September 22, 2014

Features | February 17, 2014
Enough money to survive
The struggle to guarantee income for all
Written by | Visual by Alice Shen | The McGill Daily

Correction appended February 25th, 2014.

In the 1970s, Manitoba was the site of a social experiment. Everyone in the town of Dauphin below a certain income level received a living wage from the government, no strings attached. The project ended five years after it began and was never renewed.

The pilot project was a hard-won victory in a decades-long fight by basic income advocates, a fight that has yielded little-to-no fruit. Oftentimes, there is conflict about an even more basic issue: whether poverty in developed countries is a problem to begin with.

On May 16, 2012, then-Minister for Immigration Jason Kenney dismissed the United Nations (UN) Right to Food envoy’s report on food security and poverty in Canada as “a political exercise.” In the report, which prompted retaliation and defensiveness on the part of Parliament Hill, Olivier De Schutter, the envoy, noted a widening gap “between those living in poverty and the middle- to high-income segments of the [Canadian] population.” According to De Schutter, around 3 million people in Canada live in poverty, and 1.92 million lived in food-insecure households in 2008.

Kenney based his argument that Canada should not be scrutinized around the fact that it is a “developed” country. He’s right: Canada is “developed.” In fact, it is in “developed” countries with sufficient resources to invest in social assistance programs that activists and interest groups are now focusing on the widening inequality gap, and the existence of poverty amidst plenty.

In October 2013, the Basic Income Initiative in Switzerland submitted 126,000 signatures in favour of its proposal for each resident to receive an unconditional basic income of 2,500 Swiss francs a month (or $3,072 in Canada). Unconditional basic income is exactly what it sounds like: the proposed project would provide each recipient with an amount deemed sufficient for survival, without consideration of participation in the workforce. The number of signatures collected in the Swiss case surpassed the 100,000 needed to call a national referendum, so the unconditional basic income proposal will be put to a vote. No date has yet been announced, but laws stipulate it must take place within two or three years.

If the Swiss referendum question were to pass, it would be the first permanent implementation of universal basic income in Europe. Basic income pilot projects have taken place elsewhere in the world, though, and once upon a time – in Manitoba.

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The Mincome experiment

The basic income pilot project ran in Dauphin, Manitoba from 1974 to 1979. It was funded jointly by the Manitoba and federal governments, and was held to determine the effects of an unconditional guaranteed annual income on labour market participation, education, and healthcare. A corresponding experiment was carried out in Winnipeg, focusing solely on labour market participation. It set out to tackle one of the primary arguments against universal basic income initiatives: if people are given a living wage without having to work, they won’t. The experimental payout was provided to about 30 per cent of the residents, and was far from extravagant. The conditions for receiving the money were fairly stringent; families with no other source of income received 67 per cent of the low income cut-off (LICO) value, a commonly-accepted measure of the poverty line, while the amount decreased for families with other earnings, and disappeared once a family reached 120 per cent of the LICO. The experiment ended rather unceremoniously, without even a formal analysis or final report, but the data was retained (albeit somewhat poorly). In 2009, Evelyn Forget at the University of Manitoba revisited it.

In response to an email asking why she thought the experiment ended so abruptly, Forget blamed politics. The 1970s were rife with both political and economic upheaval, including replacement of both the New Democratic Party (NDP) provincial government and Liberal federal government by conservative administrations. “Both of these meant that when Mincome researchers asked for more money, they didn’t receive it,” she explained. “The 1970s were a difficult political and economic time. There were two big oil price shocks which drove inflation to 10 [per cent], interest rates to almost 20 [per cent], and unemployment higher than it had been since the 1930s. The old economic policy tools didn’t seem to work anymore,” diverting the attention of policymakers from eradicating poverty, and toward immediate solutions to the current economic concerns.

Furthermore, the researchers – primarily economists – focused on labour market research, and therefore were more interested in parallel experiments conducted in Winnipeg. So the results from the small Manitoba town were shelved for the following decades, and the experiment was never renewed.

When Forget conducted her analysis on this guaranteed annual income (GAI) experiment in 2009, she stepped beyond the labour market impacts, though there were interesting findings there as well. She found that there was only a slight decrease in the number of hours worked by men, married women, and single women. Specifically, tertiary and secondary earners were most likely to withdraw from the workforce – meaning teenagers and new mothers formed the majority of the cohort that worked less under the guaranteed income scenario.

Forget went on to analyze the impact of the initiative on other social structures, such as education and health care. Specifically, she found that hospital visits fell by 8.5 per cent in the years when Mincome was implemented, and mental health-related consultations were also reduced during that time. The high school dropout rate diminished in the years that Mincome was available to families in Dauphin, indicating that teenager withdrawal from the workforce was correlated with a higher proportion of students finishing high school in the town.

“The biggest gap in our current programs is the way we deal with the working poor”

“I think the results for healthcare and other social programs would be similar to the effects in the 1970s,” she wrote. “Specific aspects of program delivery have changed, but poverty is still a fundamental determinant of health status.”

Forget’s analysis of the Mincome experiment is one of the more comprehensive views on the effects of a basic income system; however, because permanent implementations of basic income structures are scarce, longitudinal analyses over decades are hard to carry out.

A minimum income proposal for Quebec

There is a different but related form of social assistance – minimum income – that’s more widely implemented.

Minimum and basic incomes differ in one crucial way. While basic income is given on an unconditional basis minimum income plans stipulate conditions that individuals must meet, usually including participation in the workforce.

In 2009, a Quebec group, the Comité consultatif de lutte contre la pauvreté et l’exclusion sociale (CCLP) made a minimum income proposal for Quebec. It included a recommendation for baseline financial support at 80 per cent of Statistics Canada’s Market Basket Measure (an alternative measure to the LICO for poverty) for disposable income. That means that individuals who worked an average of 16 hours a week at the minimum wage would receive 100 per cent of the Market Basket Measure.

In Montreal, the 2011 Market Basket Measure for a family of four was $33,614 a year, and $16,573 for a single person. 11.8 per cent of the population lived below this line. Yet the measure is less expensive in municipalities of fewer than 300,000 individuals, and the dollar amount was calculated based on those municipalities. Lacroix, along with Nicholas-James Clavet and Jean-Yves Duclos, also from Université Laval, conducted an analysis of the CCLP proposal in 2011, simulating a sample of working individuals between the ages of 18 and 65. They were looking into the same criticism that motivated the Mincome study: the possible impact of the proposal on workforce participation.

Their simulations of a representative population of Quebec suggest that implementation of the CCLP’s proposal could cause some to drop out from the workforce, but that those most likely to leave are those who have the lowest current earnings. Even this level of work disincentive can have a large effect on the cost of the plan. Additionally, the CCLP’s proposal only extends itself to municipalities of fewer than 300,000 people, preventing its application to Montreal, where the cost of living is higher.

“Guaranteed income [plans] are always implemented on a small scale and targeted towards a very specific population,” said LaCroix by email, noting that though the plans are a good idea, they are typically very expensive. In their study, the Université Laval researchers determined that if work disincentives did occur, the total costs would be around $2.2 billion a year, 85 per cent of which would be borne by the provincial government. In contrast, the Swiss basic income plan is projected to cost $220 billion a year.

It is because of this cost that David Rothwell, a professor in the School of Social Work at McGill, worries about the potential unintended consequences of basic income initiatives. He fears they may come at the expense of redistribution from our current social assistance programs – programs such as the child tax benefit – that are helpful to specific populations. If such consequences were to arise, the basic income model could prove exclusionary or even contribute to inequality.

Such a concern is not unfounded. The UN, Statistics Canada, and the Ontario Association of Food Banks have found that poverty is not distributed equally, nor does it affect individuals to equal extents throughout Canada. In 2013, Citizens for Public Justice reported in their annual Poverty Trends Highlights report that the number of single, unattached working-age adults had doubled in the 30 years prior to 2011, while poverty had been reduced in other family types during the same period. Not only are there proportionally more single working-age adults who are living in poverty, but the LICO poverty line is also slipping farther away from them; their incomes are on average 44 per cent below the poverty line. Lone-parent families, Indigenous peoples, recent immigrants, and people with disabilities are also more likely than others to live in poverty. According to “The Cost of Poverty,” a report by the Ontario Association of Food Banks, “The chances of being impoverished [...] are not set by a lottery-like mechanism, in which everyone’s number has the same odds of coming up.”

But Forget believes that current programs themselves can be exclusive. “The biggest gap in our current programs is the way we deal with the working poor.” She asserted that elements of a basic income have already been implemented for “the easy groups,” including seniors and families with dependent children, in the form of the Old Age Security and the Child Tax Benefit, respectively. It is on the point of adults who are able to work that Forget sees the sticking point, but she remains convinced that a GAI is not only feasible for this group, but “a necessary way of dealing with economic changes that have led to so many difficulties faced by young people attempting to establish themselves in careers.”

The Basic Income Canada Network (BICN) is advocating for exactly this income security for working-age adults. In its BIG Push Campaign, the organization hopes to raise awareness about and build support for basic income in Canada, such that all three major age groups – children, working-age adults, and seniors – can be covered.

The moral problem

While economic feasibility of basic income plans already provide significant fodder for debate, “Most arguments against basic income have [...] concentrated on moral considerations,” as Danish academics Erik Christensen and Jørn Loftager report in their 2011 paper “Ups and Downs of Basic Income in Denmark.” Christensen and Loftager state, “One of the prominent standard arguments in the Danish debate against basic income is that it is simply morally wrong to allow able-bodied people to live on public transfers without doing anything in return.”

Such a fear of ‘freeloaders’ is fundamentally built into a system where work is deemed virtuous – its own moral good. Psychological experiments aplenty have shown that when individuals believe someone is ‘cheating,’ they display hostility and seek to punish that individual. As the authors of the paper emphasize, once economic feasibility is put aside, the morality of basic income becomes the crux of the question. One imagines that even if a proposal were wholly economically sound, the moral question would still be relevant, and perhaps prohibitive to the implementation of basic income.

Similar questions of morality are frequently raised in response to efforts to widen the social security net for all. In the 2012 Quebec student strike against tuition hikes, the strike’s critics prominently targeted students’ pursuit of educational goals that would not be ultimately lucrative (media coverage was awash in attacks on Arts degrees) and argued that students should work in order to afford higher education. The criticism is based on the same premise that government handouts are in some way morally unfair, and that if individuals want financial security, they should should work for it; this premise is a cornerstone of austerity.

“One of the prominent standard arguments in the Danish debate against basic income is that it is simply morally wrong to allow able-bodied people to live on public transfers without doing anything in return”

“If we as a society believe that we are all equal, then from a moral perspective our society should ensure that we are all equally free from poverty,” said Kelly Ernst, BICN Chairperson. “We are to be valued all equally regardless how we contribute to society.”

Other moral concerns that have been raised, according to Christensen and Lofthager, include the impact of basic income on keeping individuals away from the labour market. The worry is that basic income would contribute to existing marginalization forces within society, and create a dependency upon the state that could detract from the individual autonomy of people receiving the money; however, many supporters of basic income emphasize that a basic level of funds is necessary to give individuals autonomy within society, and a social contract with the state is no greater in the case of basic income than in any other social assistance program.

“One of the biggest benefits of a GAI is that it treats people with respect. It encourages independence,” emphasized Forget. Though she believes in the feasibility of a GAI, Forget acknowledges an overarching program like that introduced on a small scale in Dauphin is a “long-term goal,” achievable by tying together and expanding related existing programs. Before that goal can be realized, we must understand the role that capital plays in our society. It is a means of survival, rather than a good that is doled out or withheld as reward or punishment for playing by the rules of a capitalist structure.

In an earlier version of the article, The Daily stated that the Comité consultatif de lutte contre la pauvreté et l’exclusion sociale (CCLP)’s proposal for minimum income would exclude municipalities with populations greater than 300,000, therefore excluding Montreal. The CCLP’s proposal would, in fact, include all municipalities, but the dollar amounts are calculated based on municipalities of fewer than 300,000.

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