Editor’s note: This has been excerpted with permission from the Pacific Research Institute. To read the entire report, click here.

2024 was a good year for proponents of a universal basic income (UBI). Following the 2019 experiment in Stockton, UBI pilot programs are underway across cities in California including Fresno and Sacramento. This is unfortunate.

Advocates such as former Stockton Mayor Michael Tubbs argue that “we need a social safety net that goes beyond conditional benefits tied to employment, works for everyone and begins to address the call for racial and economic justice through a guaranteed income”.  A UBI allegedly fills this gap by providing income security, encouraging work, and improving low-income families’ quality of life.

These benefits are merely speculative and are not realized in practice.

First, going from pilot to policy raises important scalability and cost questions that undermine the feasibility of a UBI. Second, as Tim Anaya explains, even former Mayor Tubbs’ Stockton experiment does not demonstrate the efficacy of a UBI. The pilot program’s design was so flawed that how recipients spent the money and whether it improved their long-term financial stability is simply unknown.

Third, contrary to proponents’ assertions, a UBI disincentivizes work. Researchers at the University of Toronto, for instance, found UBI programs discouraged work and reduced people’s non-subsidized income. By discouraging work, UBI programs eliminate opportunities for low-income workers to gain valuable skills and decrease their long-run earnings potential. In other words, UBI programs create a poverty trap [link to benefits cliff piece] just like the current income support system.

Also noteworthy, UBI proponents aren’t advocating for a basic income that is universal. Making it universal would mean that California would need to tax Larry Ellison (net worth as of October 2024 of $175 billion) to provide a monthly income to Mark Zuckerberg (net worth as of October 2024 of $181 billion). And vice versa. Such a transfer system makes no sense. It also makes no sense to tax the family earning $300,000 a year to provide a basic income to a family earning $299,000 annually.

In other words, proponents are using the UBI concept to simply expand on the litany of programs that already exist. But California already spends a tremendous amount of money funding these programs. According to the U.S. Census, total state and local spending on public welfare (including federal funds) was $190.6 billion in 2022. This is an incredible sum. It means that, per capita, California spends $4,890. Per person in poverty, the state spends $31,753 – or around $90,000 per family of three living in poverty!

One would hope that spending $90,000 per poor family would be sufficient to not simply alleviate the hardships of poverty but to help lift families out of it. Yet, this has not been the case.

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