With Cleveland poised to become the first U.S. city to pilot Universal Basic Employment (UBE), citizens and policymakers seek to understand this new policy framework. Although its name is similar to Universal Basic Income (UBI), the programs have distinct structures and goals.
This article explores the differences between Universal Basic Employment and Universal Basic Income and details how Universal Basic Employment aims to create lasting change by harnessing the power of earned income.
Key takeaways:
- Universal Basic Employment is a modern adaptation of a jobs guarantee, and is not currently being trialed in the United States.
- Universal Basic Income is a recurring cash payment aimed at stabilizing income, and has over 150 current programs across the US.
- Universal Basic Employment creates lasting change by harnessing the wealth-building potential of earned income for individuals and communities.
What is Universal Basic Employment?
Universal Basic Employment (UBE) is a jobs guarantee program founded by Devin H. Cotten giving anyone wishing to work the opportunity to make an autonomous wage and receive employer-sponsored benefits. Its primary goals are to stabilize families and reduce poverty through access to the wealth-building potential of earned income.
UBE and Cleveland, the second-poorest big city in the country, have the privilege of leading the first modern jobs guarantee pilot in the United States. Similar pilot programs which envision a government authority being the lead agent for job creation have recently been run in India, Argentina, and Austria. Results from these experiments suggest that a jobs guarantee policy has the potential to stabilize local economies.
In May of 2024, the City of Cleveland, the independent organization Universal Basic Employment, and United Way of Greater Cleveland announced a two-year research and development process to explore the launch of a UBE pilot in Cleveland. Other U.S. cities considering trialing the policy include Denver and Philadelphia.
By supporting the pilot planning phase, we hope to understand better how offering greater financial security through meaningful employment can impact the trajectory of a person’s income and wealth going forward. At the same time, we will learn how UBE can help local businesses retain strong and productive employees and increase community and civic engagement throughout our neighborhoods."
What is Universal Basic Income?
Universal Basic Income (UBI) is an unconditional cash payment given to everyone, without work requirements or income criteria. Its primary goals are to stabilize families and reduce poverty by reducing the negative effects of income volatility.
UBI was championed by Andrew Yang during his 2020 presidential bid, and gained popularity when the expanded Child Tax Credits of 2021 were shown to significantly decrease child poverty without reducing work participation.
Modified UBI programs have sprung up across the country, with over 150 localities currently trialing programs. Most of these guaranteed income programs target a specific group such as former felons, parents in a certain income range, or individuals experiencing homelessness. Usually giving supplemental income in the $500-$1000 a month range, these modified UBI programs aim to reduce poverty in the target group.
How are UBE and UBI similar?
The similarity in name between these programs is no accident: they have similar goals.
Universal Basic Employment and Universal Basic Income both aim to reduce poverty and systemic inequality. They both aim to reduce dependence on public assistance and enable families to weather crises without financial catastrophe.
Both programs, if implemented fully, would be available to everyone without restrictions. Most current pilots of UBI are small and target a specific population, however, as does Cleveland’s proposed UBE pilot.
However, UBE and UBI approach reducing poverty from different angles, one through employment and one through unconditional income.
How are UBE and UBI different?
The basic difference between UBE and UBI is that UBE is a guarantee of employment while UBI is a guarantee of supplemental income.
UBE guarantees employment at an autonomous wage, one that “allows a worker to surpass the use of most social safety net benefits, provides access to private banking tools such as loans, credit cards, and more, and warrants investment from the private sector.”
UBE also requires employers to provide benefits such as medical coverage, retirement plans, and paid leave.
In contrast, UBI gives all participants the same payment amount, regardless of employment status or salary. While its impact may be most significant for lower-income participants, it does not guarantee a threshold salary or give access to benefits.
The primary difference between Universal Basic Employment and Universal Basic Income is therefore whether the program increases earned income. For lower-income Americans, both programs reduce poverty and benefit participants, but only UBE significantly increases earned income.
|
Benefits for lower-income participants |
UBI |
UBE |
|
Opportunity to earn an autonomous wage |
No |
Yes |
|
Gives access to employer-provided benefits |
No |
Yes |
|
Increases earned income |
No |
Yes |
|
Increases access to banking tools |
No |
Yes |
|
Increases spending flexibility and autonomy |
Yes |
Yes |
|
Is currently being trialed in the US |
Yes |
No |
Why is earned income important?
Earned income is important because a threshold amount is necessary to access banking tools. Untaxed benefits like housing vouchers and SNAP cannot be used to build credit, qualify for a loan, or build net worth. Without adequate assets, lower-income families are one unexpected bill away from crisis, and they will remain dependent on public assistance.
Earned income opens the doorway to building credit and getting loans. The benefits of this extend well beyond savings on interest. For example, a good credit score is needed to qualify for well-maintained rentals less likely to contain environmental hazards like mold or lead paint. Accessing a loan to buy a reliable car opens new job possibilities and saves time and stress when shopping, commuting, and caring for children.
Adequate earned income over time also opens up eligibility for a mortgage; in the U.S., home ownership is the key to stabilizing families across generations. The 2019 Survey of Consumer Finances found that the lowest-income homeowners had higher net wealth than 80% of renters.
Immediate advantages of earned income over public assistance:
- Flexibility and agency in financial decisions like where to live and buy groceries
- Less time and energy spent navigating complex benefits programs
- Potential access to Earned Income Tax Credit
- Potential access to employer benefits including health insurance, disability insurance, life insurance, and retirement benefits
Long-term advantages of earned income over public assistance:
- Access to banking tools
- Potential to establish good credit
- Potential to access loans for car and home ownership
- Greater potential Social Security benefits upon retirement
- Opportunity to gain employment providing experience and skills that improve long-term earning potential
- Revitalized tax base
Having earned income instead of receiving public assistance also gives people autonomy and flexibility. For example, using only income to pay rent allows someone to live anywhere they can afford. However, using a housing voucher of the same value greatly limits their options because many landlords will not rent to someone using a voucher. Only eight Northeast Ohio municipalities protect renters against source-of-income discrimination; in most cities, including the City of Cleveland, it is legal for landlords to specify “no vouchers” for their properties.
There are also long-term financial implications to having earned income, such as the amount of future Social Security benefits a person will have. According to the 2024 Social Security Benefit calculator, a person earning an average of $50,000 a year will get approximately $500 more a month in future social security benefits than a person earning an average of $30,000 a year and receiving $20,000 of non-taxable assistance like housing vouchers and SNAP.
In summary, there are many immediate and long-term advantages to receiving earned income instead of public assistance. Universal Basic Employment is the only program that seeks to alleviate poverty by enabling access to earned income and the building blocks of economic mobility. While Universal Basic Income has been shown to improve outcomes for lower-income Americans, it does not provide a pathway to the long-term benefits of banking and financial tools in the way that Universal Basic Employment does.
Learn more about Universal Basic Employment
Curious to know how Cleveland’s proposed $21 million Universal Basic Employment pilot program would work?
Watch the August 2024 CityClub Forum moderated by Abbey Marshall (Ideastream Public Media), with panelists Councilwoman Stephanie Howse-Jones, Devin H. Cotten (Founder, Universal Basic Employment & Opportunity), and Ken Surratt (Chief Development and Investment Officer, United Way of Greater Cleveland).
