The basic income myth: cash discourages work

• Critics of guaranteed basic income often suggest that cash payments discourage work.
• Experts say basic income can help participants afford job training and land higher-paying roles.
• Some participants say GBI let them drop several lower-paying gigs in favor of one higher-paying job.

Taniquewa Brewster is training to be a doula. The mom of five knows both how joyful and overwhelming a baby can be, and she wants to improve birth outcomes for pregnant Texans.

While earning her doula certificate, Brewster is working full-time as an assistant property manager at an income-based housing unit. The 39-year-old said she earned the position after being promoted from her role as a leasing agent, a change she said was only possible because of guaranteed basic income.

She had previously been patching together low-paying part-time work to get by.

“I was working as hard as I could, working overtime,” Brewster said. “That’s keeping me away from my family. That’s keeping me away from things that I can be doing — even going back to school — because I have to work so hard to just cover rent.”

From September 2022 to August 2023, she received $1,000 monthly through Austin’s UpTogether pilot. The cash payments gave her breathing room: she said the money helped her afford household bills, along with the real estate and doula training she needed to land higher paying jobs.

Guaranteed basic income programs are gaining momentum across the US as an approach to poverty reduction. The model offers participants recurring cash payments for a set period of time, with no strings attached. Like in Austin’s pilot, many programs are directed at households that live near the federal poverty line.

Despite GBI’s growing popularity with some policymakers and economic security experts, it continues to face opposition. Business Insider has covered basic income bans, lawsuits over GBI funding, and criticism that giving people cash discourages participants from working — one of the most common critiques.

Some experts, however, have a different view: Financial support frequently offers participants a leg-up in their careers. This is in line with results from most of America’s GBI pilots.

Since the Austin program ended and Brewster started her new role, she estimates her monthly income has increased by over $3,000. She said her job stability helped her afford essentials like groceries and healthcare, and allowed her to spend more time with her children.

“I know it’s great to have that talent and to know how to do things,” she said. “But when you have that certification behind it, it just helps you to move up in the company or in whatever you do.”

Basic income critics say cash discourages work

Billionaires, politicians, and financial leaders have criticized basic income programs, saying that cash payments could encourage laziness among participants. Others add that having an extra monthly income could dissuade people from having a job.

“Do we just get born and get money from the government?” Arizona State Rep. John Gillette previously told BI. “I think the Founding Fathers would say that is very contrary to our capitalist system and encouraging people to work.”

Sometimes results do show that participants work fewer hours or drop multiple jobs during their GBI program. For example, in Illinois and Texas’ OpenResearch study — which examined the effects of two GBI programs that were funded by Sam Altman, the CEO of OpenAI — employment rates fell in the second and third years among the participants compared with the control group. The pilot gave 3,000 low-income families $1,000 a month for three years, beginning in 2019.

When conducting guaranteed basic income pilots, researchers typically gather data on participant spending, housing outcomes, food access, mental health, job security, and weekly working hours. This data is gathered throughout a program’s run and after its conclusion via participant surveys and is often compared to a control group of people not receiving cash payments.

Sukhi Samra — the executive director of Mayors for a Guaranteed Income, a national advocacy network — told BI that measuring employment trends can be challenging because it doesn’t capture the individualized benefits of GBI.

It may look like participants are working fewer hours or fewer jobs, but often, Samra said those roles are more stable and higher-paying. Although job numbers declined in the OpenResearch case, the average participant income increased, researchers found. The study speculated the income boost could be due to participants having more flexibility over their employment choices.

“Sometimes being able to work less does have profound impacts for families,” Samra said. “Especially when you’re talking about parents being able to spend more time with their children, being able to obtain a professional license or degree, or take care of an elderly parent.”

More than a dozen guaranteed income pilots overseen by Mayors for a Guaranteed Income, like in Stockton and Baltimore, showed an overall increase in employment among participants. Other pilots, like one in Denver, showed no statistically significant impact on employment rates. Few programs show negative job outcomes.

BI has heard anecdotally from participants that cash payments helped them pay for the childcare they needed to be focused at work, leading to promotions. Others said $500 or $1,000 a month was the boost they needed to drop several lower-paying gigs in favor of one higher-paying full-time job, or reduce their working hours so they could pursue higher education or job training. Some leave their jobs to start their own small businesses.

“The benefits of that sort of compound over time, and aren’t really captured in the nuances of the data,” Samra said.

Still, guaranteed basic income programs reflect short-term results. There is limited research on participant job outcomes in the months and years after their payments end. Participant employment — or unemployment — might also be impacted by outside factors, like the changing labor market, a person’s family situation, or shifts to the local cost of living. Most GBI participants need to continue working to make ends meet.

Participants say basic income helped them afford job training, land higher-paying roles

Cepia Harper, 41, just began her second year as a middle school English teacher. Her favorite lesson to teach is essay writing, helping students learn how to craft the perfect thesis statement.

Harper began teaching shortly after enrolling in a Georgia-based guaranteed basic income program, In Her Hands. The program offered 650 participants — who were all low-income Black women — $20,400 over two years, ending in spring 2024.

Along with helping cover household bills and unexpected expenses, Harper said the money allowed her to get her education credentials. She had previously been cobbling together a couple of retail jobs to make ends meet.

“I’ve never had it where I could just go home to my own kids, pick them up from practice,” she said. “They all play sports, and I could never leave work to go to a game.”

More predictable hours means Harper can spend more time with her family. Her annual income has risen by about $13,000 since she began teaching, she said, so she no longer has to work multiple jobs.

And, as participants use their cash payments to build careers, Asya Howlette said they are more likely to boost local economies. As the director of the New Orleans Mayor’s Office of Youth and Families, Howlette has noticed the trend in her own city, where she helped oversee a recent GBI program focused on teenagers and young adults disconnected from work and school.

“It’s improving our economy because all of the money that these young people were using is going right back into our economy,” she previously told BI. “It’s not like they’re sitting on a lot of cash, they’re spending it right back in our grocery stores, they’re putting it right back in our small businesses.”

While GBI isn’t meant to serve as a paycheck replacement, Samra said can be a financial safety net: “We are allowing folks to stabilize and to then plan for the future,” she added.

Being able to afford training for more lucrative jobs in real estate and maternal care gave Brewster — the mother of five — financial confidence.

“It really motivated me,” she said of her GBI program. “Because I knew that, once the money stopped, what would I do afterward?”

Have you participated in a guaranteed basic income program? Are you open to sharing your experience? If so, reach out to this reporter at allisonkelly@businessinsider.com.