Reconciling Basic Income and Immigration

In a recent Wonkblog debate on the merits of a Basic Income Guarantee (BIG), Megan McArdle raised a serious objection to implementing a BIG in the United States. She argued that the more generous a country’s social safety net, the more political resistance there will be to allowing immigrants to enter that country. Thus, were the United States to implement a BIG, one would expect that harsh immigration restrictions would carry the day for the foreseeable future. 

If true, this would be a hard bullet to bite for both libertarian and leftist proponents of a BIG, as neither group wants to see prospective immigrants denied the opportunity to participate in the American economy. Indeed, both groups would likely agree with McArdle’s observation that denying access to would-be immigrants would condemn millions to a life of severe poverty in their respective native countries. Given these premises, proponents who favor a BIG on the grounds that it would help the poor are faced with a dilemma: should we help those within the United States at the expense of those living in even deeper poverty beyond its borders?

As some of McArdle’s fellow panelists noted, this problem isn’t unique to a BIG. Rather, any generous welfare provisions might promote resistance to immigration—including our own present-day social safety net. Of course, the fact that we maintain programs like Social Security and Medicaid while also considering immigration reform suggests that welfare state-related resistance to immigration might relax over time. Thus, were a BIG to become well-established and seemingly stable, perhaps immigration would again become politically viable.

Or perhaps it wouldn’t. As McArdle was quick to point out, many European nations are characterized by both generous welfare schemes and virulent anti-immigrant sentiment. (This may well be a case where correlation and causation come apart, but set that objection aside for now). And even if a BIG didn’t preclude immigration in the long run, this fact would bring little comfort to those trapped in poverty for however many years or decades it takes for U.S. public opinion to soften.

There is, however, a potential solution that could reconcile a BIG with permissive immigration laws. Call it a “Graduated Basic Income” (GBI). In this scheme, people entering the United States would receive no BIG for their first year living in the country (though they would be entitled to some other sort of minimal safety net e.g., Medicaid, food stamps, etc.). After the first year, they would then receive some percentage of the BIG, with that percentage increasing with each successive year spent in the country until full benefits were paid out. If the BIG amounted to $18,000 annually, a recent immigrant might receive $2,000 after her first year in the United States, $4,000 after the next, $6,000 after the third year, and so on. Only after some reasonable period of living and working in the country would she receive the full BIG.

There are a number of advantages to such a proposal. First, since immigrants would have to largely pay their own way until they established themselves, the GBI would eliminate much of the political tension between an expansive social safety net and permissive immigration policy. One presumes that any immigrants capable of supporting themselves during the graduation period will not be a significant burden to the program. Indeed, they will have already been employed and paid taxes for many years before beginning to receive a sizeable BIG.

Second, the introduction of immigrants into the system would do much to alleviate worries about labor force dropout. Since recent immigrants would have to work to support themselves, they would potentially fill any vacancies created by the introduction of a BIG. However, since the GBI would rapidly begin providing some benefits, the policy wouldn’t be too draconian with respect to newcomers. Thus, while immigrants would not have the freedom to exit the workforce, they would at least be receiving some unconditional benefits to help improve their lives and stave off poverty. And, of course, these benefits would improve every year, thereby providing immigrants with steady improvement in terms of quality of life.

Those on the left might worry that, under a GBI, economic desperation would effectively force immigrants to do the least-pleasant, worst-paying jobs available—a coercive/exploitative situation whose elimination was a central justification for the BIG. However, the fact that this situation would only be temporary makes it seem far less objectionable. Though immigrants might have to spend a brief period of time at the mercy of the market, they would soon get financial assistance in the form of early GBI payments. And the fact that their hardship would only be temporary would likely make it much easier to psychological endure. Given these moderating factors, a GBI that puts people through a few difficult years but also secures their future might still be considered just.

Others might object that there is an element of unfairness built into the proposal: those unlucky enough to be born on the wrong side of the border would get stuck with unpleasant jobs while native residents of the United States would be able to kick up their heels (assuming they didn’t mind a modest lifestyle). In response, my suggestion would be to expand the GBI to also apply to U.S. citizens. Each citizen, upon turning 18 would be placed in the same position relative to the BIG as any new arrival to the country; only after her respective graduation period elapsed would she receive the full BIG afforded to older citizens. In this way, young people would be forced to participate in the workforce for some set time period before having a real option of exit. Such an arrangement would offset the negative effects of workforce dropout while still promising individual workers financial security and the possibility of exit in the long run.

Finally, the idea of benefits that slowly increase over time should appeal to anyone who takes seriously the idea of the hedonic treadmill—i.e., the possibility that humans psychologically adapt to improved external circumstances, thereby receiving only short-term gains in happiness for any gain in income. If such a description of human psychology is accurate, then a welfare program that progressively increases its payouts would have a potentially greater hedonic impact than one that pays more at the start but whose payments are then held constant.

There are likely complications associated with a GBI that have not been considered here—complications that might potentially undermine some of the very benefits that make a BIG seem so appealing to so many. However, given the gravity of McArdle’s objection with respect to immigration, some such tradeoffs might be necessary to prevent the total shuttering of our borders that might otherwise accompany a BIG.