May 24th, 2020
Time to take a serious look at a Basic Income
The pandemic has exposed the many gaps in income supports for Canadian workers, so it's not surprising that it has renewed conversations on all sides about the concept of a basic or minimum income. Here's my latest column on the subject:
COVID-19 has obviously changed our lives in the short term, and now there is a growing consensus that the pandemic will also bring more long-lasting changes to our society—how we value workers, how we treat our seniors, how we house the homeless, how we protect the environment, and more.
One topic that is surfacing more and more often is the idea of a basic income. One of the first things we learned when the pandemic began was that Employment Insurance was completely inadequate to protect workers from lost income. Sixty percent of workers do not even qualify for EI.
So the government brought in the Canada Emergency Response Benefit, which provides $2000 per month to workers who have lost their income because of the pandemic. CERB is an essential lifeline for millions of Canadians, but there are still hundreds of thousands who fall through the cracks of the program’s qualifications and therefore can’t access it.
CERB has raised some interesting questions about how we take care of vulnerable Canadians. Some people have commented to me that $2000 per month is simply not enough to survive on with dignity in Canada. But we only provide about half that to people who are on social assistance and disability pensions, and only about 75% of that for the combination of Old Age Security and the Guaranteed Income Supplement.
These conversations have raised the profile of a basic income in Canada. How would such a program work? Would it discourage people from working? How could we afford it?
Some of those questions can be answered by looking at the results of pilot programs in Canada and elsewhere in the world. It turns out that a properly designed basic income program does not discourage people from working, although some parents may choose to stay at home longer with infants and young people may choose to stay in school longer. In many cases it has given people living in poverty the hand up they need to start their own businesses and get back to meaningful work.
The cost of the program obviously depends on how many receive the benefit. A universal basic income would entail every adult in Canada receiving the benefit and, while that would have been a good idea in this pandemic to temporarily support everyone who needed it quickly and with a minimum of red tape, it is unsustainable in the long term.
My former colleague, Guy Caron, is an economist who has studied and promoted what he calls a Guaranteed Minimum Income, or GMI. This would simply be a guarantee that no Canadian should would live below the poverty line. The GMI is meant to complement our social services, not to replace them, although it could be integrated with existing federal programs that are essentially forms of basic income, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Benefit. Caron calculates that a GMI would cost about $30 billion per year to implement in Canada.
It may sound like a lot of money, but it would save billions in the long term. Hospital workers know that a lot of our health care expenses go to treating poverty related illnesses, not treating disease. By keeping all Canadians above the poverty line, we will have healthier citizens, youths who stay in school long enough to qualify for the good jobs of the future, young people who aren’t tempted by a life of crime to make ends meet. And money provided to low-income Canadians circulates in the community, instead of being moved offshore or spent outside the country as a lot of corporate subsidies are.
We can eliminate poverty and all the negative impacts that it has on people. It’s time to take a serious look at basic income in Canada.