Covid’s lingering disruptions

The Covid-19 pandemic has disrupted the social order in many ways. WFH (work from home) was a requirement during the pandemic lockdowns but it has lingered. In the UK in 1981 just 1.5% worked mainly from home; according to the Office for National Statistics (ONS) 85% in 2021 said they wanted a ‘hybrid’ approach, working part of the week at home, part in the office. Office occupancy in the US is stuck around 40%-60% of pre-pandemic levels. In the US talk of the ‘Great Resignation’ – people leaving the workforce prematurely – has prompted a shift by many businesses to a four-day working week. In the past three years, at least six states – California, Hawaii, Maryland, New York, Pennsylvania and Washington – have considered bills to mandate, incentivize or allow the switch to a four-day week. Proposals for a shorter working week are gaining traction in the UK too.

Another Covid-aftermath idea gathering support is that of a Universal Basic Income (UBI). UBIs have been around since Sir Thomas More floated the idea in the 16^th century in his Utopia. Since then they have been tried in many different countries on a local basis. Now a UBI is to be given a trial lasting two years in the north-east of England and north London. Thirty people will be given £1,600 (almost $2,000) a month and the effect on their physical and mental health will be assessed. A control group, which will not be given the UBI, will be assessed for comparison. A UBI has some powerful supporters; the Tony Blair Institute for Global Change, established by the former British Prime Minister, sees it as an “elegant solution to help address” income inequality. Even the Pope has backed the idea. In the US the Pew Research Center found in 2020 that adults under 30 favored the government providing a UBI by two to one, while 72% of those aged 65 and above opposed the idea.

The proponents of a UBI argue that it would remove the need for social security and state pension payments, that unpaid care workers would get support, and that it would mitigate the adverse effects of technological change. Against that, would people lack the motivation to work? How much might tax revenues fall, and thus undermine the state’s ability to fund a UBI? The Mayor of Greater Manchester in England, Andy Burnham, said last year the UBI was an idea “whose time has come”. Andrew Yang, who ran for the Democratic Party’s nomination as President in 2020 before pulling out and backing Joe Biden, proposed what he called the ‘Freedom Dividend’, a monthly UBI of $1,000 to every American adult.

The introduction of a universal UBI within a country would be truly revolutionary; it would upend many agencies and institutions, and have a profound effect on how we see, use and think about money. The inevitable slide into Central Bank Digital Currencies will also make it possible for governments to accurately ‘target’ recipients of a UBI – or withhold the UBI if it so chooses.