What is the cost of NOT ending poverty?
This is the first in a series of posts about unconditional basic income (UBI). Also called universal basic income, it is an amount of cash that is given to everyone on a regular basis. One of the best known examples is the Alaska Permanent Fund, which distributes several thousand dollars each year to Alaska residents, funded by oil revenues. Armed with data from this and many other successful pilot programs around the world, I’ll lay out the logical and ethical reasons in the coming weeks why UBI should be part of America’s 21st century social contract.
One of the first questions people ask about unconditional basic income is, “How do we pay for it?” Before that, though, let’s look at the cost of the status quo. What is the cost of doing nothing at all, with millions of Americans without bank accounts and 10% without health insurance? Of 37 million Americans living beneath the poverty line, and 100 million more struggling? What are the costs of being the only industrialized nation that doesn’t require paid maternity leave?
Some of the economic costs are straightforward; the direct outlays to those in poverty, on all levels of government, are $870 billion, which excludes $792 billion on Medicare. (For ease of comparison, all figures will be in billions of dollars.)
About a third of those living in poverty are children, and the lifetime costs of children born into poverty each year are estimated to be over $1,030 billion. This includes loss of economic productivity, increased health and crime costs, and increased costs as a result of child homelessness and maltreatment. The research also suggested poverty was the direct cause of 30% of the children in the child welfare system.
Since crimes are usually committed when the expected return exceeds the cost, basic economics suggests poor people do better in a cost-benefit analysis. Thus, eliminating poverty will reduce crime; a 2007 basic income experiment found a 42% reduction in reported crime. Alaska sees an 8% drop in property crimes in the month after distributing its dividend checks.
Annual healthcare spending in the US runs to around $3,500 billion, and poverty is a major driver of healthcare costs. In her book, Hand to Mouth: Living in Bootstrap America, Linda Tirado puts it this way: “Being healthy and being poor are generally mutually exclusive conditions. We all have physical weaknesses, but a rich person gets these tended to before they get out of control. Poor people don’t have that luxury.” It is estimated that “overall utilization and spending could be as much as 30 percent less” if poverty were addressed, because it exacerbates many underlying health conditions.
A 2019 report found poverty was linked to nearly 200,000 premature deaths per year. This contributes to a 10-year difference in the average lifespans between the top and bottom of the economic ladder.
The most tragic of these deaths are newborns. America’s infant mortality rate – babies who die before reaching their first birthday – was more than 65% higher than the European Union in 2020. Lowering our rate to the average of the 27 EU nations would prevent the needless death of 8,000 infants a year. Poverty is a contributing factor; the widespread unavailability of paid family leave meant that 900,000 new mothers return to work within 14 days of childbirth. (Experts recommend a minimum of six weeks, for both the mother and baby’s health.)
Even worse, poverty’s impact on pregnant women can create epigenetic changes in their unborn children. The “thrifty phenotype” described in The Spirit Level: Why Greater Equality Makes Societies Stronger finds a predisposition “to obesity, to diabetes, and to cardiovascular disease.” These problems are among the drivers of healthcare usage today, but could be countered. In Alaska, babies who got a $1,000 oil dividend in their first year of life were 4.5% less likely to be obese, compared to those who first benefited as toddlers.
On the other end of life are growing numbers of deaths of despair, exacerbated by poverty and economic insecurity. Suicides, drug overdoses, and alcohol related deaths all increase during economic downturns. In 2017, researchers found 158,000 deaths of despair —more than double that of two decades earlier. With the Covid-19 pandemic further disrupting lives, this number exceeded 250,000 in 2021.
This is the status quo in America today.
This is the cost of doing nothing.
This is the cost of NOT ending poverty.
Allowing absolute poverty to exist in America is a policy choice, and it’s wrong. We have the opportunity to do better in 2024 by unionizing as voters and collectively bargaining for a better social contract.
The American Union is not a political party, but a union of swing voters offering a crowdsourced legislative package to all candidates for Congress in 2024, one that ends poverty, ends mass incarceration, and ends the endless wars. When 3.5% of voters unite, we will have the leverage needed to make Congress act.
Want to see America end poverty? Join the American Union with a $7 monthly contribution and a good-faith pledge to vote together 2024.
