Many tech entrepreneurs have long argued that guaranteed income could offset job losses due to artificial intelligence and automation. The latest and largest study on the idea is led by Sam Altman, the man behind ChatGPT.
Michael Dwyer/AP
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Michael Dwyer/AP
The rise of artificial intelligence has raised fears that such technological advances will wipe out millions of jobs. Silicon Valley entrepreneurs have thought about it too, and they’ve pushed an idea to soften the blow: cash assistance from the government, no strings attached.
Now, the first results are out from latest and greatest research on the impact of free money — research led by the man behind ChatGPT.
Sam Altman, CEO of OpenAI, offered to fund an experiment on so-called basic income in 2016. In a blog post That year, he said some kind of national payment would likely be necessary because technology was killing more jobs even as it created huge wealth for others. So, he said, it would be good to study what might happen if people received a regular paycheck from the government.
“Do people sit around playing video games, or do they create new things?” Altman writes. “Would people, without the fear of not having enough food, get more done and be more beneficial to society?”
Job loss due to technology isn’t his only motivation. Altman mentioned progress in reducing poverty, writing, “I also think that there can’t be true equality of opportunity without some version of guaranteed income.”
There are thousands of different needs.
It took a while for his free money experiment to take place, and in the meantime, dozens belong to other experiments used to has been carried out. The idea was also fueled by the success of federal relief checks and Other support during the COVID-19 pandemic. But Altman’s study was much longer than most others and included a more nationally representative group across rural, urban, and suburban areas.
For three years, 1,000 low-income people selected in Illinois and Texas received $1,000 a month. (A control group of 2,000 others received $50 a month.) Elizabeth Rhodes, research director at Altman’s nonprofit OpenResearch, began tracking their finances when she signed them up.
“One person just finished a cosmetology course, but she didn’t have enough money to buy a cosmetology license,” she said. “Another person just turned off her phone. Another person just got into a car accident and then wrecked her car, and they didn’t have enough money to buy another one.”
There are thousands of different needs, she said, and only cash can satisfy them all. 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 with other people and they’re able to move out on their own.”
Many people also put money in the bank. The biggest increase in spending was actually to help family and friends.
An unexpected challenge in the testing process: The COVID-19 pandemic hit early on. That complicated the study, but it also meant it took place during a period of soaring unemployment. “Cash has given people more autonomy in their hiring decisions during one of the most turbulent times in modern history,” said Karina Dotson, OpenResearch’s director of research and insights.
For example, the study found that the extra cash allowed one woman to take a pay cut to get a job with room for advancement, and she now earns close to six figures. But that increase in job quality is rare.
Overall, those who received cash worked slightly less — an average of 1.3 hours less per week — and so did their partners. This included some people who worked 50 or 60 hours a week at more than one job.
Participants also reported having more free time.
Dotson recalled a single father who worked at a restaurant. “And when he found out about the transfer, he told us he immediately went to his boss and said he wanted to reduce his hours so he could spend as much time as possible with his 4-year-old son,” she said.
As for Altman’s question about whether people create new things, the study found more interest in entrepreneurship. But it wasn’t until the third year of the payment that some people, mostly blacks, actually started businesses.
Meanwhile, many people reported significant reductions in stress and food insecurity at the outset, but these levels dropped off after the first year. The researchers aren’t sure why. Rhodes also noted that in some cases, the extra cash actually led to more unexpected expenses. For example, some recipients were able to buy a car, only to have it break down and need repairs.
The OpenResearch team plans to do more analysis on where people moved during the study — the most common reason participants gave for moving was to get to a better school district — and the impact that money had on children’s educational outcomes.
Altman declined an interview request to discuss the findings so far. But the bottom line is that in the debate over whether basic income helps people’s long-term prospects, the report says, “Our results support both sides.”
Basic income is no magic bullet, advocates say
Guaranteed income is an old idea with a surprisingly diverse following, 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 who have endorsed the idea include Elon Musk and Jack Dorsey.
The most expansive vision is a universal basic income, as 2020 presidential candidate Andrew Yang has called for giving it to every adult in the United States. $1,000 a month (plus rising cost of living) regardless of income. In Altman’s 2016 blog postHe called for giving people “enough money to live on.”
But thinking about basic income has changed dramatically. A series of recent experiments and proposals for some kind of national policy are much more limited and aimed at low-income households.
“I hope that through this research and others, people will understand that guaranteed income alone is not effective,” said Chris Hughes, co-founder of Facebook.
He also co-founded the Economic Security Project, which advocates for basic income. But Hughes said it’s no magic bullet—$500 or $1,000 a month isn’t enough to overcome skyrocketing housing, health care, education, and child care costs. But he said a growing body of research, as well as pandemic payments, proves that a small amount of money can help families stay afloat.
“I think a great place to start would be to have a guaranteed income when things get tough,” he says. To that end, Hughes suggests automatic payment can occur when high unemployment signals a recession.
But making untied cash a national policy would face strong opposition. Some states even banned it.
“Contributing to society through the labor market…is a more promising system than one where the poor just get checks from the government,” said economist Michael Strain of the American Enterprise Institute.
While research so far shows limited impact on employment, Strain worries that a fixed basic income program would exacerbate long-term declines in employment rates for some groups.
A better idea, he says, would be to significantly increase tax credits for low-income workers. Say, for example, someone loses a $40,000-a-year job to automation, and the only other job they can find pays $25,000. “What if we lived in a world where the government handed you $15,000?” Strain says. “You only get it if you take the job. But the government tries to, you know, subsidize enough to make it worth your while.”
For the record, neither Strain nor Hughes are overly concerned about mass job losses due to technologies like AI. They say history shows that over time, new technologies create new types of jobs. But they agree that as jobs become more precarious, struggling American families need more help, one way or another.
