Y Combinator Learns Basic Income Is Not So Basic After All
In January 2016, technology incubator Y Combinator announced plans to fund a long-term study on giving people a guaranteed monthly income, in part to offset fears about jobs being destroyed by automation. “I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale. So it would be good to answer some of the theoretical questions now,” Y Combinator president Sam Altman wrote in a blog post at the time.
“Giving people enough money to live on with no strings attached” is necessary to achieve true “equality of opportunity” and could “eventually make real progress towards eliminating poverty,” Altman wrote. He said the group hoped to provide a basic income to a group of Americans for five years.
Now, nearly three years later, YC Research, the incubator’s nonprofit arm, says it plans to begin the study next year, after a pilot project in Oakland took much longer than expected. “Although it’s frustrating for funders, it has been good from a research standpoint,” Elizabeth Rhodes, YC Research’s project director, wrote in an email to Oakland Mayor Libby Schaaf in mid-July. WIRED obtained the email through an open-records request.
In April, the nonprofit signed a contract with the University of Michigan’s Survey Research Center to help manage the study, which will give unconditional cash transfers to 3,000 participants in two states, and is expected to begin in early to mid 2019, Rhodes says in an interview. The locations will not be finalized until next month, but will encompass a region, not just a city, and it will not be Oakland. One thousand people will receive $1,000 per month while a control group of 2,000 people gets $50 per month. Some participants will receive payments for three years and some for five in the study, called “Making Ends Meet.”
The study reflects growing interest around the globe in the concept of a universal basic income; the approach differs from most existing US social-service programs, which are based on some level of need or include work requirements. Silicon Valley technocrats have gravitated towards basic income amid rising public anxiety around inequality and job loss from automation. But their gestures have been criticized as self-serving, especially as some tech luminaries fight taxes that would support basic services to the same low-income families.
A project in Stockton, California, funded in part by Facebook cofounder Chris Hughes, is further along, although smaller in scale. Last week, Stockton released a report detailing plans to give 100 low-income families $500 per month for 18 months, paid from a $1.2 million fund donated by The Economic Security Project, a nonprofit that Hughes co-chairs, and other tech donors. In November, notices will go out to 1,000 randomly selected residences in neighborhoods where the median household is $46,000 or less to let residents know they may qualify.
The University of Michigan research center is also collecting data for another large-scale basic income project, called “Baby’s First Years,” being led by Greg Duncan at University of California Irvine. The project is recruiting 1,000 low-income new moms from hospitals in four cities, half of whom will receive an unconditional $333 per month, while the control group receives $20 per month.
Recent basic-income projects have been funded by governments in Finland, the Netherlands, and India. Previous efforts in Brazil, were also funded by private donors. The largest current study, in Kenya and Uganda, is backed by the nonprofit GiveWell and Google.org.
Y Combinator Research estimates it will need $60 million for its study, three-fourths of which will cover the monthly payments to participants. Rhodes says the group is talking to individuals, national foundations, and local philanthropic groups, and won’t begin the study until funding is secured.
‘It’s harder to give away money than you might think.’
Elizabeth Rhodes, Y Combinator
Progress until now has been slow. In April 2017, Altman described a pilot project for the study involving 100 families in Oakland receiving $1,500 a month. But in a 32-page report released in September 2017, Y Combinator said the initial test involved fewer than 10 people, though it expected to have 100 enrolled by the end of last year. Rhodes now says the group hopes to hit 30 to 40 participants by the end of September. In the initial feasibility study, six people received $1,500 per month, but pilot participants now receive $50 a month. The goal of the pilot is to refine operations, including testing ways to keep the control group engaged, when they are receiving only $50 per month, says Rhodes.
The Michigan survey center plans to begin a separate pilot test in Oakland next month, interviewing 30 to 50 people, Stephanie Chardoul, the group’s survey director, told WIRED.
Y Combinator’s Rhodes says the process was slowed by the need for approval from Institutional Review Boards at Stanford and Michigan, where researchers will track the study. It also took time to work with California state agencies and the IRS to make sure that no study participants lost existing benefits.
“Coming from academia, it wasn’t more challenging than I expected,” whereas the tech industry does not have to comply with as many restrictions, says Rhodes, who previously worked as a researcher at the University of Michigan. “It’s harder to give away money than you might think, but we’re being very intentional about making sure to work through all the challenges and think through every possible angle before we start, to be as responsible as possible.”
Once the study begins, the cash payouts will be unconditional, Rhodes says. She described private funding as an advantage over government-backed studies, which can be affected by political swings and regulators who want to put restrictions on receiving cash. In July, Doug Ford, the newly-elected conservative premier of Ontario, cancelled what was supposed to be a significantly more ambitious basic-income project in Canada.
Michigan’s Chardoul says that Y Combinator Research will recruit potential participants and screen them for eligibility. Michigan researchers will then contact each participant, confirm eligibility, and schedule an in-person baseline interview. During the visit, participants will activate a debit card, which will be used for the monthly cash transfers. Y Combinator will randomly assign participants to different groups, and then track their behavior and outcomes, Chardoul explained.
Altman says he’s just as hopeful about the potential for basic income as he was in 2016. Guaranteed income could unlock incredible human potential, when people no longer have to worry about their basic needs, he says. Even with their basic needs met, people will still be motivated to work and be productive. “Human desire for status and other silly things is totally limitless,” he says.
Pendarvis Harshaw, an Oakland-based freelance writer and educator, did some consulting work and canvassing for Y Combinator in 2016 when the program was launching. He was excited at the prospect of a Silicon Valley institution like Y Combinator trying to improve conditions in Oakland, and feels let down that the study will be located elsewhere. “There’s some disappointment in being a bit diluted, if you will, or more widespread,” says Harshaw. “But also these issues are not particular to just Oakland. There are working class people struggling everywhere.”