Updated on Wednesday, July 8, 2020

As the coronavirus pandemic continues to pummel the U.S. economy, causing a heightened financial strain on U.S. households, the argument for a universal basic income (UBI) has been gaining traction.

In fact, legislation introduced in the House of Representatives in April 2020 proposes a UBI payment for up to 12 months in the wake of the coronavirus pandemic. The payments would consist of at least $2,000 a month for individuals age 16 or older who earn less than $130,000 a year, and $4,000 each month for married couples who earn less than $260,000 annually. The proposal also includes $500 per child for up to three children.

If the proposed UBI is intended to represent how much American households need to bring in to get by, a new study from MagnifyMoney reveals that the incomes of a stark number of U.S. households are falling significantly short of the proposed UBI amount. Using data from the U.S. Census, we calculated the total income of each household and counted those with total incomes below what they would receive from the proposed UBI. Here’s what we found.

Key findings

• Our study reveals that 4.9% of American households currently have a lower income than the proposed UBI would provide. This comes to a total of 6,120,981 households nationwide.
• Despite having the nation’s highest median income ($82,604 in 2018), 8.6% of households (26,762) in the District of Columbia bring in less income than they would receive under the proposed UBI. 
• Mississippi follows closely behind, with the incomes of 8.3% of households — or 98,768 of households — falling under their UBI allotment.
• In Louisiana, 127,889 — or 6.9% — of households would at least double their incomes if they were to receive the proposed UBI.
• At the other end of the spectrum, only 2.7% of households in Minnesota  — or 62,800 — have incomes lower than what they would receive if the bill went into effect.
• Washington state and North Dakota round out the bottom three, with only 2.8% and 3.1% of their households falling below the UBI mark, respectively.
• Interestingly, the 10 states where the fewest households make less than UBI are in the northern half of the country. Seven of those states border Canada.
• Nine of the states at the top of our list are below the Mason Dixon line, as well as the District of Columbia.
• Surprisingly, states with higher median incomes still had pretty large populations of households with incomes under the proposed UBI: New York, California, Massachusetts, Connecticut and Illinois all have above average household incomes, but also have about 5% of households earning less than UBI.

U.S. households make less than the proposed UBI

Universal basic income policies have been floating around for decades, and are designed to act as a type of social security, guaranteeing a set amount of money to an entire governed population with no strings attached.

UBI can be a polarizing topic, largely among political party lines. However, if we assume that a proposed UBI represents the standard amount that an American household would need in order to survive, our study found that many Americans are making far, far less than this standard amount determined by elected officials in the most recent proposal.

Overall, our study found that 4.9% of households in the U.S. currently make a lower income than that of the proposed UBI — underscoring the vast swath of the American population that is earning less than what elected officials likely believe to be the standard amount of money needed to get by.

Our study also reveals a few pretty significant regional differences. The top 9 states, as well as the District of Columbia, had the largest percentages of households that make less than the proposed UBI and are all below the Mason Dixon line, suggesting that families in the South make far less per household than what governed officials deem to be enough to make ends meet.

Meanwhile, the states that had the lowest number of households that make less than the proposed UBI were primarily in the North, with seven of those states bordering Canada.

Interestingly, our study found that even states that had households earning higher incomes had large swaths of the population bringing in less than the proposed UBI amount — even when compared to other states. The District of Columbia, for example, boasts the highest median household income of $82,604, yet has the largest percentage of households (8.6%) making less than the proposed UBI. Meanwhile, the median household income in New York was above average (a solid $65,323 in 2018), but it was also one of the states in our study above average for households making less than the proposed UBI, at 5.1%. making less than the proposed UBI, despite its median income being slightly over the average for the U.S.

States with the highest percentage of households that make less than the proposed UBI

As noted previously, the top states with the largest swaths of population that make less than the proposed UBI are all located in the South. The District of Columbia tops the list with a whopping 8.6% of households falling short of the proposed UBI; following the nation’s capital is Mississippi, with 8.3% of households earning less than the proposed UBI, and Louisiana, with 6.9% of households earning less.

Alabama and Arkansas are next, both with 6.4% of households coming up short of the proposed UBI, and Georgia rounds out the top five, with 6.3% of households earning less. Kentucky and New Mexico follow suit, both with 6.2% of households making less than the proposed UBI, followed by West Virginia with 5.9% and South Carolina with 5.6%.

States with the lowest percentage of households that make less than the proposed UBI

Meanwhile, many northern states boast a small percentage of households that earn less than the proposed UBI. Our study found that the state in the best shape is Minnesota, with just 2.7% (or 62,800) households making less than the proposed UBI. Trailing Minnesota is Washington, with 2.8% of households making less than the proposed UBI; North Dakota and Maine with 3.1%; and Utah and Alaska with 3.3%.

Rounding out the 10 states with the lowest number of households that make less than the proposed UBI include Wyoming and Nebraska with 3.4%; Montana with 3.5%; and Idaho with 3.6%.

Methodology

Using microdata from the 2018 American Community Survey from the U.S. Census and hosted on IPUMS, MagnifyMoney analysts calculated the amount of universal basic income (UBI) that each household would receive under the Emergency Money for the People Act introduced into the House of Representatives in April 2020: $2,000 for any U.S. citizen 16 or older and $500 for any citizen under 16. Analysts then calculated the total income of each household and counted those with total incomes below what they would receive from this proposed UBI.

Source: https://www.magnifymoney.com/blog/news/households-make-less-than-proposed-universal-basic-income/