Could a Universal Basic Income Make Small Town America Great Again?

In the summer of 2013, I undertook a field study of sorts with my graduate school classmates in Southside, Virginia. Our hope was to see the theories we’d learned in classes on local economic development and regional economies put to practice. We spent a week roaming through towns like Floyd and Martinsville; observing business incubators in Blacksburg and Danville; and discussing development projects in Roanoke and Rocky Mount.

But the moment that stuck with me was listening to author Beth Macy read a selection from Factory Man, her best-selling account of the rise and fall of the furniture industry in the towns we visited. Macy, who spent 25 years reporting for the Roanoke Timesrecounted the tale of Mary Reed, a displaced factory worker who would do anything to get her job back: “If Tultex were to open back up today and the only way I could get there would be to crawl on my belly like a snake, I would do it.”

In the years since that trip, as Donald Trump used the grievances of small town America to fuel his unprecedented political surprise, I’ve returned frequently to the memory of that factory worker’s longing. Our sojourn through Southside was an eye-opening experience that showed me the gulf between economic theory and economic reality.

Yes, downtown revitalization improves prospects for employment. Community college apprenticeships attract new industry while providing a path to the middle class. But these place-based methods often fail to immediately provide opportunities for people on the ground to regain the prosperous lives they once knew. And they often lack cultural salience, preferring to cater to well-to-do newcomers over longtime residents.

As I highlighted in my recent TEDx talk on the universal basic income (UBI), geographic inequality is the elephant in the room. According to one 2015 study of the richest counties in America, four of the five richest are in the Greater Washington, DC area, a fact that increases outrage and mistrust of government in small town America. Further research shows an economy increasingly concentrated in big cities and along our coasts.

What policy, then, would “square the circle” between long-run economic growth and short-term need? In my view, it’s time we transitioned from place-based development to people-based development. And that comes in the form of UBI.

UBI, which would provide enough no-strings-attached money for every citizen to cover their basic needs, is a much more effective solution to geographic inequality for two clear reasons.

First, UBI would expand the buying capacity of current residents rather than subsidizing businesses that are theoretically attractive to new residents. Monthly UBI checks would provide a boost to local economies through direct spending, much as payroll tax deductions did in the wake of the financial crisis and food stamp benefits do today in many small towns.

UBI payments would also have knock-on effects for local sales tax revenues, leading to healthier municipal and state governments and more investment in important public services. Stimulating local demand quickly, in addition to making human capital investments that improve the labor market in the future, is an excellent recipe for job creation.

Second, UBI would empower small town residents to participate in and shape their local economies. Instead of discouraging work, studies show that safety programs encourage entrepreneurship by reducing risk, and that small business owners are more likely than other Americans to receive public benefits. Ensuring that their basic needs are met would enable more Americans to create their own businesses to meet rising local demand, boosting employment and rejuvenating Main Street at the same time.

One of the biggest arguments against UBI as a solution has been that many rural and small town residents might resist government “handouts” on principle, no matter the positive effects on local economies. But a program similar to UBI can be found in one of the most conservative rural states, Alaska, where all residents receive payments from the Alaska Permanent Fund. This universal income payment, commonly referred to as a dividend, is a distribution from earnings on state oil wealth, not a redistribution of personal income. Similar schemes could work in coal-rich Appalachia or regions of North Dakota and Texas that enjoy vast reserves of natural gas. Indeed, some conservative eminences have suggested replacing EPA regulations with a tax-and-dividend regime for carbon emissions.

As automation further erodes industries like manufacturing and trucking, traditional pillars of rural employment already decimated by globalization, UBI offers an opportunity to open up entrepreneurship and paths of possibility to more of our fellow citizens while preserving the rich cultural traditions of small town America. The question is if policymakers will seize the moment.

 Universal Basic Income +

by Dorian Warren

Nochild should live in poverty, and in the richest democracy in the history of the world, every kid should have a shot at a life where they can thrive and have their basic needs met.

Yet just 5 miles from here, either west or south, 2 out of 3 black kids are born into, and grow up in poverty. I believe that is wrong and Un-American.

Two of the most unpopular ideas in American political discourse: UBI and reparations.

“We believe that the federal government is responsible and obligated to give every person employment or a guaranteed income.” That’s from Plank 2 of the 1966 Black Panther Party’s 10-point platform. Two years later, Dr. King advocated for a guaranteed income in his final book.

I come to UBI from a very different political tradition: black politics with a focus on race and political economy. It’s this tradition that led both Dr. Martin Luther King Jr. and the Black Panther Party to argue for full employment and a “guaranteed income” for African Americans specifically and all Americans more than fifty years ago. They understood we can walk and chew gum at the same time. Five decades later, it’s about time the rest of us caught up to their vision.

Black workers today face the exact same dual crisis of high unemployment and low wage work they did fifty years ago. The Black unemployment rate is twice that of white workers at nearly every level of education. Thus, one need not be only concerned with future trends to speculate that a UBI would help black Americans today, especially those who continue to be locked out of access to labor markets at disproportionate levels.

We should imagine a robust UBI that advances racial and gender justice while simultaneously addressing the ills of 21st century capitalism. In fact, there is a model of UBI which is not only acceptable, but preferable to common proposals: The Universal PLUS Basic Income.

It is identical to most UBI proposals but includes a pro-rated, additional amount for black Americans over a specified period of time. The Universal PLUS Basic Income draws on the concept of “targeted universalism” in designing social policies. Such a proposal would take into account the historical and cumulative disadvantages of income, wealth and inheritance afflicting black communities, and it would recognize that potential changes in the nature of work will disproportionately hurt black Americans. It would effectively function as reparations, in a grand bargain with white America: All would benefit, but those who suffered through slavery and continuing racism in the economy would benefit slightly more.

Why? More importantly, today’s wealthiest Americans benefit either directly from African Americans’ disadvantaged position in our political economy, or indirectly as a result of the cumulative benefits to our nation from centuries of exploiting black bodies. For the first 25 decades of this country, we relied on racially-based slave labor to build the wealth of this country. For the next 10 decades after the Civil War, we relied on “slavery by another name”: Jim Crow. It’s been only 5 decades since the Civil Rights Movement in the long sweep of American history. 25–10–5: we can all do the math. Black Americans helped build the co-owned wealth of our nation (our infrastructure and banking, legal, and patent systems) and were denied access to our share of it (land, sky, and other natural resources). Even if African Americans receive an equal income with whites, tapping wealth hoarded by racist means and distributing it universally effectively amounts to targeted redistribution.

Most importantly, a campaign around a racially inclusive UBI is a potential opportunity for creating the political will within Black communities and across racial and ethnic divides in American politics to win. Public opinion around economic redistribution has always been higher among black Americans relative to the rest of the population, and initial polling and focus groups around support for a UBI in the U.S. suggests this pattern still holds. Thus, a UBI+ proposal could become a bridge to the increasingly salient demand for reparations and reinvestment emerging from the Movement for Black Lives. And, if nothing else, it serves as a stronger starting progressive bargaining position in political fights over UBI.

This is the ninth piece in a series of pitches written for the Economic Security Project’s first design workshop on basic income held last spring. We are sharing these pieces in the lead up to the Economic Security Project’s first ever Cash Conference on Thursday October 19th in San Francisco. RSVP to attend here.