Debating Universal Basic Income
Policy Brief by Jami McElrea & Anson Shen
The debate around basic income is increasingly prevalent as the policy responses to the ongoing COVID-19 pandemic raise questions about safety nets and social services. Programs like the Canada Emergency Response Benefit (CERB), CRB, CRSB and CECB mimic basic income programs by supplementing or replacing lost wages payments to eligible participants [2]. The popularity and early economic successes of these fiscal policies have sparked a conversation at provincial and federal levels about the viability of a permanent Universal Basic Income (UBI). In April 2020, fifty members of the Senate proposed to amend the CERB to become a “crisis minimum income to all who are in need” [3]. However, the evidence is not totally one-sided. The BC Basic income panel recently concluded that strengthening existing social programs would be more effective than a UBI.
The Argument for UBI
The four defining principles of basic income are simplicity, respect, social inclusion, and economic security. An early attempt at basic income was the Manitoba Mincome experiment in the 1970s, which attempted to address poverty and to “evaluate the economic and social consequences” of a negative income tax program [4]. The experiment provided $3,800, $4,600, and $5,400 a month for a family of two adults and two children aged younger than 15 years, adjusted according to family size for smaller and larger families [4]. The experiment revealed that a universal income can improve the socio-economic well-being of society. In terms of healthcare and wellness: over 50% of participants smoked less, 48% drank alcohol less, 83% felt depressed or anxious less, and 81% felt more confident in themselves [5]. The Mincome experiment showed that three-quarters of participants who collected the basic income payments continued to work and kept looking for work beyond “low paying dead-end jobs to jobs with better working conditions and with improved long-term opportunities” [5]. The additional income gave participants the opportunity to find better alternatives.
Basic income manifests commonly as UBI, a program in which periodic cash payments are distributed to everyone in a group. Many advocates point to the results of studies like Mincome to argue that UBI is a policy initiative that can address issues like cyclical poverty by improving health, reducing stress, and providing the stability to invest in human capital and find better jobs. Basic income may also alleviate the impact of job losses caused by technological advancements like automation and disruptions like climate change and pandemics. Poverty rates in Canada fell by almost half between 2014 and 2018, with child and senior poverty rates falling by almost half [1]. This success stems in part from federal basic income programs like the Canada Child Benefit and the Old Age Security/Guaranteed Income Supplement for seniors.
These programs did not provide a universal basic income, rather were targeted towards specific groups, but still serve as evidence of the transformative capacity of direct monetary transfers.
The Argument Against UBI
On July 3rd, 2018, the government of British Columbia unveiled an expert committee to “test the feasibility of a basic income in BC and help find ways to make life better for British Columbians'' [1]. The expert panel on basic income was established in response to the Confidence and Supply Agreement between the BC Greens and the BC New Democrat Party Caucus. This agreement represents a commitment to make life more affordable with a provincial poverty reduction strategy that analyzes the real causes of homelessness, affordable accommodation, support for mental health and addiction, and income security. One objective of the panel was to consider the viability of a basic income in BC and to support the simulation of various models to identify its impact and the financial implications. Another objective was to examine BC’s existing social support system and the impact of basic income on social programs. The panel conducted a litany of research, consisting of over 40 studies that describe the current system and gaps within it, analyze design and implementation considerations of UBI in the BC context, and suggest program and system reforms.
The evidence, according to the panel, supports two main conclusions: first, that there is limited evidence of a transformative shift towards mass job loss; but second, that the current level of precarious work should be a concern, as it has reduced the proportion of low skilled jobs that have good working conditions and proper wages. The main question is whether UBI is the right policy response to persistent worker precarity. The panel argues that greater support for workers in precarious jobs would be provided by more direct policy responses such as enhanced employment standards and labour relations regulation.
Recommendations from the BC Panel
The panel concluded that basic income should not be implemented at this time as there are more effective ways to address issues directly. The panel contradicts several key claims made by proponents of UBI. The report argues that assertions like that UBI is easy to implement through the tax system, that it will pay for itself, and that there will be an end to work as we know it due to automation that emphasizes the need for it, are not true.
The panel recommends a mixed system that applies different approaches in different circumstances and that addresses the needs common to all low-income households, such as adding a new extensive rental assistance benefit. They also recommend targeted support for youth ageing out of care, women fleeing violence, and people with disabilities, as well as recommending the overhaul of the Disability Assistance Program so that it focuses on dignity and support. The report also recommends improved earning supplements for low-income earners and policies that create a just labour market that improves the wages and the job conditions for low-skilled, low-income workers. The panel explains that all these recommendations, with specifics laid out throughout the report, create a complete system to move BC to a more just society [1].
According to the BC Basic Income Panel, provincial programs benefit from targeting specific circumstances in a way that a broadly applied UBI might not be able to do as effectively. Within the fiscal context of BC, the panel determined that, even if other programs were not eliminated, the pressure on the budget due to UBI would preclude needed reforms to these programs and result in their erosion over time. Moreover, the panel noted that a BC basic income pilot would not provide evidence on the long-term impacts. However, they did maintain that they understood that future BC governments may wish to reinvestigate universal basic income as the labour market changes, and that, regardless, reforms to the current system would allow for greater effectiveness and should be made.
Since the implementation of the CERB, many conversations have been generated around the possible implementation of a UBI for Canada. The Mincome experiment done in the 1970s is a framework many have looked towards for guidance and research because of it being the only BI pilot project in Canada. In contrast, the new BC panel report on BI advocates for strengthening existing social programs instead of implementing a universal program. The COVID-19 pandemic has given the country a unique opportunity to illuminate and experiment with different welfare policies. The new conversations on whether the government should implement a UBI or look towards strengthening the existing social programs can generate research that can better the quality of life for Canadians. The debate surrounding basic income is not one of progressives versus conservatives, but rather a policy debate as to which measures best serve the needs of specific populations. Ultimately, both perspectives are attempting to explore the best option for a more equitable society for Canadians, whether that be through focusing on strengthening current social programs, or by promoting a universal basic income.
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[1] Green, David, Jonathan Rhys, and Kesselman Lindsay. 2020. “Covering All the Basics: Reforms for a More Just Society Final Report of the British Columbia Expert Panel on Basic Income.”https://bcbasicincomepanel.ca/wp-content/uploads/2021/01/Final_Report_BC_Basic_In come_Panel.pdf.
[2] Parliament of Canada. 2020. “Bill C-13.” March 25, 2020.
https://www.parl.ca/DocumentViewer/en/43-1/bill/C-13/royal-assent.
[3] Lankin, Frances and Kim Pate. 2020. COVID-19 Pandemic – Minimum Basic Income. Ottawa: Senate Canada.
https://99ef1c2f-cf4f-4886-a2a6-e608d33a7c01.filesusr.com/ugd/138236_ba7a4dd75e85420994 980904ba220a12.pdf.
[4] Simpson, Wayne, Greg Mason, and Ryan Godwin. 2017. “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later.” Canadian Public Policy 43, 1. 85-104. https://www.umanitoba.ca/media/Simpson_Mason_Godwin_2017.pdf.
[5] Ferdosi, Mohammad, Tom McDowell, Wayne Lewchuk, and Stephanie Ross. 2020. Southern Ontario’s Basic Income Experience. Hamilton: McMaster University.
https://labourstudies.mcmaster.ca/documents/southern-ontarios-basic-income-experience.pdf.
[6] Green, David, Jonathan Rhys Kesselman, and Lindsay Tedds. 2020. “Considerations for Basic Income as a COVID-19 Response.” The School of Public Policy Publications 13, 11. 1-15. https://doi.org/10.11575/sppp.v13i0.70353.
[7] Giroux, Yves. 2020. Costing a Guaranteed Basic Income During the COVID Pandemic. Ottawa: Office of the Parliamentary Budget Officer.
https://www.pbo-dpb.gc.ca/web/default/files/Documents/Reports/RP-2021-014-M/RP-2021-014- M_en.pdf.