There has been a lot of hype around the topic of a universal basic income lately, and for good reason too. A free thousand dollars every week is an appealing number and sounds like an extremely beneficial program. However, such a shift in the economy will undoubtedly bring with it a slew of consequences, one of the most controversial of which is whether working wages will go up or down.
On one hand, the argument is posed that by removing their desperation for income, a UBI would give workers the ability to decline job opportunities that pay poorly, which would cause wages to rise. The economy depends on money to circulate in a number of ways, the most important among these are consumption and investment (Stollery). Essentially, the demand for work will go down with a UBI, which forces employers to offer more money in order to hire workers.
However, the other side argues that wages will actually decrease with a UBI. An empirical example comes from Finland, where a UBI experiment that was run revealed that an unconditional income caused wages to decrease by 21 Euros (Howgego). The argument is that since working for income with a UBI in place would be making "pocket money" on top of the subsidized money that pays for essentials, people will be more inclined to accept lower paying jobs because the extra income is a want, not a necessity.
With strong arguments for both sides, it's impossible to conclude which of the two results will occur when and if a universal basic income is implemented. However, the potential of both is still an important factor to consider when deciding whether or not to implement a UBI (or perhaps, whether or not to vote for Yang in 2020).
Sources:
https://medium.com/age-of-awareness/universal-basic-income-is-an-inevitable-part-of-our-automated-future-3cc181d4778d
https://www.newscientist.com/article/2193136-universal-income-study-finds-money-for-nothing-wont-make-us-work-less/
This was an interesting read, and I have definitely found myself at a dilemna in terms of my personal views surrounding this issue. I really liked all the points you brought up about wage decreases as a possible risk with the implementation of UBI, and I think it is also important to consider the economic impact that this will have on the economy (if the government can even afford to implement this in the first place). Additionally, I think it is important to consider how welfare will be impactful as a result of UBI, will the systems get dissolved because there will no longer be a need for them?
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