The future of work and American income

May 7, 2019

There’s a coming storm that will affect just about everyone — artificial intelligence (AI).

It’s potentially so bad that economists have predicted AI will consume a huge number of jobs over the next 15 to 20 years, touching just about every inch of the economy. From manufacturing to professional, legal and medical services, almost everyone will feel something.

And while new jobs will surely develop from AI’s existence, they won’t be immediate. So, some people are going to lose out to a robot or algorithm.

For something that is supposed to affect so many people, politicians don’t seem to be talking about AI, much less providing solutions.

That is, except Andrew Yang, a former technology executive and 2020 Democratic presidential candidate. He’s unique in talking about solutions for AI displacement, though his ideas to remedy the situation aren’t necessarily new.

Next-Gen Assistance?

Yang supports the idea of universal basic income (UBI), which is a steady stream of government-provided income delivered to all citizens with no strings attached. It’s usually not enough to live on alone, but enough to make a difference.

UBI isn’t new — it’s been tried throughout the world (see Finland, Canada and more) — but it’s not a welfare program in the traditional sense. This application of it is more forward-looking, though.

Yang has a background in technology and knows the power of disruption. He realizes AI intrusion can’t be undone and that it’s already underway. He also knows that, most likely, the solution will need to be on such a mass level that it can only be government-provided.

So, in that sense, Yang wants to prepare for what’s on the horizon. And for that he deserves credit. He’s the only candidate talking about this with such fervor.

But for all its forward-looking appeal, Yang’s UBI pitch ironically uses a time-tested solution — guaranteed income. With President Andrew Yang in office (an admittedly unlikely event), everyone will get a check, on-time, regardless of their work status. It’s basically a pension for everyone, even while working.

The Power to Steady the Ship

Given the impending AI storm ahead, guaranteed income could be critical for Americans. That could be especially true for those in low-wage jobs that are ripe for automation, like retail, customer service, warehousing and more. It could take years of education and training to find new work.

The power of guaranteed income cannot be denied. To receive a paycheck no matter what? I know pensioners and Social Security beneficiaries sure like it. The same is true of people who have annuities. It helps steady the ship for many American households.

Pension-less Paychecks

But what if you don’t have a pension, an annuity, or receive Social Security benefits…and UBI isn’t enacted yet?

It’s still possible to create your own pension-like income stream.

For instance, you could use permanent life insurance, which allows you to build cash value within the policy. That cash value can then be used as an income source during retirement.

This would give you reliable income that is free from the ups and downs of the stock market, and also has tax advantages. Plus, you’d have the death benefit to provide for your family too.

Please keep in mind, that is a simplified example. In practice, there are many things to consider. Beyond that, there is also a downside to this strategy — the payment stream isn’t guaranteed for life.

An annuity or Social Security will pay you no matter how long you live. A permanent life insurance policy is limited by its overall value — in other words, once the balance hits zero, the income stream is dry. That said, if premiums continue being paid, the policy will live on.

Financial Confidence

One thing is certain in these times of uncertainty — stable income instills confidence.

The true impact of AI at this point is still unknown. The arrival of automobiles upset carriage companies, but many years later, we’re better off as a result. In the long-run, AI will probably be the same.

Still, right now we don’t know the impact of AI. That’s why guarantees on income could be vital. They could help weather financial storms for American families nationwide.

To receive income no matter what unfolds economically or around the globe is indeed priceless. If nothing more, guaranteed income can help you sleep better at night. And that’s something we could all probably use.

Holly Peterson is the owner of Elite Retirement Strategies and a former radio show host. You can find her online at eliteretirementstrategies.com or by calling 208-252-4345.