We're gradually entering a world where our income will not be solely tied to our job. This is already happening for seasoned entrepreneurs and creators who have developed multiple income streams that's not dependent on them showing up to work everyday.
It's a bit overly optimistic to believe that a world in which a guaranteed and unconditional safety net will empower the average person to pursue their passions and prioritize well-being without having to worry about weathering the storms of an ever-transforming job market.
This is the vision that UBI promises, to have a stable and guaranteed income that's not dependent on you putting up any work on your part.
Universal basic income is a logical proposition that is increasingly gaining traction as technology continues to reshape the nature of work and the economy at large.
But within this vision lies a crucial point of debate about what UBI's impact will be on wage growth? Will it become a crutch, stagnating salaries and fostering complacency?
Or will it liberate workers so to speak, as in setting the stage for a dynamic, skill-driven economy where wages reflect true value and potential?
UBI and Workers Bargaining Power
With a guaranteed income, many workers will feel less pressure to accept low-paying jobs with poor conditions.
This means increase bargaining power when negotiating wages and benefits, which can be a good advantage in sectors with high turnover i.e low employee retention.
Another probable advantage is increasing a workers job market value through a focus on skill development. If basic needs are covered by UBI, they can devote more time and resources to acquiring new skills or pursuing higher education to earn higher wages or job offers.
But what I'm interested to see more is how things will play out in the shift of power dynamics.
Assuming UBI programs will be different from traditional welfare programs, there will be reduced reliance on traditional welfare programs which have been a great tool that employers use over workers to have them stay or lose all their 'work benefits'.
Employers will lose a lot of leverage when a shift in power dynamics happen.
Many argue that UBI could incentivize individuals to leave the workforce entirely, and the more I think about it the more it seems to hold weight.
I mean, with a guaranteed income to cover the basic needs and automation taking over most of the jobs, why would one bother to be part of the workforce?
There are also concerns on whether the money will be used productively, UBI recipients may choose to spend on their wants instead of focusing on fulfilling their basic needs.
But I think this mostly depends on the way it will be distributed, which is hard to tell at this point. Even designing and implementing a fair and effective UBI system can be complex and challenging.
Besides, concerns about irresponsible use of UBI funds are being worked on already with possible solutions in sight. The Stockton study(a pilot UBI program), for instance, provided financial literacy training alongside the UBI payments, empowering recipients to make informed financial decisions and spend their income wisely.
Possible Stall or Dynamic Wage Growth?
We can make the argument that with increased bargaining power and automation of the job market, workers are less incentivized
to participate, which could mean a tighter job market with less competition for jobs.
In terms of wages, this may mean a possible stall since workers aren't keen on participating or it could also mean higher wages in terms of more demand and less supply.
But I think the latter is generally unlikely, especially if automation continues to grow and develop. Perhaps, wages could decrease in the sense that automation will fill the gaps and charge much less over time.
Dynamic growth stems from the more positive aspects of UBI. With basic needs covered, there's a tendency to experience an explosion in entrepreneurial ventures, creativity and innovative work that can give birth to increased productivity and overall economic growth. New forms of value creation that ask us to redefine how wages are calculated or paid.
The question isn't whether UBI will impact wages, but how we, as a society, choose to use this seemingly guaranteed safety net to navigate through what comes next. Will we let it lull us into stagnation, or will we leverage it to build a dynamic and fulfilling future of work?
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