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What Effect Would UBI Have On Minimum Wage?

UBI is an economic stimulus program that would free America from the welfare state and unleash capitalism. But, what does that mean for the minimum wage?

How would UBI affect employers?

The UBI-VAT policy takes the responsibility of making sure citizens have enough to survive and places that burden on the state.

How would UBI affect employees?

The UBI-VAT policy gives every citizen the leverage to negotiate for fair and equitable compensation.

What's the point of minimum wage?

The point of a minimum wage is to ensure that even the lowest paid productive citizen can generate enough cash flow to serve their basic needs.

What's the poverty line?

In 2018, the federal poverty income threshold was $17,308 for a single parent of one child.

What's the minimum wage?

The federal minimum wage is $7.25 per hour.

Do people working minimum wage live in poverty?

40 hours per week x $7.25 per hour = $15,080 per year

How many people work for minimum wage?

In 2020, 73.3 million workers age 16 and older in the United States were paid at hourly rates, representing 55.5 percent of all wage and salary workers. Among those paid by the hour, 247,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 865,000 workers had wages below the federal minimum. Together, these 1.1 million workers with wages at or below the federal minimum made up 1.5 percent of all hourly paid workers.

About 4 percent of part-time workers (people who usually work fewer than 35 hours per week) were paid the federal minimum wage or less, compared with about 1 percent of full-time workers.

Which states are the worst?

The states with the highest percentages of hourly paid workers earning at or below the federal minimum wage were in the South: about 4 percent for South Carolina and about 3 percent for Alabama, Louisiana, Mississippi, and Virginia.

Which states are the best?

Compared with recent years, a relatively large number of states had less than 1 percent of hourly paid workers earning at or below the federal minimum wage: California, Colorado, Hawaii, Minnesota, Montana, Nebraska, Nevada, Oregon, Vermont, and Washington.

Would UBI increase or decrease the minimum wage?

It’s hard to know exactly what would happen to minimum wage if a UBI-VAT policy is enacted.

While much of the burden for America’s workers to be able to survive would be shifted from employers to the state they would still have to pay competitive wages.

Employees would receive enough cash to make sure they’re able to buy the bare necessities. However, there’s no reason why they would seize to desire earning more money. 

Smaller businesses will likely see less pressure on their minimum wage because employees may be more likely to believe in the company and the cause, or receive compensation in the form of equity.

Larger businesses may see pressure to raise their minimum wage as they compete for employees.

Final Word

While it’s hard to say exactly what the legislation would be under a UBI-VAT program would be there are two things we know for certain:

  1. UBI-VAT relieves small businesses from being responsible for making sure citizens have the bare minimum amount of cash to survive.
  2. UBI-VAT empowers workers to have the leverage to demand fair compensation from their employers.

 

Now that sounds like a true win-win.

How do you think the UBI-VAT policy would affect minimum wage? Would it be better for employers or employees? Or good for both?

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