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Unconditional Basic Income is a Pigovian Subsidy for Unpaid Work

Scott Santens
Scott Santens
4 min read
Unconditional Basic Income is a Pigovian Subsidy for Unpaid Work
Photo by Elissa Garcia / Unsplash

There's something about unpaid work that I've never actually seen discussed, and that's the cost of the work that's paid...

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Take for example the amount of unpaid care work in the US that's estimated as being around $700 billion per year (and mostly done by women). That's an invisible work force comprised of 1/3 of Americans putting in over a billion hours of free work per week. What if they all went on strike and refused to work for free anymore? Perhaps because they're tired of being seen as lazy simply because the work they do isn't remunerated. Well, that work still needs to be done, right? That means the demand for paid caregivers rises considerably. Now, some of the unpaid caregivers would become paid caregivers, but they wouldn't all do that. So the price everyone pays for care work would go up due to demand exceeding supply. Additionally, government spending on care work would go up, and therefore taxes would also need to go up.

Now the interesting thing to realize here is that everyone right now is enjoying low prices and low taxes thanks to all those people choosing to do entirely necessary work for free. Everyone's taxes are lower because of unpaid work. Everyone's prices are lower because of unpaid work. Everyone keeps a larger percentage of the money they get for doing paid work, because of the free work unpaid workers are doing.

Now consider unconditional basic income. It will go to all unpaid workers (and paid workers), and it will be paid by those being paid large enough incomes that their own basic incomes don't cover the increase in their taxes required to pay for the basic income. Remember though, unpaid work is currently lowering prices and tax burdens. So a higher tax burden is simply eliminating the artificially low tax burden, and subsidized costs.

universal basic income

If right now, because of unpaid work you are benefiting from invisibly, you're paying say $700 per month on care work, and it would be $1,400 per month if all unpaid workers stopped working, then you owe $700 per month to those workers. If your taxes are 30% of your income but they would be 40% if all unpaid care workers stopped working, then you owe 10% of what you earn to those workers.

Basically, just like how carbon tax is a Pigovian tax meant to correct for the unpriced negative externalities of greenhouse gas emissions, the tax increase required to fund a full basic income can be seen as Pigovian in nature too. It would be a market correcting tax where what's currently not being calculated in markets are the positive externalities of unpaid work. UBI is thus a Pigovian subsidy.

Everyone right now is benefiting from unpaid work. There is a ton of unpaid work going on. With unconditional basic income there will be even more unpaid work as that option opens up to many more people than those to whom it's currently limited - those who can afford to do unpaid work. That UBI will require an increase in taxes is simply recognizing that right now because of all the unpaid work going on, we're all receiving positive externalities without paying for them.

Complaining about higher tax rates for UBI is akin to not paying any taxes at all for roads, but driving on them every day, and enjoying the prices of goods and services that are only as low as they are because of roads, and complaining about a tax being introduced to pay for them. Paying for public roads isn't stealing. NOT paying for public roads is stealing.

One final note if it isn't obvious for those like Joe Biden. Unpaid work is work. It also tends to be more meaningful than paid work, because why else would people be doing it for free? Work that you can only get someone to do in exchange for money tends to be far less meaningful than the work people do because they simply want to do it. That should be obvious, but it unfortunately isn't because we're all just so used to money helping define one's worth.

work jobs meaning

Money does not define work's value. Wealth does not define YOUR value. Money is what we use to get people to do work they wouldn't do otherwise. If we want a world full of far more meaning, we'll automate the work people don't want to do, pay people far more for the work people don't want to do and machines don't yet make sense to do, and we'll enable everyone to pursue unpaid work over paid work.

Unconditional basic income is the foundation of that new world.

Additional UBI images for sharing:

unpaid care work basic income
mother basic income
father basic income

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Scott Santens Twitter

Unconditional/Universal Basic Income (UBI) advocate with a crowdfunded basic income; Founder and President of ITSA Foundation, Author of Let There Be Money; Editor of