The "guaranteed floor" version of a basic income has a lot of harmful effects — for example, any work that pays anywhere close to the basic income would be a ridiculously bad deal that no rational actor would accept. In the "actually guaranteed" version, a job that pays 90% of the basic income would still be worth doing because you're nearly doubling your income.
You wouldn't want to make an actual hard floor, rather if you want something along those lines you do a graduated negative income tax which smooths out the incentives near the boundary.
Interestingly enough a negative income tax was proposed by Milton Friedman of all people.
It should also be mentioned that along with basic income and a negative income tax, a third grand idea for eliminating poverty and replacing welfare is guaranteed employment (i.e. the government is the employer of last resort). Right now that last is mostly being advocated by Australian adherents of the MMT school.
>The "guaranteed floor" version of a basic income has a lot of harmful effects — for example, any work that pays anywhere close to the basic income would be a ridiculously bad deal that no rational actor would accept.
Not necessarily. The types of jobs that people would do at wages close to the floor are the types of jobs that they would do regardless of salary. Writers, musicians, painters, artists, contractors, entrepreneurs, small-business owners, stay-at-home-parents, interns would appreciate a guaranteed floor. Seasonal jobs, sales jobs and other jobs with month-to-month variance (make a lot some months, make little other months) would be more attractive. Any job that has the potential of upward mobility (make less now so you can make more later) would be be more attractive with a guaranteed floor.
Jobs in retail or fast-food, jobs that require hard-labour, or are unattractive for various reasons would have to pay more - which isn't a terrible thing. Now MacDonald's and Walmart would have to pay a living wage else nobody would bother with those jobs.
So it may actually work. I'm still a believer. Besides, instead of a hard floor, you could introduce a scaling floor to provider further incentive to work.
> Now MacDonald's and Walmart would have to pay a living wage else nobody would bother with those jobs.
They would have to pay way more than a living wage — nobody's going to go from a life of leisure to a Walmart job for a 5% increase in income. This would drastically increase costs, would would simply spur inflation.
Drastically increasing costs for unskilled laborers wouldn't kill the companies - say, McDonalds wouldn't go out of business or double their burger prices because of that, as long as their competitors get the same labor cost increase.
For a bunch of professions it would accelerate automation - already there are a lot of jobs that could be better done without humans, simply minimum wage workers are cheaper than the automation. On the other hand, such basic income program would be also a fix for that rising unemployment.
> Drastically increasing costs for unskilled laborers wouldn't kill the companies - say, McDonalds wouldn't go out of business or double their burger prices because of that, as long as their competitors get the same labor cost increase.
I have to admit I don't quite follow. How would everybody getting the same labor cost increase prevent price hikes?
There would be a price hike for all companies, but it would be much, much smaller than the increase in wages - the price of a burger (unlike, say, price of a haircut) is mostly independent of the cook's wage, and to the extent that it matters, there are valid avenues for automation that put a cap on it.
