THE NATIONAL CONSTITUTION PROTOTYPE PROJECT

Means-Tested Welfare

Means-tested welfare is welfare that is offered to individuals and families who meet certain criteria. Such criteria commonly include limits on household income and wealth. The goal of means testing is, in theory, to limit benefits to only the neediest people and deny it to all others. Recipients generally have to apply for benefits and provide proof that they satisfy the criteria, while government clerks must make determinations as to which applicants in fact meet the criteria. Note that potential recipients of such welfare may not know of its availability, and some applicants may be wrongfully denied or lack the means to document their need. And even when such welfare is granted, a significant delay can occur between when application for the welfare is made and when the welfare is actually received.

From the standpoint of the government, means-tested welfare has several major drawbacks. For example, the most obvious drawback is that such programs require a costly government bureaucracy to administer and police them; and the more numerous and more complicated the means test programs are, the larger the bureaucracy needs to be to support the programs.

Note, too, that potential recipients will also commonly invent ways to circumvent the means tests, leading to some receiving benefits who should not. Such incidents, when discovered and publicized, often serve to fuel public hostility toward welfare programs in general and toward those who receive such benefits. And when household income is closely tied to race, religion, and/or ethnicity, such hostility can spread to even those who do not receive any welfare benefits at all.

But perhaps one of the most tragic problems with means-tested welfare is that it creates a barrier to entry into the workforce, as recipients of means-tested welfare are often forced to choose between keeping their benefits and taking a job.

Consequently, because of the many drawbacks of means-tested welfare, a far better alternative is universal basic income (UBI). The many benefits of UBI include (1) extremely low administrative cost, (2) the elimination of the barrier to employment posed by means-tested welfare, and (3) a guarantee that those who truly need the welfare will receive it.

Note that, because all citizens would receive the benefit, no citizen or group of citizens would be associated with exploiting the welfare system. And there would be no feeling that one group of citizens is "footing the bill" for another group of citizens seen as undeserving freeloaders.

Note, too, that, in theory, no one receiving UBI would ever be "judgement proof", potentially leading to a reduction in petite crimes. Furthermore, the permanent withholding of UBI could potentially serve as significant disincentive to the commission of more serious crimes.

Another hidden benefit of UBI is that it effectively subsidizes all employment. That means that minimum wage requirements could potentially be lowered. And because wages in general could perhaps be lowered, too, the reduction in labor costs could potentially make employing the domestic workforce more attractive than employing a foreign workforce to a potential employer.

Critics of UBI bemoan its assumed cost. Unfortunately, such critics are typically ignorant of the enormous cost of existing means-tested welfare programs. They also do not understand that the net cost of UBI can in fact be fine-tuned through taxation so that the actual cost of UBI can be made to be equal to or less than existing means-tested welfare programs. Thus, the claims regarding the alleged cost of UBL are in fact hollow.