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Tech Incubator Promises to Pay 100 Lucky Oaklanders Just for Being Alive

Y Combinator’s study will track what people do when you give them free money.

 

When the startup accelerator Y Combinator announced a new study that will pay about 100 Oaklanders a basic income, the company launched an effort to put a trendy idea to the test. As advances in automation eat away at traditional jobs—and even threaten newer occupations, like driving for Uber—universal basic income has emerged as a way to offset the economic pain wrought by the new world order. The idea: Pay everyone a survival wage, no strings attached, and leave people free to spend it as they wish. Think of it as a way to take the pressure off surviving in an economy that will start to need workers less and less. “We think it’s important to expand the social safety net so people can figure out alternatives to doing the usual type of job,” says Y Combinator’s Matt Krisiloff, who is managing the basic income project with research director Elizabeth Rhodes.

Y Combinator’s pilot will pay about 100 Oaklanders for between six months and a year, roughly. Krisiloff ballparks the payment at between $1,000 and $2,000 per month (the Federal Poverty Level now stands at $11,880 for individuals, or about $990 per month). “We’re looking at roughly a poverty wage for the Bay Area,” says Krisiloff. “The exact dollar amount could change.”

Universal Basic Income, or UBI, breaks with Americans’ usual assumptions about how to help people. We tend to tie benefits to particular goods (see: food stamps, school vouchers, Medicare). But, as Y Combinator’s research group sees it, why should it be that way? Their pilot is a pure social experiment: How do people behave when you give them free money? Does it improve their happiness? Their economic security? How will it change the way they spend their time, their relationship to work? “People could sit around and do drugs and play video games all day, but we’re optimistic they won’t,” says Krisiloff. “We’re optimistic that people would use it to improve their lives over time. But that is something that needs to be tested.”

As it’s normally pitched, universal basic income would go to everyone, even the wealthy. The reasons for this are twofold: The bureaucracy needed to run a typical social safety net shrinks, because everyone qualifies. And the payments don’t take on the stigma of welfare. Krisiloff draws an analogy to the Alaska Permanent Fund, the program that pays out dividends from state oil revenues to all residents: “No one thinks about leeching in the Alaska Permanent Fund, because it’s given to everyone.”

For the purposes of this pilot—which could lead to a larger, longer-term study if it goes well—Y Combinator may limit participation to people below a certain income threshhold. Because of the pilot’s small size, “most likely our study will focus on a subset of the population,” meaning a particular income range or a particular age range, says Krisiloff. “For the main study that could definitely change.”

The pilot sidesteps the biggest question, though: how a basic income would be paid for. And that one's a doozy. As New York Times columnist Eduardo Porter points out, a $10,000 check to all 300 million Americans amounts to almost all of the tax revenue collected by the IRS. UBI is attractive to Y Combinator because of its political feasibility—claiming fans among conservatives, libertarians, and Berners alike—but as soon as it’s time to settle the bill, people tend to splinter along ideological lines. Conservatives solve it by doing away with other entitlement programs, which, as Porter points out, would actually redistribute wealth upwards. That's not palatable to liberals, and the alternative—a higher tax burden—isn't really palatable to anyone. As Robert Greenstein of the liberal-leaning research group Center on Budget and Policy Priorities writes, "A UBI that’s financed primarily by tax increases would require the American people to accept a level of taxation that vastly exceeds anything in U.S. history."

For Krisiloff, all that’s a question for another day. “It’s not our goal to see if it’s feasible to be giving basic income to everyone,” he says. “We’re not convinced basic income is the solution. That’s why we’re doing the research.” 

 

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