Written by: Isabella Gentry<\/p>\n\n\n\n
Despite the United States being one of the wealthiest nations in the world, 12.9% of Americans live in poverty according to the Supplemental Poverty Measure (Shirder and Bijou, 2024). Among this 12.9%, poverty disproportionately affects women and people of color, leading to higher mortality rates within these demographics (Carbonaro, 2023). In addition to poverty, income inequality is a defining feature of the United States economy. $50 trillion has been taken from the bottom 90% of Americans and transferred to the top 1% and the wages of citizens in the top 1% are skyrocketing at rates higher than GDP growth (Hanauer, 2020). When income inequality is high, people experiencing poverty become trapped and upward mobility is limited. In an attempt to decrease poverty and income inequality, many governments\u2014locally, nationally, and internationally\u2014consider tax credit and basic income programs as possible solutions. <\/p>\n\n\n\n
Basic income programs fall under two main categories: (1) universal basic income (UBI) and (2) means-tested basic income. Universal basic income is a government program that provides everyone with a guaranteed cash payment, regardless of income or employment status. On the other hand, a means-tested basic income only provides payment to individuals who meet specific criteria related to financial status, and government benefits are reduced as recipients earn outside income. In order to fund an income program, the federal government would have to increase existing taxes (income, corporate, and excise taxes) or propose a wealth tax (\u201cWhat Options Would Increase Federal Revenues?\u201d, 2024). Aside from funding, there are several aspects policymakers take into consideration when trying to determine if a government policy will be beneficial. <\/p>\n\n\n\n
One of the primary considerations in evaluating income programs is administration, which plays a central role in the efficiency of a program. To implement a means-tested basic income, the government must establish eligibility criteria for citizens, likely based on the federal poverty line (Hayes, 2025). Next, individuals and families apply to the program by providing the government with the necessary employment, asset, and income information. The government verifies this information, determines if the applicant qualifies to receive the cash payment, and administers the payments accordingly. In order to ensure that all recipients maintain their eligibility, families must renew their applications and update their financial status on a regular basis (Capistrano, 2024). This process comes with high administrative costs and increases the transparency of the qualification system, making it a greater subject for corruption (Franchese and Prady, 2018); since the rules are made public, they can be easily manipulated by those looking to find loopholes. Means-tested programs also create tremendous barriers for people experiencing homelessness who don\u2019t have the proper identification or supporting documents to receive federal assistance (Cackley, 2024). These obstacles often turn income programs into counterproductive systems that prevent government aid from supporting citizens who rely most on it. <\/p>\n\n\n\n
Compared to means-tested, UBI is relatively simple when it comes to administration, given that it provides payments to citizens unconditionally. This implies significantly lower administrative costs since citizens do not have to qualify and apply to receive benefits. Advocates also highlight that UBI is more efficient in providing aid to low-income individuals as it avoids target mechanisms and the social stigma associated with means-tested assistance (Franchese and Prady, 2018).<\/p>\n\n\n\n
The primary concern for means-tested income programs is that they create a financial disincentive to work. This happens because the government accompanies the benefit guarantee (the baseline amount of money that recipients are entitled to upon enrollment) with a benefit reduction rate, which reduces the amount received from the program when the recipient earns more income (Gruber, 2022). Individuals must also maintain below the threshold to continue qualifying for means-tested income. Together, these factors together make it more advantageous for individuals to reduce their work hours and depend on federal aid rather than their wages from work. When citizens are working less, the labour force participation rate goes down, causing prices and deficit spending to rise, productivity to decrease, and an overall constraint on economic growth (Montevirgen, 2025). <\/p>\n\n\n\n
UBI largely avoids these labour market consequences because recipients are not penalized for working more. In fact, a study done in Stockton, California, revealed that full-time employment increased among individuals who received basic income. The study provided 125 participants with a $500 monthly stipend and found that, within one year, the full-time employment rate among the participants grew from 28% to 40%. For some, the guaranteed cash payment allowed individuals to search for jobs that better fit their skills, pursue a more advanced education, or even afford childcare (SEED, 2021). In this way, UBI empowers individuals to work and maintain meaningful careers by providing them with the financial security to do so.<\/p>\n\n\n\n
Income programs are often used as a mechanism for financial redistribution, in an effort to minimize income inequality. By definition, financial redistribution is the process of transferring income or wealth from one group to another. UBI, however, is not designed to serve this purpose. Giving money to all citizens\u2014even the ultra wealthy\u2014limits the government\u2019s capacity to provide adequate aid to individuals with the greatest need (Kearney and Mogstad). This raises the matter of equity vs. equality, where equality values sameness through the identical treatment of groups while equity emphasizes justice and recognizing individuals\u2019 unique needs. While UBI focuses on equality, this approach does not effectively address income<\/em> inequality because there is no transfer of wealth between classes. Means-tested basic income, however, is a practical approach to financial redistribution as it uses a wealth tax to take money from high-income households and transfers it to low-income households. Not only does a means-tested policy more efficiently reduce income inequality, it also empowers the government to provide more support, in the form of higher cash payments, to those who qualify.<\/p>\n\n\n\n As with most welfare policies, there is a considerable cost associated with income programs. The UBI Center outlines exactly how costly it would be to provide all US citizens\u2014regardless of socioeconomic status\u2014with basic income, estimating that, to give each person in the United States $1000 each month, it would cost approximately $4 trillion per year (UBI Center, 2022). This would take an enormous financial toll on the economy, whereas a means-tested basic income would cost only a portion of this amount since it would only provide income to those in need, rather than all US citizens. The discrepancy in costs for UBI and means-tested basic income draws attention to the tradeoff between universality and economic efficiency. <\/p>\n\n\n\n Despite the potential benefits the program could bring, the United States has never fully implemented UBI at a federal level but has launched a series of pilot programs. On the contrary, means-tested programs do exist at a federal level, including TANF, Medicaid, and SNAP, yet there are several barriers to expanding these programs into full means-tested basic income initiatives. These obstacles include significant budgetary commitments, political support, and administrative infrastructure. Until these issues can be addressed, UBI and mean-tested basic income programs compete for the opportunity to address poverty and income inequality in the United States.<\/p>\n\n\n\n References<\/strong><\/p>\n\n\n\n Cackley, A. (2024, February 7). Homelessness: Barriers to Obtaining ID and Assistance Provided to Help Gain Access | U.S. GAO<\/em>. Www.gao.gov. https:\/\/www.gao.gov\/products\/gao-24-105435 <\/p>\n\n\n\n Carbonaro, G. (2023, June 19). Poverty is killing nearly 200,000 Americans a year<\/em>. Newsweek. https:\/\/www.newsweek.com\/poverty-killing-nearly-200000-americans-year-1806002<\/p>\n\n\n\n FRANCESE, M., & PRADY, D. (2018, December). What Is Universal Basic Income? \u2013 IMF Finance & Development Magazine | December 2018<\/em>. International Monetary Fund. https:\/\/www.imf.org\/en\/Publications\/fandd\/issues\/2018\/12\/what-is-universal-basic-income-basics<\/p>\n\n\n\n Freepik. (n.d.). Business man and woman sitting on equal piles of coins<\/em> [Photograph]. Freepik. https:\/\/www.freepik.com\/free-photo\/business-man-woman-sitting-equal-piles-coins_6657303.htm<\/p>\n\n\n\n Gruber, J. (2022). Public Finance and Public Policy<\/em> (7th ed.). Macmillan Higher Education. https:\/\/bookshelf.vitalsource.com\/books\/9781319399030 <\/p>\n\n\n\n Hanauer, N., & Rolf, D. (2020, September 14). The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%\u2014And That\u2019s Made the U.S. Less Secure<\/em>. Time. https:\/\/time.com\/5888024\/50-trillion-income-inequality-america\/ <\/p>\n\n\n\n \u200cHayes, A. (2021, February 10). Means Test Definition<\/em>. Investopedia. https:\/\/www.investopedia.com\/terms\/m\/means-test.asp <\/p>\n\n\n\n Income Eligibility Applications: Ensuring Proper Classification for Free and Reduced-Price Meals in CACFP – Nutrition and Nourishment Collective<\/em>. (2024, October 15). Nutrition and Nourishment Collective. https:\/\/www.nutritionnc.com\/income-eligibility-applications\/ <\/p>\n\n\n\n Kearney, M., & Mogstad, M. (n.d.). Universal Basic Income (UBI) as a Policy Response to Current Challenges AUTHORS. <\/em>https:\/\/www.economicstrategygroup.org\/wp-content\/uploads\/2019\/12\/Maintaining-the-Strength-of-American-Capialism-Universal-Basic-Income-UBI-as-a-Policy-Response-to-Current-Challenges.pdf <\/p>\n\n\n\n Montevirgen, K. (2024). Britannica Money<\/em>. Britannica.com. https:\/\/www.britannica.com\/money\/labor-force-participation <\/p>\n\n\n\n SEED. (2021). SEED. <\/em>https:\/\/www.stocktondemonstration.org <\/p>\n\n\n\n Shrider, E., & Bijou, C. (2025, September 9). Poverty in the United States: 2024<\/em>. Census.gov; US Census Bureau. https:\/\/www.census.gov\/library\/publications\/2025\/demo\/p60-287.html <\/p>\n\n\n\n UBI Center. (2022). Why Not UBI? UBI Center.<\/em> https:\/\/www.ubicenter.org\/what-is-ubi\/why-not-ubi\/ What options would increase federal revenues?<\/em> (2024). Tax Policy Center. https:\/\/taxpolicycenter.org\/briefing-book\/what-options-would-increase-federal-revenues<\/p>\n","protected":false},"excerpt":{"rendered":" Written by: Isabella Gentry Despite the United States being one of the wealthiest nations in the world, 12.9% of Americans live in poverty according to the Supplemental Poverty Measure (Shirder and Bijou, 2024). Among this 12.9%, poverty disproportionately affects women and people of color, leading to higher mortality rates within these demographics (Carbonaro, 2023). In… Continue reading UBI vs. Means-Tested Basic Income: Differing Approaches to Alleviating Poverty and Income Inequality\u00a0<\/span><\/a><\/p>\n","protected":false},"author":4908,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_jetpack_memberships_contains_paid_content":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-4278","post","type-post","status-publish","format-standard","hentry","category-domestic-economics","entry"],"jetpack_featured_media_url":"","uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"post-thumbnail":false},"uagb_author_info":{"display_name":"nityaw","author_link":"https:\/\/sites.lsa.umich.edu\/mje\/author\/nityaw\/"},"uagb_comment_info":0,"uagb_excerpt":"Written by: Isabella Gentry Despite the United States being one of the wealthiest nations in the world, 12.9% of Americans live in poverty according to the Supplemental Poverty Measure (Shirder and Bijou, 2024). Among this 12.9%, poverty disproportionately affects women and people of color, leading to higher mortality rates within these demographics (Carbonaro, 2023). 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