Universal Basic Income, a standard payment given to all US citizens to cover their needs, has often seemed little more than a pipe dream and was not seriously considered (and arguably still isn?? ? ? €™t) until the Forward Party pushed it as their sole policy issue. I would like to explain how in America a Universal Basic Income is not only possible but necessary to combat the upcoming automation-induced mass unemployment.
The consultant McKinsey & Company reports that as much as 30% of tasks in 60% of jobs could be backend automated by technologies existing in 2019, since the introduction of ChatGPT in 2022 and the AI revolution that followed, this number could only have increased. Goldman Sachs places that number even higher after the introduction of generative AI, at about two-thirds of all worker tasks could face total or partial automation, but they also estimate an offset due to job creation.
There are ~215 million jobs in the USA; 60% of that is ~130 million and 30% of that is ~38 million. The median annual US salary is 60,000$. Those 38 million jobs that could be automated have a combined annual salary of about 2.28 trillion dollars.
Automation (specifically robotics but we will use the number for AI) has a standard upkeep cost of about 25% of the salaries it replaces. This means that of the 2.28 trillion in salaries, 1.71 trillion will be savings.
Here is how we get Universal Basic Incomes: for every worker replaced by automation, 90% of their salary, after deducting the cost of the upkeep for the technology that replaced them, must be paid in tax. So, if all 38 million jobs were lost then after deducting 25% that would leave 1.71 trillion saved, which is then taxed at 90%, leaving 1.5 trillion dollars in revenue.
These taxes go to a UBI fund that disperses them across the US to all adults over 18, not on Social Security. Of the 340 million people in America, 250 million are over 18 and 200 million are not receiving social security. This means that the 1.5 trillion-dollar ABI fund to be paid annually to 200 million Americans would provide 7,500 dollars a year or 625 dollars a month.
As more technologies increase productivity, the UBI fund will grow. McDonalds and other fast-food brands have been trying to automate entire stores for years now, and the restaurant consulting firm Aaron Allen & Associates estimated that as many as 80 percent of restaurant jobs could be replaced by automation or robots. There are 15 million restaurant jobs in the US, which means as many as 12 million jobs are at risk.
The same McKinsey report estimated that a full 5% of jobs could be completely automated, which amounts to another 10 million jobs lost. This brings our total from 38 million to 60 million jobs lost. This raises the salaries lost up to 3.5 trillion with 2.6 trillion in savings, taxed at 90%, leaving 2.3 trillion for the UBI fund. That translates to 11,500 a year and 958 a month for every 18-year-old.
In essence, one tax could help America ride the coming Automation Revolution to a point where millions could be free from work to do as they please with their time while still spending money and thus being a net positive to society rather than a drain on social services. This tax would bear no additional burden on those upon which it is levied and collects trillions every year for a fully self-sustaining program that adds nothing to the US national debt.
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