlled by anyone.”

Worldcoin hopes to reach mass adoption by “distributing it to everyone on earth through a novel approach: a dedicated hardware device ensuring both humanness and uniqueness of everybody signing up, while maintaining their privacy and the overall transparency of a permissionless blockchain,” the post said.

The silver, basketball-sized device would scan peoples’ irises to create a personal identifier for the coin and prevent users from defrauding the system, Bloomberg reported, adding that the creators said the image isn’t stored. Bloomberg said the device is being tested in various cities with Bitcoin because Worldcoin itself is not yet ready to hit the market.

Altman – who is one of three founders and now serves as an advisor, according to the report – did not immediately respond to Insider’s request for comment for the story. Firms backing Worldcoin include Andreessen Horowitz, the venture capital firm behind Coinbase. The firm also did not respond immediately to Insider.

Worldcoin has yet to be formally unveiled, Bloomberg reported, as the founders, who believe crypto could give the whole world access to financial systems, are considering how to distribute the currency to everyone.

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Half of Americans want a major overhaul to the US economy, Pew says

NYSE Wall Street coronavirus
  • Half of Americans believe the US economy needs “major changes” or to be “completely reformed.”
  • People largely backed job training but were less supportive of universal basic income, Pew said.
  • Support for economic reform was far more common among liberals than conservatives, Pew added.
  • See more stories on Insider’s business page.

As the US enters a new normal, half of its population is ready for an economy that’s starkly different from that which came before.

About 40% of surveyed Americans believe the economy “needs major changes” as it emerges from the coronavirus pandemic, according to a Pew Research report published Thursday. One in 10 Americans said they saw a need for the country’s economic systems to be “completely reformed.”

PEW
Source: Pew Research Center

Conversely, only 12% of the US sees no need for economic change. Roughly 38% said the country’s economy needs only “minor” changes.

Pew conducted a survey across the US, UK, France, and Germany from November 10 to December 23. More than 4,000 adults across the four countries responded.

When asked which potential economic policies should be instituted, three-quarters of surveyed Americans said it’s “very important” that the government provide more job and skills training for workers. Nearly half of respondents deemed an increase of government benefits to the poor as “very important,” and 44% said it’s critical the government contribute to affordable housing.

About 45% said it’s very important for lawmakers to lift taxes on the wealthy. President Joe Biden proposed such tax hikes to cover the costs of his upcoming American Families Plan, which includes funds for universal pre-K, paid family and medical leave, and an extended child tax credit. The White House has said it won’t lift taxes on households earning less than $400,000 per year.

Only 31% of Americans characterized universal basic income as “very important,” making it the least supported of the five potential policies. Still, that marks a shift from discussions a decade ago, when universal basic income lingered on the fringes of progressive economic policy.

Support for economic reform was far more common among left-leaning respondents. More than three-quarters of US adults on the left said the country needs a complete overhaul or major changes, according to Pew. That compares to just 32% of right-leaning respondents and 46% from moderates.

Support of stricter government regulation received a more mixed response. Half of surveyed Americans said it’s generally bad for society if the government regulates business, while 46% said such regulation is good. That differs from responses in Europe, where the majority of residents in the UK, France, and Germany supported business regulation.

Even if major economic changes remain years away, Americans are largely optimistic as the country rebounds. Roughly 78% of US respondents said they have either “somewhat good” or “very good” chances at improving their standard of living. Only 7% said they have “very bad” chances, and 11% said their odds are “somewhat bad.”

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Los Angeles could offer thousands of poor residents $1,000 a month, ‘no questions asked’

california homelessness los angeles
Echo Park Lake Thursday, March 25, 2021 in los Angeles, CA.

  • Poor residents in Los Angeles could receive $1,000 direct monthly payments as part of the city’s budget.
  • LA Mayor Eric Garcetti outlined the $24 million proposal during his annual “State of the City” address.
  • The payments will “begin to tear away at poverty in our city,” Garcetti said.
  • See more stories on Insider’s business page.

Over one in five residents of Los Angeles live in poverty, making it one of the poorest big cities in the nation – a fact most visible in the tens of thousands of people who sleep on its streets every evening. But some could soon receive a cash infusion from their government.

“$1,000 a month to 2,000 households for an entire year,” Mayor Eric Garcetti said Tuesday, “no questions asked.”

In his annual “state of the city” address, Garcetti outlined a $24 million proposal to lift up the city’s poor residents without the bureaucracy of traditional welfare programs, which tie assistance to specific goods, such as food or housing. The aid, according to LAist, will be directed to families that live at or near the federal poverty line.

The “direct help,” Garcetti said, will “begin to tear away at poverty in our city and show this nation a way to fulfill Dr. King’s call for a basic income once and for all.”

In the 1970s, Dr. Martin Luther King advocated for a guaranteed income equivalent equal to the median wage, which would be over $30,000 today. Garcetti’s proposal will only make a dent in a region where hundreds of thousands of people live in poverty.

But, the Los Angeles Times reported, any city-wide effort will be supplemented by district-level initiatives, including one in South Los Angeles to provide $1,000 annual cash assistance to single parents.

Last year, Garcetti also announced that thousands of out-of-work food service employees would receive a one-time payment of $800, using private funds raised by his nonprofit organization.

Humanity Forward, the nonprofit of former presidential candidate Andrew Yang who was a major proponent of universal basic income and ran his campaign on the platform, partnered with the $1K Project last August to bring $1,000 direct monthly payments to struggling American families amid the ongoing COVID-19 pandemic.

“If Congress had its s— together, we’d all be getting direct, recurring payments throughout this pandemic, and something like what we’re doing with $1K Project would be less vital,” Yang, who is now running for mayor of New York, told Insider in August. “In the absence of congressional action, then what we’re doing seems even more immediate and vital.”

Have a news tip? Email these reporters: cdavis@insider.com and lfrias@insider.com

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Andrew Yang on which would more broadly help the most Americans: universal basic income or higher wages

Andrew Yang
Andrew Yang rides the Staten Island Ferry on February 26 in New York City.

Most progressives – really, most Americans – agree that income inequality is a tremendous problem. For over 40 years, the vast majority of profits have gone to the wealthiest 10% of the economy, and a gigantic portion of those gains have been scooped up by the wealthiest .01 percent. The $50 trillion dollars that used to go to the American working class has now been leveraged to a fraction of the population, and that disparity is now obvious to everyone.

In this case, though, identifying the problem is the easy part. A lot of very smart people have many different ideas about how to alleviate income inequality, and many of these ideas aren’t compatible with one another. So decisions will have to be made about how to get that money back in the pockets of ordinary Americans.

For Nick Hanauer, the host of the “Pitchfork Economics” podcast, the first step to address income inequality was easy. In Washington state, Hanauer became one of the leading voices in the Fight for $15, which called for a $15 minimum wage. Now that it’s been endorsed by almost every single high-profile Democratic politician, $15 seems obvious, though Forbes in 2013 characterized it as a “near insane” proposition.

In the latest episode of “Pitchfork Economics,” Hanauer describes those early days of the Fight for $15 to former presidential candidate and current New York City mayoral candidate Andrew Yang. And Yang is in agreement with Hanauer’s assessment that raising the minimum wage is good for the economy.

“Just about everything out of your mouth, I’ve always agreed with,” Yang told Hanauer. “But I think you would agree with me, particularly during this pandemic, that the extremity [of America’s income inequality] is accelerating and getting worse.”

Yang’s approach to fixing the economy

The entrepreneur and New York City mayoral candidate is perhaps the most high-profile proponent of the universal basic income (UBI), in which the government would send every American a check that they could then spend however they wish.

Andrew Yang
Andrew Yang.

“If I had a choice between something like universal basic income and a higher minimum wage, I would choose universal basic income,” Yang said. “But if I don’t get universal basic income, then I’m all for raising the minimum wage.”

“I’m on exactly the other side of that trade,” Hanauer said. “I really do believe in capitalism. I do believe that it is a great economic system – the best ever devised.” At the same time, Hanauer rejects the idea that “the whole system will come tumbling down if companies are required to pay their workers enough to live in dignity without food stamps.”

Yang told Hanauer that when he considered getting into public life, “I looked at the political possibility of changing the labor standards along the way you suggest.”

Universal basic income versus a higher minimum wage

Yang believes that the idea of a UBI is simpler and more suited to the modern world than reforming and updating the suite of labor standards instituted in the first half of the 20th century. He considers automation to be the leading problem for American workers in the 21st century, and believes that a significant portion of the American workforce will be made obsolete once technologies like self-driving cars and trucks finally mature.

If Yang’s dire prediction is correct, and millions of Americans are forced out of work and essentially considered useless to the labor force, a UBI might be better-suited to solve that crisis.

Nick Hanauer 100 list

Hanauer, however, believes that the coming wave of automation is not significantly different than the uncountable waves of automation that workers have lived through since the dawn of civilization. The invention of assembly lines, industrial farming equipment, and personal computing caused disruption in their fields that temporarily put people out of work, but all three technologies created jobs in the long run.

Hanauer believes that the real battle is to make sure that the newly created jobs pay enough that workers can afford to fully participate in the economy, because their consumer demand is what creates more jobs.

A meaningful path forward

The problem with internal debates among progressives is that there is no one right answer, and that these economic ideas are largely exclusive of each other – no politician that I know of is simultaneously calling for expanding the minimum wage and also establishing a regular series of UBI payments for all Americans.

The path forward can only be found through good-faith, informed debates like this, deliberating what action is possible, which outcomes are preferable, and who is persuadable. The debates of today are the crucibles that shape the policy of tomorrow.

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