How Universal Basic Income Could Rescue The Freelance Economy

On January 1 Finland became the first country in history to launch a large-scale universal basic income trial. The two-year trial selected 2,000 unemployed Finnish citizens and will pay them €560 ($587) each month whether or not they find a job during the trial. There are also no requirements for reporting how they spend the money. The experiment aims to see if large-scale UBI programs could actually help boost employment and spur the economy by providing people with a small guaranteed income, which could enable them to take more risks, such as applying for different kinds of jobs, seeking out self-employment through freelancing, or starting a small business.

Related: How Finland’s Exciting Basic Income Experiment Will Work—And What We Can Learn From It

“Studies have shown one of the top reasons more people don’t become entrepreneurs is because they don’t have the capital to both support themselves and start a business at the same time. This means they can’t afford to leave their current job to start their own small business,” says Marjukka Turunen, the head of the legal unit in benefit services at KELA, the Finnish government social security institution that is overseeing the project. “UBI would give them a solid financial foundation to do this.”

Or at least, that’s the hope. After all, no one really knows how a large-scale universal basic monthly income service would affect individual productivity—it’s never been done before, after all. But it may be the only thing that could help give millions of people an income in the next decades as robots and artificially intelligent software eliminate jobs once held by humans. By just 2021, 6% of all U.S. jobs could be eliminated in this manner. As that proportion of job losses grows, UBI could be the only hope of guaranteed income for many.

But while the Finnish study and other smaller ones mean basic income may finally be closer to happening, many are questioning if such a system could work in the U.S., a country with a relatively less generous social benefits system compared to most European nations. Yet a growing number of economists are saying it’s no longer a question of if, but when.

“I’m quite optimistic [that UBI will be rolled out in the U.S. eventually], because it is becoming a political imperative,” says Guy Standing, professorial research associate, School of Oriental and African Studies, University of London, and co-president of the Basic Income Earth Network.

He explained: “The 20th-century income distribution system has broken down irretrievably. Unless something like a basic income is introduced, the economic insecurity of the “precariat” (which includes most freelancers and taskers working in the platform economy) will become so great that the appeal of political extremists will be hard to resist. The election of Trump, in my view, is a dangerous signal of precisely that siren luring society toward the rocks. Providing income security is essential to preserve freedom, social justice, and healthy political democracy.”

Standing also believes UBI could not only help freelancers survive, but thrive. Here’s five ways how:

1. It Could Help People Retrain For In-Demand Jobs

“A basic income—by which I mean a modest amount paid to every individual monthly, without conditions—would provide people with basic security, which is essential for mental and physical health, and is conducive to longer-term perspectives and decision-making,” says Standing. “As such, it would give people a greater sense of being in control of one’s life.” That feeling of control and stability would enable people to leave dead-end jobs in favor of more education, enabling them to retrain for
in-demand jobs, without the fear of not being able to pay for basic necessities.

This in turn could eventually provide a more in-demand workforce and spur a growing of the economy. And it’s not only the economy that could benefit—other areas of society could bear fruit from UBI, including “some work that is ignored in official statistics and that is unremunerated, including the work of care, for our children, other relatives, and our community,” says Standing.

2. It Could Inspire People To Take Risks And Start Their Own Businesses

“By providing basic economic security, a basic income would encourage a more entrepreneurial mentality, which might take the form of starting a new business or expanding an existing one,” says Standing. In other words, that financial cushion UBI provides could be just enough stability for people to allow them to spend their own savings or other capital on starting a business—thus potentially creating even more jobs. After all, as KELA’s Turunen pointed out, one of the top reasons more people don’t become entrepreneurs is because they don’t have the capital to both support themselves and start a business at the same time.

But Standing says the payment frequency of UBI here is key. If UBI were paid annually instead of monthly, it may not result in as many successful entrepreneurial endeavors. “One reason for supporting a modest regular basic income rather than a larger lump sum paid once or at the end of a year is that it puts a lid on ‘the weakness of will, the tendency to take a risk carelessly. A [monthly] basic income would help give mental stability, which is conducive to strategic risk-taking.”

3. It Could Help Freelancers Maintain Health Insurance Coverage

Since I’ve been living in the U.K., I’ve noticed people here don’t fret as much about starting a small business or freelancing because they don’t have to worry about health care coverage. Health care in the U.K (and many European countries) is provided by the state and not conditional on employment of the ability to pay for it. Now that President-elect Trump and the Republicans have vowed to repeal the Affordable Care Act, many freelancers are once again worried if they’ll be able to keep and pay for their health insurance.

If UBI is rolled out in the U.S. people would potentially have one less hurdle to overcome to going freelance or starting their own business because they would be guaranteed an income no matter what, which could then be use to help cover the most expensive and necessary living costs: private health insurance. “A basic income would provide some defense against economic shocks, due to illness, an accident or other personal setback,” says Standing. “While many of us who support a basic income also believe in a national public health service paid mainly out of taxation, if an insurance model is pursued there must be robust safeguards to ensure the low-income groups and those who will probably have fluctuating incomes, such as most freelancers, do not find they ‘pay more, for less’.”

4. It Could Help Freelancers Say “No” To Abusive Clients

Many times freelancers are afraid to say “no” to clients, even ones who are psychologically abusive or are notorious late payers—in other words, ones they should dump. Having a UBI as a buffer could mean freelancers could be less desperate in taking any job that comes along and enable them to focus on obtaining work with high-value, beneficial, decent clients.

“It would enable more people to say ‘no’ when confronted by exploitative and oppressive demands. And it would enable more people to say ‘yes’ to forms of work that one might wish to do but otherwise would have to omit due to financial pressure to do paid labor,” says Standing. “A basic income could enable more people to pace themselves and think and act in a longer-term way.”

5. It Could Help Compensate Freelancers For The Unpaid Work They Do

“The primary justifications for a basic income are social justice and an enhancement of freedom. This applies to everybody, regardless of their work status,” Standing says. “However, freelancers realize more easily than those in wage labor that they have to do a lot of work that is not recognized or remunerated. A basic income helps to legitimize those forms of work.”

In other words, a UBI could help compensate freelancers for the parts of their work they don’t bill clients for—or that clients refuse to pay for. Those types of work include chasing down leads or interviewing for freelance writers, wandering around town for inspiration to find the best look for a freelance interior designer’s client, or a freelance developer taking the time to master that obscure coding language a client of hers insists on using on their system.

It’s the time-consuming tasks like these, which are almost always never billed for, that separate the average freelancer from the incredible one. If freelancers the country over—a country in which freelancers make up 35% of the workforce—felt UBI enabled them to take more time to perfect their work for client, the entire business sector, and ultimately, economy, benefits.