Businesses despise the plan, even if it’s better for them.

The likely mechanisms underlying the positions taken by business discussed above ought to be spelled out explicitly. Firms whose business strategies involve the employment of local labour will lose out in any policy that provides an outside stream of income. A world where labour has no alternatives to work is one where their reservation wage will be relatively low, and in order to survive they will have no choice but to sell their labour on the market. By contrast, an income maintenance policy that provides workers with an exit option from the labour market is one that will grant them vastly improved bargaining power and one, therefore, that employers will oppose.

In the context of bilateral bargaining over wages, a generous and universalistic basic income will give workers external options where otherwise they had none. The most reasonable hypothesis therefore is that their negotiating position will improve. Moreover, if we expect the basic income to reduce the labour supply to some extent—as most studies show (Burtless 1986; Hum & Simpson 1993; Keeley 1981; Widerquist 2005; Calnitsky and Latner 2017)—apart from changes in bilateral bargaining, we ought to expect the basic decline in supply to force up the wages offered by employers. Income maintenance programs that are conditional on work, such as the EITC, will have the opposite effect: they increase the labour supply and lower wages, and therefore may be appealing to employers (Rothstein 2010). Notwithstanding this basic logic, a standard claim is that the guaranteed income would operate as an “employer subsidy,” lowering wages through some unspecified mechanism. As Block and Somers note, similar claims were made for the Speenhamland precedent, an episode from English poor law history where an income floor supposedly encouraged employers to hire at below subsistence wages; the authors, however, find evidence undermining the usual Speenhamland story (2003). Moreover, a recent empirical paper on the Mincome experiment shows that, relative to controls, wages offered by firms went up and not down (Calnitsky 2018).

One final point worth adding is that on the basis of the evidence I have presented above, business objections concerning the labour market appear more significant than those related to the costs of income maintenance programs: if the cost of the program was the main obstacle, all variants of income support would have been rejected rather than solely those proposals, or aspects of proposals, that facilitated labour market exit.

There are ways to dispute the above arguments for business consensus. One may argue that business will benefit from improved consumption power among workers, or that a work-force with improved outside options will facilitate deeper forms of worker-employer cooperation that are ultimately in the interests of employers (Wright 2004, 2006). Perhaps they will serve as the cornerstone of a new “class compromise” that ultimately stabilizes economic life (Wright 2000; Przeworski 1985). While I do not reject these arguments out of hand, if any of them are indeed true they are likely best understood as either in the long-term rather than short-term material interests of firms, or acceptable only as a “second best” option. Further, it appears that they were not present in the minds of business lobby representatives who were emphatic in their demand that work be non-optional. While business groups may not be altogether visionary, it is reasonable to assume that they were not mystified about their immediate material interests.