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Comment by cle | Hacker News Reader

I've been skeptically positive towards UBI, but this sounds like a real problem with UBI, to me. Do you think there is merit to this concern?

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Only if you think businesses that rely on extremely low wages in order to be profitable deserve to exist.

Frankly if the only way you can make widgets is to pay your widget-makers just enough so that they don't die, or perhaps less, then in my opinion society should reconsider how valuable it considers widgets to be, or at least whether someone else can make widgets more efficiently.

It's called a market externality. In economic terms, any externalities like this are a symptom of market failure. Get enough of them and a market won't exist or arguably should not. At the very least it represents inefficiencies. Everybody's supposed to agree to hate all of the aforementioned in a capitalistic economy.

@ianai, how is this an externality?

Aren't externalities costs/benefits that accrue to third parties? But this doesn't seem to be in that category.

An externality impacts the market through a means other than the immediate price point of a good. As Milton Friedman put it, the market only affords one communication method between supplier and demander: price. That, alone is meant to encapsulate all input costs. If to employ someone to make or render a good or service the employer relies on an external factor such as the state of the world then the employer is exploiting a market externality.

That's a much wider definition of externality then I was taught when I studied economics. To quote wikipedia: "In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit" So, it's not just any state of the world, but in particular that my actions cause cost/benefits to other parties.

What if the widget-makers are teenagers who are working their first job? They don't need to support themselves by their labor yet. I think there is some room for these kinds of jobs.

Obviously, when adults are trying to support themselves with this kind of job, we have a problem.

Only 24% of minimum wage workers are teenagers. http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi... That mans 76% are 20+.

Why is that a problem? The teen, not having to support themselves, has an advantage over the self-supporting individual, they can accept lower wages. In return the company has a choice, to employ teenagers for less money and dealing with the consequences that they are part time or seasonal, or to employ the individual that demands a living wage for themselves and dealing with the consequences that they are full-time and rather permanent.

I don't think it is a problem.

My point was that not every job needs to pay a living wage.

It's not a real threat, because as UBI is slowly ratcheted up to actually be a livable wage automation will replace all of that unskilled labor. If we instituted a UBI right now it might be something really low, like maybe $200/mo. A person might work fewer hours at their shitty no-skill low wage job, but they aren't going to quit.

It would vary by locality. I'm guessing the figure should be such that you could afford rent (1 bedroom, worst part of town) and food off it.

Eventually yes, but I was speaking of the transition period that the OP was asking about... what will happen while businesses still need labor? That is, before we've successfully automated all of the low skill human labor? Well, until then, we need people to work, so the UBI would have to be below a livable wage.

Not at all. People will still want to work. Everyone wants better than they currently have. so you can afford food and rent. you may not need it but you still want a cell phone, Internet, a car, etc etc. the point is to ensure a basic quality of life. The rest is up to the individual. Plus after UBI people will be much more open to working fewer hours or with no benefits. It's a very strong positive externality on labor flexibility.

If you mean "in practice it will vary by location because it won't be everywhere provided by the same organization, and thus likely won't be provided everywhere under the same rules," then I agree with your expectation.

If you mean "a basic income, offered by the same organization in multiple places, should be adjusted for cost of living", I disagree. Moving some "extra" funds towards lower cost-of-living areas winds up being a feature - resources are shifted (slightly) away from concentrations of wealth and toward concentrations of people, where those disagree.

If your strategy for employing labor includes anything other than the monetary recouperation for someone's time then your entire labor strategy is perverse.

Can you clarify the question? It sounds like you think UBI's problem is that it removes the "continual supply of low-paid unskilled workers [the businesses] want".

To me that sounds like an upside, not a problem. With UBI, workers have more bargaining power, so employers can no longer get away with treating them like they're disposable.

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