UBI, work and unions

I’m working with Troy Henderson from the University of Sydney on a book chapter looking at union responses to the idea of a universal basic income (UBI),which have covered a range from supportive to strongly hostile, with the latter view predominant in Australia. Here’s a draft of my section of the chapter. Comments much appreciated.

UBI, work and unions

The concept of a universal basic income (UBI), has been advanced in a number of different forms, notably including guaranteed minimum income (GMI) and negative income tax (NIT). Although these policies are essentially equivalent, they have been put forward in support of radically different political agendas, ranging from a libertarian desire to eliminate the welfare state to a utopian vision of a post-scarcity society. 

As a result, the idea of a UBI has acquired a highly disparate group of supporters, and also a disparate group of opponents. In particular, trade unions have often been critical or suspicious of the concept.  It’s important for progressive advocates of a UBI to consider the grounds for this criticism and to show how a UBI policy can serve the interests of workers. 

As I’ve argued elsewhere, the most promising model to focus on is that of a  GMI, achieved by reducing and ultimately eliminating the conditionality of existing unemployment and disability benefits. as well as raising these benefits to a level consistent with a decent long-term standard of living. 

Most existing experiments with UBI-style schemes are in line with this approach: that is, participation is limited to people who are unemployed, at least at the start of the scheme. 

An unconditional GMI means that people can live decently without paid work and without being required to search for work.  However, this leaves open a crucial question: can people choose whether or not to work?

Much recent advocacy of GMI-style schemes takes it for granted that this choice is already unavailable to many, and will become unavailable to most people in the future.  The central idea, simply put is that ‘robots will take your job’. More complex and realistic versions of this argument take account of the interaction between technology and labour markets that produces the ‘gig economy’.  In this context, a GMI may be seen as easing the path of adjustment towards the replacement of paid work by involuntary unemployment.

An alternative interpretation of technological progress is that it provides us, as a society, with the resources to allow everyone a meaningful choice between paid employment and other activities, including unpaid contributions to society and creative use of leisure. To make such a choice a reality, it is necessary to combine a GMI with some form of employment guarantee and to maintain minimum wages at a level significantly higher than the GMI.

Benefits for workers and unions

The combination of a GMI and a Jobs Guarantee would greatly improve the bargaining position of workers relative to employers, both individually and in aggregate. For the individual worker, the Jobs Guarantee weaken the ability of any individual employer to threaten unemployment. Moreover, the GMI would provide an ‘outside’ option that could be taken if employers attempted to cut costs through work intensification, removal of working conditions and so on. At the aggregate level, the power of employers as a class depends, to a critical extent, on the belief that ‘business confidence’ is essential to economic prosperity.

These points imply substantial benefits to unions. The capacity of employers to resist unionisation will be reduced, and the bargaining power of unions will increase.

The closest approximation to the conditions of a combined GMI and Jobs Guarantee was the thirty-year period of near full employment during and after World War II, which also saw the establishment of most of the elements of the modern welfare state, including easy access to unemployment and disability benefits for workers (the process varied from country to country – Australia introduced unemployment benefits in 1945). During this period, workers and unions did very well, and the distribution of market income became much less unequal.

Reasons for union opposition

* Even an ideal UBI/GMI, with a Jobs Guarantee implies a fundamental transformation of society in a way in which makes paid work less central to life.  Since unions are concerned with representing people in their capacity as paid workers, this gives them a more marginal role than they had in the 20th century industrial economy.

* Unions are organized on an occupational or industry basis, and therefore have a natural tendency to resist changes that would result in the decline of their particular occupation or industry.  In this sense, there is a natural tendency to technological conservatism, sometimes reflected in the idea that long-established types of work (particularly manual work) represent ‘real jobs’ while newer jobs are not.  By contrast, the  movement towards UBI/GMI is characterized by an embrace of technological change and a focus on work associated with the 21st century digital economy.

15 thoughts on “UBI, work and unions

  1. While still not convinced I think simply exploring this issue seems highly desirable:

    1. You could lay out the impact of the “do nothing” option on wages and employment and meaningful careers – which with automation should be utterly horrific. I would expect the usual mantra of the market solving things to be raised. But this would ignore facts like workers/robotics potentially remove the need for people completely and raise the question is economic policy for people or for a few owners of production i.e. the urgent need to a rationale and system for redistribution. Having answers ready in anticipation of the response of reactionaries would be useful.

    2. As part of laying out the do nothing option a list of what professions/skills are likely to disappear would be useful. Its a minor point but it might get some self-interest from professions whose ‘I’m all right jack’ comfy incomes prove to be under threat. Medical practitioners accountants and lawyers might be included here.

    3. You’ve listed benefits. How about also listing risks and downsides and if possible how these might be mitigated. Presumably the information in the literature is out there ready to be summarize. The downsides relating to unions you’ve dont seem very balanced and more in the way of straw me. So this needs improvement and ‘sensitivity’.

    4. A summary of how a changeover is to be achieved would be useful. Is there to be a soviet style ‘Central Planning Board’. The concept has merit given its success during WWII. But then there is the question of board membership and operation. Presumably there would be lots of economists employed. But where would you find suitably skilled people and how would you change the profession more generally?

    So much for positives. Now for just one negative. To my mind the younger Australian population at large has forgotten how to think and act in a collective/socialist fashion while the older generation is now wrapped up in rent extraction via superannuation which would need to in effect be redistributed (“you cant have my hard earned cash would be the cry”). Could you elaborate on some mechanisms on how to get to this Utopia – Paul Mason (on LNL tonight apparently) made a few (to me unconvincing) suggestions in his recent book and his history of socialism also made it a worthwhile read. He seemed to forsee some sort of small capitalist revolution. Do you have differences or alternatives in opinions? At the least it provides a useful contrasting document to explore on how you might address inequality in this country.

  2. I think, as I’ve tried to argue at various times, that without clear arguments about what work is, and the difference between ‘exchange work’ (ie what is usually taken to be productive work or labour in mainstream economics and Marxism) and unpaid/caring/subsistence/domestic/voluntary work (that which is subordinated and taken for granted in mainstream and classical Marxist economics), you can’t get real clarity in relating work to income.

    You can base the idea around fairness/need (as socialism/Marxism did, though as I’ve suggested above, there wasn’t clarity around who the normative human was – all human beings, or worker/father/head of household?) but if you want to relate it to work then I think you have to tackle this issue of what is work, and why are some kinds of work privileged over others (as usual I recommend Marilyn Waring’s analysis of this).

    Another way of putting this I suppose is that there needs to be an analysis of the relationship of ‘work’ to class, power, gender and race.

  3. A related question which you might think would needlessly complicate your argument, but I am strongly advocating for, is around hierarchy and what we should do about it. I advocate we should get rid of income hierarchy in work structures. We need to distinguish between authority/ability to make decisions, and getting paid more. There is no logical reason why they should be interlinked (this of course again goes back to the privileging of certain kinds of work and the historical relationship of power, class, gender and race).

  4. 1. “business confidence”: I agree with James Wimberley regarding ‘business confidence’.

    2. “reasons for union opposition”: Assuming these are the only reasons unions have then their leaders’ motivation seems to be none other than the motivation of those managers who wish to preserve their privileges. It seems to me an obvious solution to the stated concerns is a restructuring of the unions such that there is only one ‘union’, called workers council.

    3. “benefits for workers and unions”: I understand this heading is more or less determined by the chapter of the book. It is unfortunate nevertheless, IMHO, because is carries over the adversarial structure of industrial relations while a system wide approach is called for.

    4. By system wide I mean all members of society are looked at simultaneously and in the short and long run. This is exactly the area where I have grave concerns about UBI/GMI. IMHO, the greatest danger of such a scheme for society is that it provides an institutional foundation of an extreme economic class system, which over time may deteriorate to a permanent (long lasting) class of poor people, defined as living at subsistence level and not at a ‘living wage’ a little lower than the minimum wage as postulated.

    The postulated choice between ‘work’ (defined as the exchange of labour services for money) and other activities depends primarily on wealth and not on income. Moreover, wealth distribution (and borrowing capacity) influences relative prices and these in turn determine effective living standards.

    It seems to me, an evaluation of UBI/GMI requires an examination of alternative policy options which would achieve the objective.

    What exactly is the objective of UBI/GMI viewed on the level of society?

  5. Once again Ernestine brings clarity to this debate. In particular her point 4. is germane to the whole conflict between equity and fairness. This is a conflict that bedevils economic policy. There is already a trend to force younger workers onto limited yearly contracts. Older workers are holding on to their award protections. A two working class dichotomy then exist already between permanently employed workers under award wages and conditions on the one hand; and contracted employees who have the bare minimum work conditions allowed. The minimum wage is not yet being circumvented but the ‘living wage’ is being redefined away to irrelevancy.
    As Ernestine pointed out so well the “work choices” (if I am permitted that pun) is based on wealth issues. It goes deeper when NET WEALTH is considered. Older workers do not, as a general rule, have large mortgages that have hidden interest payments time bombs.
    Young people either, cannot enter the real estate market, or, have done so only for tax purposes. Debt levels can destroy the stock of wealth owned by workers. This is very likely when the interest rates begin to rise exponentially at some future date.
    Economics and politics cannot be separated. There is no political will from either party to really help the “working poor”.
    Labour economists must keep the political economy firmly in their future predictions about wages and working conditions.

  6. I don’t understand: “To make such a choice a reality, it is necessary to combine a GMI with some form of employment guarantee and to maintain minimum wages at a level significantly higher than the GMI.”

    Does it fall to the Government (State, Federal, Local?) to guarantee that there is always employment opportunities for anyone who wants to work? Do these opportunities reflect the skills of the job-seeker, or are they jobs that anyone can do, like … what? (I have no idea.)

    If I assume some minimal skill set required and that one of these guaranteed jobs produces some valuable output (widgets), isn’t it certain that some entrepreneur will complain that the Government is putting him/her out of the widget business by stealing his/her workers and paying them more than they’re worth – “significantly higher than the GMI”? Who determines the “significantly higher” level?

    Who decides which activities or jobs the Government will fund as “guaranteed jobs”? Are the guaranteed jobs all available at different locations (Bondi Beach, Alice Springs)? How are the numbers of these jobs expanded or contracted to follow the private employment cycles in the economy? Does the minimum wage vary with cycles in the economy?

    Or am I reading too much into the semantics of “employment guarantee”? For Universal Basic Income, anyone can turn up at the government’s unemployed office and get paid. For Guaranteed Minimum Income, anyone can turn up to the government’s wages office and get paid. Is that the difference between UBI and GMI?

  7. @QuentinR

    The Federal Government would need to fund the Employment Guarantee or Job Guarantee (JG). It is the only government level with the necessary resources and capabilities. It could, if need be, fund the guarantee with a budget deficit in some years without borrowing. State and local governments would always need to borrow to run their own job guarantee if they had a revenue shortfall. States and local governments could employ JG workers with Federal grants. This would be the best way to run the JG with Federal, State and Local places made available and all funded by the Federal Government.

    A JG position would supply full training. New workers would be trained on the job and/or in courses as required. The JG in effect would set a minimum wage. Private employers could offer lower wages but since anyone capable of any type work could get a minimum wage in a JG position then private jobs under the minimum wage would be unlikely to be filled.

    The age pension itself might have to be reviewed and lifted. Persons unable to work could get a pension equal to age pension. Persons unwilling to work would get the UBI again set to equal the age pension. There would be no tests. Taking a JG job would still lead to a significantly higher income (with appropriate tax settings) and so would still be an attractive proposition for many.

    Stay-at-home parents would get the UBI + Child Care payments.

  8. @Ikonoclast
    Thanks. So the Federal Government pays people to attend training – school, Industry, TAFE, Uni, whatever. That’s a great idea. And I can see nothing wrong with a country of well-educated people. And the unemployed could continue enrolling in more courses if they pass the previous ones, until they eventually are qualified for some job which happens to be available.

    So it’s not a Guaranteed Job, but rather a Guaranteed Training opportunity (in order to try and get a job). If one passes some training course, then you look for a job and/or look for another training course, Guaranteed.

    I imagine that if you fail the training course (once? twice? three strikes?) then the Guaranteed Training is withdrawn for some period of time, perhaps (1, 2, 3 years?), otherwise feedback incentives will lead to corruption. But that’s a minor point.

    Thanks again.

  9. “Does it fall to the Government (State, Federal, Local?) to guarantee that there is always employment opportunities for anyone who wants to work?”

    Yes. That was the central point of the White Paper on Full Employment in 1945, and was generally accepted until the 1980s.

    Your rhetorical incredulity is an indication of the damage done by decades of neoliberalism/market liberalism.

  10. Falling short of an ideal job guarantee in the literal sense, great opportunities have been missed in the more recent past to provide training as well as employment for a very large range of occupations. I have in mind public owned projects like the original NBN, large scale and medium scale renewable energy, rail and some roads, public housing, research institutes. The list is not complete but these are the obvious ones that come to mind.

    For example, in the area of renewable energy there are ‘jobs’ ranging from clerical and administrative to a broad band of technical, engineering and research occupations in several fields; even some accountants are required and there is a need for people with skills in advertising and so forth. Such projects are amenable to speeding up or slowing down, as ‘labour market’ condition change and also in response to changing government budget conditions. Furthermore, such projects do provide a little bit of useful information for both students and TAFE and University administrations regarding employment demand at least in the medium term.

    Another example, public housing not only affects the labour market during the construction period and later maintenance but it also impacts the rental market and hence the whole structure of the real estate market.

    Now, suppose unemployment benefits, pensions, and workers compensation are reviewed to remove all penny pinching conditions while being adjusted to a ‘decent living’ level and the taxation system is adjusted to provide a tax disincentive for a segment of the labour force, the managerial class, to take out from revenue ‘what the market bears’, rather than what is comprehensible as a reward for effort and skill, while increasing the tax free threshold to correspond to a survival constraint, remove the tax expenditures, which were so clearly highlighted in JQ’s post one or two years ago, introduce payments for obviously useful social work, such as child minding by grand parents or friends, house work carried out by people with a family income less than x% of the average income for a number of years linked to the age of the youngest child, free public education up to high-school, no payments to private schools, thereafter a generous scholarship system with living allowances, labour market rules regarding standard hours and penalty rates, building up the public health system and public research institutes and we are getting to a scenario where the question arises: Why do we need a UBI or a GMI?

    Unless the wealth and income distribution is somewhat flattened, the financial sector is being put into a subservient role and the environment is given greater attention, I can’t see how UBI or GMI with or without JG can achieve much in terms of increasing the economic welfare and possibly psychological welfare of people and my original concern about a permanent extreme class system remains. Happy to be proven wrong.

  11. @John Quiggin

    What you call ‘neoliberalism’ I would call naive market economics and what you call ‘market liberalism’ I would call capitalism (because in contrast to the institutional environment we have, theoretical models of laissez faire market economies there is no institutional environment in the form of a legal framework that favours ‘capital’ over ‘labour’; there is only a price system and there are conditions on wealth distribution which are not met historically).

  12. When every I read anything about UBI and start thinking about how it would work, The apparent unrelated idea of national service always crosses my mind. A gap year of service in land care, aged/disability services, emergency services, to name a few (and, hey, why not, maybe the military too) would provide the basic training and experience for all, but in particular for the 5% to 30% of each age cohort likely to be in need of basic income constantly or regularly as the pool of easily accessable guaranteed jobs fluctuates with demand and technology. In short, national service would compliment an system of guaranteed income/guaranteed jobs, as would, of course, an overhaul of the training and vocational education system, an issue already dealt with extensively in this blog.

    There is a good article in the Jacobin here: https://www.jacobinmag.com/2017/12/universal-basic-income-inequality-work
    It suggests that any UBI system would underpin the capitalist system and inevitably leads to an erosion of states’ responsibility for welfare, given current political conditions. It argued that even leftwing governments would be unwilling or unable to implement a UBI that addresses rising inequality with out first addressing the problems witht tax and welfare systems that cause inequality. Guaranteed work and training should then be prioritised along with income schemes that specifically address areas of need such as aged and disability pensions. In other words, once we have got all the currently exisiting elements of our education and welfare systems working as the should, then we can look at whether we need a GBI. Proper funding and regulation for what we already have would in fact be a lot less socialist and than the statist GBI with national service proposal I gave above.

  13. A Job Guarantee will be a majority profitability and majority utility [value] if it is set rigidly as a minimum of 101% of median wage. This can be defined/decided from municipality level to federal/national level if preferred.
    Personally [ideologically] I prefer a UBI and/or Basic Income Guarantee before a Job Guarantee as productivity will increase more by UBI/BIG/GMI than a job guarantee. I can’t see the labor unions as being strongly against basic income programs as it is against the majority of the members financial interest.
    My own country [Norway] has mostly job guarantee programs, but we also have several universal welfare programs so all in all it is a dynamic pragmatic hybrid of welfare capitalism and cost-benefit state capitalism.

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