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Is a universal basic income the answer to robot job loss?

Key takeaways

  • While robots won’t take our jobs anytime soon, the ways that we work are changing with AI and automation.
  • A universal basic income (UBI) would give everyone a guaranteed wage to cover basic living, regardless of employment status.
  • Whether a UBI is affordable or not, it’s an intriguing concept that society may one day need to consider.

What will we do when the robots take our jobs?

Ripped from the pages of science fiction dystopias, it’s a familiar refrain as artificial intelligence and automation continue to march on to ubiquity.

But is it a fair one? And if robots do purloin employment opportunities, what will humans do to survive? Enter the universal basic income (UBI), a concept that posits humans should be paid a wage to cover their basic needs, such as food and housing, regardless of their employment status.

It’s an intriguing and often controversial idea, but is it economically possible? And does it address the realities of a world where employment and life’s meaning are often interlinked?

The reality of job loss and the need for a UBI

PwC research indicates that AI and automation will contribute 14% of global GDP by 2030.  But with significant amounts of workers worried about losing their jobs, the march towards automation is not seen by all as good news.1

In Will robots really steal our jobs?, PwC predicts three waves of automation implementation: algorithmic, augmentation and autonomy. The first (current) wave, involves automation of simple computational tasks and data analytics. The second wave will see the automation of routine jobs by the mid 2020s. And lastly, by the mid 2030s, automation will replace manual and physical jobs.

These phases will replace varying proportions of jobs in countries at different times, depending on industry makeup. While the report only looks at the feasibility of automation, not the context surrounding it which could alter uptake, it nevertheless calculates that between 22% and 44% of today’s current jobs could be automated by the 30s.

The authors stress that they “do not believe, contrary to some predictions, that automation will lead to mass technological unemployment.” In part, this is because technology will create new jobs even as it changes or replaces old ones. Reskilling, legislation and education will also address changes to the labour market, but so too could other social apparatuses, such as a UBI.

Money for nothing?

In order to live, not to mention keep the economy going, people need money, and a universal basic income could provide it. While the concept is simple – giving people unconditional income – it means different things to different people.

Those skeptical of its feasibility believe that a UBI, seen often as another form of welfare, will place an unaffordable burden on government and reward those who do not need help (ie the employed). Yet a number of academics and high profile entrepreneurs (Elon Musk, Richard Branson, Mark Zuckerberg and Bill Gates* amongst them) believe a UBI is possible, and is perhaps even necessary. Altruists argue that a UBI should be thought of as a universal human right to economic security.

Could it be affordable? Perhaps. A basic income could be introduced small and increased over time, or phased in by groups selected by need.2 Moreover, proponents argue, the UBI is often represented as a gross monetary equation, when in fact it could be a net transfer from interactions with existing tax systems – and thus be significantly less expensive.3

These calculations are also often made off today’s economic reality. PwC predicts that automation will lead to a significant injection of money into global GDP (an amount of around US$15 trillion in today’s money by 2020) and as Elon Musk puts it, automation leads to abundance. In such a world, a UBI could be both affordable and seen as fair redistribution of technological wealth.4

Will a guaranteed income lead to unemployment?

Some argue that a UBI would prove a disincentive to work. One view however is that unlike many welfare programs, a UBI will not penalise someone – by taking away their welfare money – for getting a job.5 In this way, employment becomes an additional source of income, not a competing one. On the other hand a UBI might encourage those who are working to stop doing so, given their higher income taxes could potentially be paying other people’s guaranteed income.6

Importantly, studies thus far have not found a correlation between UBI and unemployment. In fact, they’ve often shown the opposite. The city of Dauphin in Manitoba, for example, found that people were not dissuaded from employment when receiving a UBI, and the only two groups who worked less were mothers with young children, and teenagers who remained in school longer.7

A human sense of purpose

In the short term, it is unlikely the world will see mass job loss from automation. But what if it’s a possibility in the long term?

There’s little question that for many, employment provides a sense of purpose and societal usefulness. As Musk remarked, without jobs, where will people find their meaning? Potentially, in innovation. Mark Zuckerberg acknowledged in his UBI commentary that while innovation and wealth comes in part from hard work, it also comes from the luck of circumstance – the ability to work on ideas which may not make money with the safety net of underlying economic security.8

It’s worth noting of course, that there are plenty of people in the world who currently do unpaid work (parenting, unpaid labour, caregiving) and a UBI would be a fair way to acknowledge (and encourage) these contributions. And, as UBI advocate Scott Santen notes, creative work, often thought to be the last non-automatable work, is often intrinsically motivated. Meaning, therefore, could be found through unemployed ‘work’ of a different sort. Says Santens, “It’s the difference between doing meaningless work for more money, and using money to do meaningful work.”9

Universal equality

While UBI might be suggested as a solution to a joblessness problem, there are other benefits to such a scheme. Raising people above the poverty line has, studies show, a marked positive effect to individuals, families, communities and society.

In Dauphin, researchers found that after UBI implementation hospitalisation rates went down by 8.5%, particularly with regards to mental health diagnoses.10,11 In a Namibian experiment, crime dropped 42% and in Mexico, children experienced a reduction in behavioural problems and better childhood development.12 Communities in general seem to experience better social cohesion with the removal of money-related psychological burdens.13

The effect of shared profit from a local casino to Cherokee Indian tribal members was a 40% decrease in children’s behavioural problems. Indeed, the younger children were when the casino opened, the better they were with regards to emotional problems and drug and alcohol issues later in life.14

Not to mention the saving in cost to government of no longer needing to support those with insufficient income and its correlated effects on social infrastructure such as the health, education or justice systems.

A physical solution to a digital consequence

Much of the rhetoric around the feasibility of a universal basic income is ideologically-based. Do humans deserve money as a basic right or should they only receive it if they’ve ‘earned it’? Depending on political leanings, cultural sensitivities and upbringing, people have polarised UBI views.

Yet, with an uncertain future, it seems foolhardy to dismiss the idea out of hand, particularly when there are so many ways in which it could be designed, implemented, paid for and benefit society. As in previous industrial revolutions, fears of job loss may prove unfounded. Yet there can be no doubt that we are to encounter a change in the way that we work as a result of digital innovation, and the consequences of those changes are unclear.

While we prepare for a future where moving parts require constant reskilling to remain relevant, and emerging technologies create new and fascinating possibilities, the idea of a universal basic income – however it might look – remains a comforting safety net in case we lose our balance.

* Gates has taken a slightly different view when it comes to UBI. While he doesn’t believe that ‘universal’ income could be implemented today, he has proposed a so-called ‘robot tax,’ potentially taxing businesses for each worker they replace with automation.15 This money could be used to fund a UBI, or slow down the potential job loss until society can deal with it adequately.16


Amy Gibbs

Dr Amy Gibbs is a manager at PwC Australia, and the Editor in Chief for Digital Pulse., PwC Australia