Do pandemic income supports encourage people to stay off work? Of course — and that could be a good thing

Posted on June 4, 2021 in Debates

Source: — Authors: – Opinion/Contributors

The Financial Times, no source to trifle with, says the sluggish return to work due to income supports during COVID “spells trouble” for fans of a universal basic income (UBI). “If you give people the kind of financial support that allows them to withdraw their labour, a good number probably will.”

I think the proper response to this insight, after due reflection, is DUH! The Financial Times (FT) belabours it anyway: “Could furlough schemes and pandemic handouts be spurring workers to shirk?” True, “shirk” betrays a touch of repressed employer rage, but the point stands. If you’re paid more to not work than work, you might figure out that it’s a rational economic choice to stay in bed.

The problem will solve itself soon, as supports like CERB get phased out, as they already have in much of the U.S. But the FT wants to assure the supports aren’t replaced by a UBI, which has gained some wee traction and might have the same dire effect: disincentivizing work.

I’d call this the first good argument I’ve heard for UBI. I’ve always opposed it — the floor will become a ceiling, it’s a form of top-down charity rather than workers making gains through their own agency, etc. — but this could really shake up capitalism for the better.

How? If workers choose to stay in bed, employers might (rationally) choose to entice them back with higher wages. This would be a Good Thing beyond merely making people happier (the FT notes a Finnish study showed “those getting the basic income were much happier than those in the control group,” and the New York Times reports that a U.S. survey showed wage supports “reduced anxiety and depression,” especially for the poor and those with kids). Higher pay though would also narrow the equality gap. Does that matter? Only if you care about the death of democracy through the rise of authoritarian demagogues who capitalize on racism and resentment.

What if workers stay in bed, even if they’re offered more money? Somehow I’m not sweating that. Why? Well, what about all the lawyers, bankers and CEOs who continue working even though they could stay in bed forever? People just don’t like bed that much. In fact, they like work, especially if it involves some satisfaction. I recently met some students who worry that if they got compensated by YouTube or Facebook for providing free all the content that makes Google or Zuckerberg rich — as IMO they should be — it might undermine their sense of authenticity. Work, like life, is complicated.

A pervasive economic insecurity hovers over them, and the rest of Generation Z. Will they own a house, or even a car or bike? Real estate in particular is the main form of wealth today; it’s the asset that means you can afford to raise a family and pass something on to them. But it’s increasingly out of reach — people move from Oshawa or Whitby to North Bay or Powassan in order to afford a home — and even then spend forever paying off the mortgage instead of accumulating a bit more for themselves. Paying whom? Banks and their investors!

This is as feudal as it gets. It outdoes the landlordism of the Middle Ages. Much of what comes in goes back out in virtual rent as interest above principal, due to the “sky-high” and “red-hot” market. It’s a parasitic, not a productive economy — and the gap keeps growing. You still end up working for The Man on Maggie’s farm and owe your soul to the company store. But enough ranting (and renting). This moment offers both possibility and peril…

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