Financial Series: Universal Basic Income
Part 2 of 6
By Brandon Currie

This is the 2nd of a 6-part series on the Universal Basic Income. In the first article we discussed the origins of social programs, how these programs are represented here in Canada and the definition of Universal Basic Income (UBI). Let’s build on that foundation by looking at the pros and cons of this program using a specific, Canadian example.

As stated in my first article, the idea of a program guaranteeing basic needs to all has been around since, well, since humans decided to band together in groups to form communities. The idea is that supporting the individual also benefits the whole. Whether or not these plans were implemented in the past is another story. Fast-forward to the present day and the concept of a Universal Basic Income for all is once again trending. This is most likely a direct response to the dramatic change in the employment landscape over the last several years. In the past, a person may have spent his/her entire working life employed by – and loyal to one company – ever confident of receiving a regular paycheck. Nowadays the rise of the Gig Economy – where short term, temporary positions are becoming more the norm than not – has created an unstable, unreliable payment infrastructure. Nothing is guaranteed. Enter the concept of the UBI.

Currently there is no country that I am aware of that has instituted a straight-up, pure, UBI nationally. There are programs that take care of segments of the population, such as India, where there is a program for farmers, and Brazil where it is income-based. So why is there no across-the-board, jumping off point to ensure that basic needs can be met by all? The most prevalent argument against a UBI is the concern that such a program would decimate the job force. Plainly stated, why work if you don’t have to?

In order to try to gain some insight into this aspect of human nature, Canada did indeed perform a universal basic income experiment in Manitoba in 1974. It was a partnership between the federal and provincial governments and was nicknamed “Mincome”. The purpose of this experiment was to assess the social impact of a guaranteed, unconditional annual income, including whether a program of this nature would create disincentives to work for the recipients and, if so, to what extent. Mincome guaranteed that a family’s annual income would never fall below a certain amount. For a family of four in today’s dollars that would be $16,000/year. If they did earn additional money they still received their Mincome cheque, but at a lower amount. For example if they earned $10 over the minimum then their Mincome cheque would be reduced by $5.

Strangely, the information collected was never analyzed by the government. After the completion of the experiment, all 1800 boxes of data were stored in the Canadian National Archives in Winnipeg where, over 30 years later, a researcher by the name of Evelyn Forget decided to review and analyze the material. The compiled data showed:

• The vast majority of Mincome participants kept working their regular jobs.
• Primary wage earners worked a little less, but only slightly.
• There was a small drop in work by teenagers but only so they could stay in school longer, as the family was not desperate for another wage earner.
• The Mimcome allowed the families to jettison the stress of living paycheck to paycheck as the UBI provided a small but welcome cushion.
• It boosted well-being. Hospitalization rates fell significantly, especially mental health-associated problems.

There top causes of stress and stress-related medical issues in our society. They account for a huge portion of absenteeism in the workplace. These results lead me to believe that if you eliminate an income test (like the one taking place right now in the Canadian Emergency Relief Benefit (CERB) where if you make over $1,000/month the relief payment is cancelled), individuals will continue to work as there would be no incentive not to.

It’s amazing what a stop-gap measure can do for an economy. If you combine the security of an unconditional, secure, basic income with the possibilities and opportunities of a free market, you would get more entrepreneurs taking chances on businesses, more freelancers accepting short-term and temporary contracts without worrying about providing for their families and much more willingness to accept commission-based jobs. New world of business, meet the new workforce.

All of this is fine on paper, but how to figure out where to start? In the next article we will sort out how to implement such a program and how it would impact the individual as well as the Canadian economy as a whole.