Who Will Universal Basic Income Disadvantage, if Anyone?

Who Will Universal Basic Income Disadvantage, if Anyone

In this article, we’ll aim to demystify the potential negative impacts of UBI. We’ve identified seven specific groups who might face disadvantages due to the implementation of this economic strategy.

From those dependent on conditional welfare programs to small business owners grappling with inflated costs, the list is diverse and comprehensive.

Stick with us as we navigate these complexities and shed light on this often overlooked aspect of UBI.

It’s crucial to have a well-rounded understanding of these potential issues before diving deeper into the world of Universal Basic Income.

1. Those Dependent on Conditional Welfare Programs

The introduction of UBI might mean the reduction or even elimination of certain conditional welfare programs.

UBI, by its very nature, is unconditional. It’s intended to provide a safety net to all citizens, irrespective of their socio-economic status.

However, people who are dependent on specific welfare programs could potentially find themselves at a disadvantage.

For instance, individuals who need disability allowances or housing benefits may find the UBI amount insufficient to cover these specific needs.

The UBI payment might not match the value of the various benefits they currently receive.

Moreover, the switch from a targeted assistance program to a universal one can result in gaps in support.

This is particularly critical for individuals who require assistance due to unique circumstances like disability or chronic illness.

  • Existing benefits might be higher than the proposed UBI amount.
  • Specialized support could be lacking in a blanket UBI policy.

2. Small Business Owners

The implementation of UBI could have a profound impact on small business owners. This is primarily due to the potential increase in wages.

A universal basic income might lead to a rise in the general wage level, as individuals no longer need to accept low-paying jobs for survival.

Consequently, small businesses that rely on offering minimum wages or slightly above may struggle with these increased labor costs.

In order to continue operation, these businesses may need to increase prices, cut back on staff, or even automate processes.

Each of these solutions has its own set of challenges and potential downsides.

For instance, a price increase could lead to loss of customers, while staff reduction could result in overwork for remaining employees.

Additionally, automation might necessitate an initial investment that could be burdensome for a small business.

READ NEXT: Universal Basic Income vs Guaranteed Income

3. High Income Earners

At first glance, it might seem counterintuitive to consider high-income earners as potentially disadvantaged by UBI.

After all, the extra income would be a drop in the bucket for them. However, the primary concern here is not about receiving UBI but rather, funding it.

To fund a universal basic income, governments might consider imposing higher taxes, particularly on the wealthier segments of society.

This could mean that high-income earners end up paying significantly more in taxes.

While this group arguably has the ability to withstand such increases, it is nonetheless a potential disadvantage to consider.

For high-income earners with significant financial commitments or businesses to run, this additional tax burden could pose a challenge.

Moreover, it’s worth noting that if the tax increase is too significant, it could disincentivize ambition and hard work.

4. The Economically Inactive

Another group that could potentially be disadvantaged by UBI are the economically inactive.

This group includes individuals who are not working and not actively seeking employment, such as retirees, students, or stay-at-home parents.

While it might seem that these individuals would benefit from a universal basic income, the reality might be more nuanced.

The key issue here lies in the fact that UBI is typically proposed at a level sufficient to meet basic needs, but perhaps not much more.

For individuals who are economically inactive by choice and rely on their savings or other forms of income, UBI might not make much of a difference.

However, for those who are involuntarily economically inactive due to circumstances such as disability or age, UBI might not be enough to support their needs fully.

Particularly in cases where these individuals rely on specific welfare programs, the potential replacement of these programs with a standard UBI amount could leave them worse off.

So while UBI might seem like a boon for the economically inactive, it’s important to consider the potential disadvantages for this group.

5. Renters in High-Cost Areas

UBI could potentially disadvantage renters, especially those residing in high-cost areas.

It’s important to remember that UBI is a fixed amount, meant to cover basic living expenses. However, what constitutes “basic” can vary greatly depending on geographical location.

In cities with high living costs, the UBI amount might not be sufficient to cover rent, let alone other necessities.

Conversely, in areas with a lower cost of living, the UBI could exceed a person’s basic needs.

This geographical discrepancy could create a potential disadvantage for renters in pricey cities.

They might find themselves struggling to make ends meet even with UBI, while their counterparts in more affordable areas fare better.

Moreover, there’s a concern that landlords in these high-cost areas might increase rents once UBI is implemented, knowing that their tenants have a guaranteed income.

This would exacerbate the financial strain on these renters.

READ ALSO: 20 Reasons Why Everyone Deserves Universal Basic Income

6. Individuals in High Debt

While UBI provides a consistent income, it might not provide much relief for individuals who are heavily in debt.

The challenge lies in the fact that the UBI amount is generally designed to cover basic living costs, not substantial debt repayments.

Let’s consider individuals with large student loans, mortgages, or high-interest credit card debt.

These obligations can add up to significant monthly payments that might exceed the provided UBI amount.

Moreover, if the introduction of UBI leads to inflation, as some economists predict, the real value of debt could increase.

This would put further financial strain on those with substantial obligations.

So, while UBI might seem like a financial lifeline for many, it could potentially disadvantage individuals in high debt. The fixed income might not be sufficient to meet both their basic needs and their debt repayment commitments.

Picture of Adrian Volenik

Adrian Volenik

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