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What Is a Guaranteed Minimum Income?

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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 29 August 2016
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There are two major senses in which the term “guaranteed minimum income” can be applied. The primary definition of the term relates to a social construct or theory that requires all citizens of a nation to be provided with income or services that allow for a basic survival existence. A guaranteed minimum income is also an income model used in some professions, to determine the minimum a worker will be paid while allowing for bonuses, tips, or commissions.

In social theory, the concept of a guaranteed minimum income relates to a belief that a government must strive to provide basic means of survival to all citizens. The means to obtain of food, clothing, shelter, and other basic necessities are considered by some social philosophers to be part of the social contract between a government and its citizens. While able-bodied citizens are generally intended to obtain these necessities through work, the guaranteed minimum income is meant to help cover citizens who are unable to maintain a regular job, such as the elderly or disabled.

A guaranteed minimum income is often created through laws and social programs. Student loans, for instance, allow people without the means to borrow enough money to obtain an education. Setting a minimum wage protects the income of working people, ensuring that they are paid fairly for their work. Health insurance and pension plans for the elderly work to guarantee that the elderly are not lost to penury after retirement.

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While a guaranteed minimum income may be a noble idea, it tends to be difficult to put into practical use. The cost of programs needed to guarantee a living wage for all citizens often requires the imposition of taxes and the expansion of government mandate, which some citizens find objectionable. Some versions of the theory require that qualifying participants perform some community service or volunteer work to help defray the cost of their wages, much as the Depression-era workers in the Works Progress Administration were paid for restoring or improving community infrastructure.

In terms of income models, a guaranteed minimum income is often used to attract new or entry-level workers to a particular job. Frequently used in sales jobs and the service industry, a minimum income is the base salary for a worker, which can be augmented by high performance. A telemarketer, for instance, might have a guaranteed hourly wage of $11 US Dollars (USD) per hour, but receive a bonus for every sale made. This model allows workers to rest assured that they will be paid a basic wage for their work, while providing incentives to perform at a high level.

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