(This story corrects reference to Hughes’ fortune in par 2 to millions from billions.)
SEATTLE (Thomson Reuters Foundation) - A $500 monthly check from the government for every American earning less than $50,000, financed by taxing the wealthy, would provide financial stability for millions of people in the United States, said the co-founder of Facebook.
Chris Hughes, who made millions after co-founding the social network with Mark Zuckerberg while at Harvard University, said such a guaranteed income was needed to counteract the effects of growing income inequality in the United States.
Despite a recovery in the U.S. labor market, millions of citizens work in the informal economy with little job security and few benefits, largely due to automation and the outsourcing of jobs abroad.
“The gig economy is the tip of the iceberg,” said Hughes whose book “Fair Shot: Rethinking Inequality and How We Earn” was published on Tuesday.
“We talk a lot about Lyft drivers and Postmates delivery people, but underneath them are tens of millions of American workers who are temps, part-time contractors, people who don’t have the kind of financial stability we used to think of as a job,” he said.
The idea of governments providing a universal basic income to their citizens has garnered a growing number of plaudits, from former U.S. presidential candidate Hillary Clinton to Silicon Valley billionaire Elon Musk.
Hughes’ concept is based on a broad definition of work that includes students, caregivers, child-rearers and part-time employees.
He spent the past few years in conversations with working people, and came to the conclusion that a guaranteed income was the most powerful tool to combat poverty and stabilize America’s middle class.
“For the past 20 or 30 years, work has become increasingly unreliable. You might be able to find a job but it’s unlikely that it provides a reliable income, benefits, vacation days, or sick leave,” Hughes told the Thomson Reuters Foundation.
Hughes believes a tax on people earning above $250,000 - along with other adjustments to the tax code - could provide the money necessary to benefit an estimated 90 million people.
The best working model of a guaranteed income is Alaska, where since 1976, oil revenues have funded an endowment on behalf of the state’s residents, said Hughes.
Each resident receives an annual dividend check, which last year amounted to $1,100, paid out to nearly 740,000 people.
“It’s a small amount of money, but critical in the lives of people who receive it,” Hughes, who grew up in a working-class family before receiving a scholarship that sent him to an elite boarding school and ultimately Harvard, said via Skype from New York.
During a visit to Alaska last September he discovered most Alaskans saved the annual amount for longer-term investments like a child’s future university education.
A small-scale experiment is already underway in Stockton, California, a city where one in four residents live in poverty.
The Economic Security Project, a network Hughes co-chairs, provided $1.2 million to fund the city’s effort to distribute $500 per month for the next 18 months to a few dozen families.
Hughes hopes experiments like these will create support for his idea, based on an amount that is designed to be high enough to help working people, but not so high as to discourage work.