Hawaii Examines Universal Basic Income in Effort to Increase Economic Security for All Residents
As the concept of universal basic income becomes an increasingly popular talking point in the nation’s economic debate, Hawaii has moved beyond rhetoric. This May, the Aloha State made national news when the state legislature unanimously passed legislation to create a working group to study the feasibility of UBI in the state.
Hawaii becomes the first state to take concrete steps toward implementing UBI, a progressive system in which the government or a private entity gives all residents of a city, state, or country regular, no-strings-attached cash payments, regardless of employment, income, age, or social status.
The resolution was introduced in March by state Rep. Chris Lee (D) who lives and works on Oahu, the island on which 69 percent of the state’s 1.4 million people live. Lee says he first heard about the concept on the website Reddit.
For many in the U.S., says Lee, the concept of the American Dream, “work hard, get ahead, have a comfortable life,” is no longer achievable. It’s further threatened by automation, especially in a service-based state like Hawaii, he says, citing a University of Oxford statistic that 45 percent of American jobs will be automated within the next 20 years. “This is a conversation that’s critical because (Hawaii) doesn’t have other strong sectors of its economy to rely upon. We don’t have a strong manufacturing base, we don’t have a strong tech base.”
Proponents of UBI like Lee tout its potential to help ease the crushing burden of poverty without discouraging people from working. It could also boost higher learning, entrepreneurism and volunteering for recipients, while alleviating their caregiving hardships. UBI isn’t a novel idea. In the U.S., former President Richard Nixon first floated the idea of a basic income in 1969. Concentrated trials ran in cities such as Seattle, Denver and Gary, Indiana and found that a guaranteed minimum income had no negative impact on work ethic.
Hawaii isn’t the only one taking an interest in UBI. Last year, Silicon Valley-based Y Combinator launched a UBI trial for approximately 100 Oakland families; in January, Finland started a two-year, nationwide pilot of UBI; 95 people in a village in western Kenya are currently participating in a UBI pilot; and a UBI trial in Ontario is slated to start.
But UBI has fierce opponents as well, who object to the policy idea on grounds that range from fears that it would discourage recipients from seeking work to concerns that instituting UBI would come at the cost of unraveling the current anti-poverty safety net.
In an Intelligence Squared debate in March, Jared Bernstein, the former chief economic adviser to Vice President Joe Biden, said support for UBI often stems from a misguided belief that current anti-poverty programs are inefficient. UBI boosters, Bernstein said, “argue that [government] money sent to the elderly today doesn’t work … that the welfare state today doesn’t work, but these claims are false.”
Hawaii’s UBI working group legislation received unanimous backing in the state legislature (which includes five Republicans). House and Senate. The bill also received support from the Chamber of Commerce Hawaii and local unions. Cindy McMillan, the communications director of Hawaii Gov. David Ige, says the governor likewise supports the bill’s intent.
Lee says the feedback for the bill was generally positive: “Everyone feels and understands the problems here every day.”
Chief among these problems is the highest cost of living in the country, an issue that puts an extreme strain on the economic security of the state’s residents. The state’s current minimum hourly wage is $9.25. And while it will rise to $10.10 in 2018, after adjusting for the high cost of living, it amounts to one of the lowest in the nation. According to the U.S. Census Bureau, one in six Hawaii residents live in poverty.
Matthew Jensen, founder and managing director of the Open-Source Policy Center at the conservative think tank American Enterprise Institute, says Hawaii might be better poised to implement a UBI program, thanks to its geographic isolation. “There’s always a challenge with the migration between states that can make it difficult to implement fiscal policy that’s dramatically different,” he says. But because it’s more expensive and challenging to move to and from the Island, Hawaii would face less of a population influx than the contiguous 48, should it ever implement a statewide UBI.
In fact, Alaska has had its own basic income program of sorts since 1982. The Alaska Permanent Fund Dividend gives unconditional money—between $1,500 to $2,000 annually—to Alaska residents from a fund financed by the state’s oil industry revenues.
The Hawaii government is far from issuing checks to its own one million plus residents; Lee says it could be years before a bill endorsing basic income is introduced to the state legislature. “There’s a lot that we don’t yet know,” he says.
The working group, which didn’t receive funding and has yet to convene, is tasked with four objectives: 1) assessing the job market’s exposure to automation 2) assessing social safety net program costs 3) analyzing cost and feasibility of UBI and 4) reporting findings to the Hawaii legislature.
The working group will be co-led by the Hawaii state Department of Business, Economic Development and Tourism, and the Hawaii state Department of Labor and Industrial Relations. Additional members include Lee and other legislators, the Chamber of Commerce Hawaii, and the AFL-CIO, but Lee says membership is open-ended. (Worth noting: Both state departments tasked with leading the working group testified to the legislature they didn’t have adequate staffing or funding to participate in the working group. Both departments declined comment.)
According to a study by the Open-Source Policy Center, UBI, at least at the federal level, might only be possible if existing social safety net programs, such as Social Security, Medicare and food stamps, were repealed and then replaced with basic income. Conducted by Matthew Jensen, William Ensor, Anderson Frailey and Amy Xu, the study determined that an approximate income of $13,800 for adults, and $6,900 for children, could be financed if the majority of welfare and transfer programs were first repealed.
“My personal view is that any introduction of the UBI should include a repeal of some existing programs, otherwise it’s just a massive expansion of another entitlement,” says Jensen. “For voters, the question is going to be how much higher tax rates are we willing tolerate in order to fund a UBI and how much (fewer) existing welfare and transfer programs are we willing tolerate … There has to be a tradeoff somewhere.”
While the Hawaii working group is expected to analyze these very proposals, the idea already has detractors. Thomas Yamachiko, president of the nonprofit Tax Foundation of Hawaii says a basic income would give incentive for people to stop working. “I think an idea like (UBI) is getting away from the fundamental work ethic on which the society is based. The phrase I heard growing up is, ‘no hanahana, no kaukau,’ meaning ‘no work, no food.’ A universal basic income program would basically say ‘no hanahana but kaukau.’”
Victor Geminiani, the co-executive director for the nonprofit Hawaii Appleseed Center for Law and Economic Justice says while he supports Lee and the intent of the working group, there are initiatives the Hawaii state legislature could have passed to enact more immediate change for the state’s lower income and working class populations. “You don’t have to pass a resolution like this to have a working group to figure out what you’ve got to do in five, six, seven months,” he says. For example, Geminiani says legislators killed bills to raise the state’s minimum wage to $15, and haven’t increased the low-income household renters’ credit since 1981.
It’s too early to tell what recommendations will come from the UBI Hawaii working group. At the very least, the conversation has been started in another U.S. state.
“I think Hawaii has an opportunity to really be a leader with this working group,” says Jensen. “As someone who doesn’t reside in Hawaii, for me, it’s great to see Hawaii studying this topic and thinking about whether to try because that means there’ll be more evidence that I have to take to my legislators in my state.”
Tiffany Hill is a freelance writer based in Honolulu, Hawaii