(CNN Money) — As the co-founder of Facebook, Chris Hughes joined the ranks of the nation’s Top 1% by the time he was in his mid-20s.
That oversized success, he says, was a wake-up call. Being part of such a small group of people achieving such wealth while others struggled to get by helped him to realize the great inequities in America’s economy.
Hughes wants to fix that.
Two years ago, he cofounded the Economic Security Project, a network of policymakers, academics, and technologists working to end poverty and rebuild the middle class. One of the solutions they have proposed? A guaranteed basic income that would provide $500 a month to every American worker making less than $50,000 a year.
In his new book, “Fair Shot: Rethinking Inequality and How We Earn,” Hughes lays out how it will all work. CNNMoney spoke with him to learn more about the plan.
America is suffering from a record wealth gap. Why is this issue so important to you?
It is such a fundamental idea behind America that if you work hard, you can get ahead — and you certainly don’t live in poverty. But that isn’t true today, and it hasn’t been true in the country for decades.
I believe that unless we make significant changes today, the income inequality in our country will continue to grow and call into question the very nature of our social contract.
My own experience shines a light on how the tie between work and wealth in America has frayed. I was a scholarship kid who worked hard to get to Harvard, and I’m proud of the work I did to make Facebook successful in its early years.
But the fact that I was able to earn nearly half a billion dollars for three years of work is indicative of how unfair the American economy has become. Few people recognize that the same forces that enable the outsized “success” of many Internet entrepreneurs are also making it harder for everyone else to make ends meet.
Your solution to income inequality is a universal basic income system for working Americans. How would this system work?
In a few steps. First, I think we should invest in what we know works. The single most successful program to support economic mobility and fight poverty in the United States: is the Earned Income Tax Credit. Nearly 30 million Americans get between $500 and $6,000 each year to supplement other earnings, no strings attached. It’s also a rare program that has bipartisan support.
And the results are undeniable. Recipients work just as much after they get the money as before, if not more. Their kids do better in school and are more likely to go to college. And families who get it are healthier, not to mention a little less stressed.
Rather than start some brand new program, we should expand and modernize the Earned Income Tax Credit to provide $500 per month, via direct deposit or debit card, to every working adult who makes less than $50,000.
A family with two adults in minimum wage jobs would see an overnight boost to their incomes of 40%. It would help 90 million Americans make ends meet and lift 20 million out of poverty overnight. Anyone working gets the money, including people who work in unpaid jobs like child care, elder care, and education, which our laws have historically ignored. It is time to expand the definition of work to recognize the contributions millions of Americans are already making, but not getting paid for.
And we should pay for it by bringing tax rates on people like me into line with their historical averages — 50% on income above $250,000 — and closing the most egregious tax loopholes.
This is not about pitchforks coming for the rich — it’s about taking care of one another. The total cost would be less than half of what we spend on defense each year.
I do think it’s important to say that this kind of policy is not a silver bullet. We still need good schools, better health care and smart climate policy. But an expanded EITC is the most powerful and immediate thing that we can do to combat income inequality and give everyone a fair shot.
You propose giving $500 per month to every working adult whose family makes less than $50,000. How did you arrive at $500?
Five hundred dollars is enough to provide a financial cushion that can be used to cover bills, pay down debt, save, cover some basic expenses while being retrained for a new job, or any other manner of economic challenges millions of families face every day. It’s not intended to replace a paycheck, but to supplement it.
I also think we should expand the definition of work to include caregivers and students, which would recognize the work of an additional 30 million Americans in the workforce and offer them a financial lifeline that doesn’t exist today.
I also think we could start with $500 and if the technical unemployment that some predict arrives, then the amount could increase.
What would you say to those in the 1% who argue that they’ve worked hard for their wealth and shouldn’t be responsible for supporting those who are less successful?
This isn’t about taking down the rich. This is about acknowledging the glaring disparity we have in our country between the ultra-wealthy and everyone else — the top 0.1% owns as much as the bottom 90%.
And rich folks don’t necessarily work harder than those who are poor. In fact, money paid for work only accounts for about 15% of the income of Americans making $10 million per year or more; the rest is capital income from simply owning assets.
So when you have a minimum wage worker who is taking buses across Chicago to juggle multiple jobs who can barely pay his rent despite working almost around the clock, you have to recognize there’s something wrong with the system.
Critics argue that handouts aren’t the solution because they don’t incentivize people to work. What are your thoughts?
Americans don’t want handouts, but they do want the basic security of knowing that if you’re working, you’re not going to live in poverty.
A guaranteed income for working people will provide that financial stability that a full-time job used to provide in America, but the gig economy increasingly fails to provide today. For those who can’t work, like the elderly and disabled, that is exactly what the social safety net is for.
What do you believe we can gain as a society from universal basic income?
A guaranteed income alone isn’t going to guarantee everyone a fair shot, but it is by far the single most powerful tool to help.
At the core of America is that the idea that people have the opportunity to live their own dreams, that they can be the person they want to be. If you want to be a teacher, nurse, artist or businessperson, you should have every chance to work toward that goal. That requires a good education and the ability to work your way up over time.
But every step along that journey requires cash of some sort – to pay for a security deposit on an apartment, the gas money to interview for a job, or for childcare while you’re in classes at the local community college. Right now, people have little cushion, and poor and even middle-class people have no savings to pay for basic expenses.
A guaranteed income is not a cure-all, but it does make it just a little bit easier for people to fulfill their dreams.
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