Dear "why not cut everyone a $2K cheque" crowd:

I will be talking about this tomorrow at the Broadbent confab about basic income Thurs aft 1 pm ET, register here: https://www.broadbentinstitute.ca/would_a_universal_basic_income_guarantee_a_good_life_for_all_canadians?

A few thoughts about the key issue: how much? https://twitter.com/ArmineYalnizyan/status/1260178288766529536

There are as many definitions of what people mean by Basic Income as the number of people using the term.
It is almost NEVER universal, and when you start asking questions the speakers usually walk some of their talk back.
/3

To clarify what problem the speaker hopes BI will solve, ask what amount of BI.
This will reveal if the goal is reducing poverty, or streamlining the thicket of administrative/eligibility rules; stabilizing volatile income, or readying for when the robots eat allathe jobs.
/4

In Canada we have had four rounds of ideation about basic income/guaranteed annual income since the 1970s.
Two have been on-the-ground pilot projects. Two never got off the drawing board.
Let me walk you through the "how much" story.
/5

First Pilot Project
Manitoba Mincome (1974-78)
4,000 low-income residents were eligible.
Singles received $1,255; family of 4 got $3,301 (60% of poverty line at the time, by design).
The amts were established in 1972, so fam of 4= ~$21K in 2020$. BUT /6

I don't think the amounts were ever inflation adjusted after the design and it took from 1972 to 1974 to roll out the money.
In 1974, the amount for a single =$6.8K in 2020$, for a fam of 4= $17.9K
By 1978, when program ended, singles= $4.8K in 2020$, fam of 4= $12.6K

/8

Definitely not about ending poverty, and - to be fair - never designed to do so. But a nice lift for a lot of families, and kept a lot of people in school who would have otherwise worked....in the 1970s.
Different world now.
Let's fast forward to 2017, and the Ontario BI pilot
/9

I'm not going to 2020$ these figures, but in 2017, as in Manitoba in the 1970s, the pilot group entitled 4,000 ppl aged 18-64 (working age) to
$16,989/yr (if single) or $24,027/yr (if couple)
+$500 if living with disability
-50% of earned income [100% of EI benefits].
/10

The explicit goal of the Ontario Basic Income pilot was to bring this group, on social assistance or not, to 75% of the poverty line (LIM), adjusting for family size.

My thoughts summer 2016 <final form of pilot https://www.thestar.com/opinion/commentary/2016/07/19/basic-income-how-about-basic-services.html
And in Jan 2017
https://www.policyalternatives.ca/publications/monitor/redistribution-through-basic-income
/11

The BI $s in the Ontario and Manitoba pilots were less than CERB's $2K/mth.
Some see $2K as the new UBI.
But the goal of CERB was to KEEP PEOPLE HOME to contain the contagion, rather than look for a job/income.
This is not usual goal for income supports for the working age.
/12

Let's roll back the clock to the other two ideas about BI.

1985, Macdonald Commission proposes rolling all forms of income support into 1 flat benefit: $2750 for adults, $750 for kids. (in 2020$ $6039 for adults, $1647 for kids)

What's gone: EI, OAS/GIS, Family Allowance
/13

The Macdonald Commission report recommendations was never brought forward as a proposal by the federal government.

/14

In 1993, after the collapse of the cod fisheries, a desperate Newfoundland and Labrador came up with a different approach to income support, rolling up all dollars that came from the feds and supplementing with some prov $ to create a single flat benefit
/15

The House Report of 1993, from Newfoundland and Labrador, proposed a single flat income benefit for residents of $3K per adult and $1.5 per kid.
In 2020$: $4,810 per adult and $2,404 per kid.
(Seniors incl in both Macdonald Commission and House models)
/16

Note seniors and kids would lose mightily under both proposals. Our guarantees for those too young and too old to work, at the federal level alone, are far more generous than what was envisioned as a single flat benefit.
Today seniors and kids get federal guarantees of....
/17

Today the federal Canada Child Benefit guarantees $6.6K minimum income for children under age 6, $5.6 for kids 6-17.
Seniors are guaranteed a minimum income of $18.2 through federal OAS and GIS alone.
There are also provincial programs.
The working aged, tho..trickier problem
/18

For the working age population, the challenge is balancing the need for support, whilst not encouraging laying about. We've been oversteering in the latter direction for decades, but oversteer we will do, forever; because it's not an easy needle to thread.
BI is no cure
....
/19

BI isn't the solution to our problems for the working aged because one size fits all flat benefits don't solve different problems. They solve one problem (and none of them include eliminating poverty).
Our problem is we have two problems, maybe three, for the working aged
/20

First we need a floor, a minimum below which nobody will fall. We've got one already: welfare,
Administered by provinces/territories; different levels and rules everywhere; ridiculously cumbersome and punitive everywhere; and everywhere and wholly inadequate to live on
/21

Welfare in this country is a punishment, not a support, the result of many years of "reform" from late 1980s to mid 1990s, when the political bias for action in all jurisdictions was tax cuts + welfare cuts.
We need welfare reform to improve adequacy and reduce red tape. But
/22

Please do not imagine that BI is the solution for even this basic problem. Because basic support can never occur without rules.
Shd you get BI if you live in a million dollar house? Have a late model care? Have $500K in RRSPs?
How much cd you earn before giving some back?
/23

Can't duck the eligibility issues for BI either. Will never be a CERB - just apply through the front door and we'll do our "integrity" at the back door (next year's tax returns)
Won't happen.
But there is a thornier problem for the working age population. Work.
/24

Welfare supports those who can't work, episodically or chronically. It's emergency support for some, longer-term/lifelong for others.
EI is different, aiming to stabilize workers' incomes during (relatively short) periods of unemployment.
Tricky given current job trends.
/25

EI was designed to prevent huge fluctuations in purchasing power among workers who temporarily lost their jobs. It's an automatic stabilizer because it flows money to sectors, regions and whole economies as needed during job loss.
It's also had its failings, for decades.
/26

After 4 rounds of "reforms" (1990,1992 xConservatives; 1994, 1996x Liberals; 1st by withdrawing $2.1B in fed funding from what was a tripartite fund, like everywhere in the world except the U.S.; each subsequent round gutting coverage further) EI didn't reach most jobless
/27

Wrote about it in 2009, a(surprisingly, thankfully) short-lived job market recession at aggregate level (not for ON, tho) https://www.policyalternatives.ca/publications/reports/exposed-revealing-truths-about-canadas-recession
When Covid19 hit, no secret EI couldn't do the job.
Dec 2019 (latest data) only 39% of jobless got EI, (just 32% of jobless women)
/28

So the feds designed CERB. Better coverage. Addressed a wicked problem: volatile hours/incomes, low earnings of the underemployed and gig workers. A non-trivial part of the job market, tho measures are poor and tell different stories.
But CERB isn't a long term solution.
/29

To be brutally honest, $2K a month is more than some people made working.
How do you deal with very real work disincentives when, even in the middle of a pandemic, we have very real labour shortages as well as massive labour surpluses?

/30

It's hard designing good income support for the working aged.
It's only going to get harder after Covid19 blows through, because of population aging.
A smaller cohort of working age people will have to support more people too old, too young (too sick) to work than ever
/31

When we get to the other side, we'll need programs that build resilience for these workers who are doing all the heavy lifting for everyone.
They are also the primary tax payers, supporting programs, income supports and services for everyone.
/32

Gov't coffers get most of their $ from personal income taxes.
Working age people pay most personal income taxes.
At the aggregate level, household incomes may not recover for a long time after Covid19. This makes tax hikes a difficult political ask + raises fiscal pressures
/33

To ask the working aged to pay more taxes for a basic income for other working aged people to receive, while seeing nothing for the more money they are paying, is highly unlikely to achieve.
Even if you achieve it, it is not socially, politically or fiscally sustainable.
So
/34

We have to look at the post Covid19 income support options very differently.
Basic income is not a solution, IMHO.
Other income supports maybe, at the margin (GST refundable credit?)
All "more money in your pocket" solutions have one huge drawback...
/35

Most low-income ppl who will receive the cash are renters. Biggest household expense: rent.
Without rent control (non-starter given balkanization/politics at sub-national level) income support puts $ in one pocket, out the other.
Redistribution = funneling tax $ to landlords
/36

So we need to reimagine not just redistribution but *pre*distribution.
Better jobs (more enforceable workplace health and safety protections, less subcontracting, better pay)
Better basic services irrespective of income (drugs, dental, vision care, childcare, eldercare...)
/37

This is what I will be spending a good deal of the coming weeks/months noodling about, and happy to read your ideas too.
We need to think this through together.
I get how potent the BI dream is, but it's just that. A dream. Let's make the #FutureOfWorkers a better reality.
~fin~