Many tech entrepreneurs have long argued that a guaranteed income could mitigate job losses caused by artificial intelligence and automation. ChatGPT founder Sam Altman is leading the latest and largest study of this idea.
Michael Dwyer/AP
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Michael Dwyer/AP
The rise of artificial intelligence has sparked concerns that this technological advancement will eliminate millions of jobs. That’s something Silicon Valley entrepreneurs have considered, too, and they’ve long been pushing an idea to soften the blow: government cash aid with no strings attached.
Now, the first results of the latest and largest study on the impact of free money, led by the people behind ChatGPT, have emerged.
OpenAI CEO Sam Altman proposed funding a so-called basic income experiment as early as 2016. But it kills more jobs, so some form of state payment may be needed for others. So, he said, it would be good to look at what would happen if people received a regular salary from the government.
“Will people sit together and play video games, or will they create new things?” Altman wrote. “If people no longer worry about not having enough to eat, will they be able to achieve greater success and benefit society more?”
Technology-driven unemployment isn’t his only motivation. Altman noted progress against poverty, writing: “I also believe that true equality of opportunity cannot be achieved without some form of income security.”
There are a thousand different needs
His free money experiment took a while to happen, along with dozens of other experiments. The idea has also been boosted by the success of federal relief checks and other aid during the COVID-19 pandemic. But Altman’s study was much longer than most and involved a more nationally representative group in rural, urban and suburban areas.
For three years, 1,000 low-income earners selected in Illinois and Texas received $1,000 a month. (A control group of 2,000 people received $50 a month.) Elizabeth Rhodes, director of research at Altman’s nonprofit OpenResearch, began tracking their finances when she signed on with them.
“One person just graduated from cosmetology school, but she couldn’t afford a cosmetology license,” she said. “One person’s phone just went off. Another person just got into a car accident and their car was totaled and they couldn’t afford another car.”
She said there were a thousand different needs, all of which could only be met with cash. Rhodes said this study, like many others, found that people mostly spent the extra money on the basics: food, transportation, rent.
“We’ve seen an increase in people actually paying for housing,” she said. “So a lot of people are actually sharing their homes with other people and then they can move out on their own.”
Many people also deposit their money in banks. The biggest increase in spending is actually helping family and friends.
An unexpected challenge arose during the experiment: The COVID-19 pandemic hit early on. That complicates the study, but also means it was conducted amid a sudden spike in unemployment. “Cash gives more people agency in employment decisions during one of the most volatile times in modern history,” said Karina Dotson, research and insights manager at OpenResearch.
For example, the study found that the extra cash allowed a woman to take a pay cut and take a job with room for advancement, and she now earns close to six figures. But improvements in work quality are rare.
Overall, those who received cash payments worked slightly fewer hours – 1.3 hours less per week on average – and their partners did the same. These include some who work more than 50 or 60 hours a week at more than one job.
Participants also reported having more leisure time.
Dotson recalls a single dad who was employed at a restaurant. “When he learned about the cash transfer, he told us that he immediately went to his boss and said he wanted to reduce his working hours so he could spend as much time as possible with his four-year-old son,” she said. .
As for Altman’s question of whether people will create new things, research does find that people are more interested in entrepreneurship. But it wasn’t until the third year of payment that some, mostly black participants, took steps to actually start a business.
At the same time, many people reported significant decreases in stress and food insecurity early on, but this disappeared after the first year. Researchers aren’t sure why. Rhodes also noted that in some cases, extra cash can actually lead to more unexpected expenses. For example, some recipients were able to purchase a vehicle, but then the vehicle broke down and required repairs.
The OpenResearch team plans to conduct more analysis of where people moved during the study period (the most common reason participants gave for moving was to a better school district) and the impact of cash on children’s educational outcomes.
Altman declined an interview request to discuss the findings so far. But most importantly, the report says, “our results provide support for both sides in the debate over whether a basic income will help people’s long-term prospects.”
Supporters say basic income alone is not a magic solution
A guaranteed income is an old idea with a surprisingly diverse group of supporters, from libertarian economist Milton Friedman and President Richard Nixon to the Rev. Martin Luther King Jr. and the Black Panther Party. Other Silicon Valley billionaires backing it include Elon Musk and Jack Dorsey.
The broadest vision is universal basic income, which 2020 presidential candidate Andrew Yang calls for providing $1,000 a month (plus a cost-of-living increase) to every American adult regardless of income. In Altman’s 2016 blog post, he called for giving people “enough money to live on.”
But the thinking around basic income has shifted dramatically. The spate of recent experiments and proposals for some sort of national policy are far more limited and targeted at low-income households.
“What I hope people take away from this study and other studies is that guaranteed income alone doesn’t work,” said Facebook co-founder Chris Hughes.
He also co-founded the Economic Security Project and advocated for a basic income. But Hughes said it’s not a magic solution — $500 or $1,000 a month isn’t enough to overcome ballooning housing, health care, education and child care costs. Still, he said, a growing body of research, as well as pandemic subsidies, prove that a little more money can keep families stable.
“I think a good place to start is with guaranteed income when things get tough,” he said. To that end, Hughes suggested that automatic payments could be initiated when rising unemployment signals a recession.
But turning untied cash into national policy would face strong opposition. Some states have even banned it.
“Contributing to society through the labor market … is a more promising system than one in which poor people just get a check from the government,” said Michael Strain, an economist at the American Enterprise Institute.
While research so far shows a limited impact on jobs, Strang worries that a permanent basic income plan would exacerbate long-term declines in employment for some groups.
A better idea, he said, would be to significantly increase tax credits for low-income workers. For example, suppose someone loses a job that pays $40,000 a year to automation, and the only job that person can find pays $25,000 a year. “What if we lived in a world where the government gave you 15 grand?” Strain said. “You don’t get it until you take the job. But you know the government will try to put in enough money to make it worthwhile.”
For the record, neither Strain nor Hughes are too worried about mass unemployment caused by technologies like artificial intelligence. They say history shows that new technologies create new jobs over time. But they agree that as jobs become more precarious, struggling American families need more help, one way or another.
