Easing the burden
Ontario tests basic income effect on poverty amid lost jobs
Former security guard Tim Button considers how a sudden increase in his income from an unusual social experiment has changed his life in Hamilton, Ont.
Sipping coffee in a Tim Hortons, Button says he has been unable to work because of a fall from a roof, and the financial boost from Ontario’s new “basic income” program has enabled him to make plans to visit distant family for Christmas for the first time in years. It has also prompted him to eat healthier, schedule a longpostponed trip to the dentist and mull taking a course to help him get back to work.
“It’s making a huge difference for me,” Button said of the almost 60 per cent increase in monthly benefits he started receiving in October from the Ontario government.
Ontario intends to provide a basic income to 4,000 people in three different communities as part of an experiment to evaluate whether providing more money to people on public assistance or low incomes will make a significant difference in their lives. How people like Button respond over the next three years is being closely watched by social scientists, economists and policymakers in Canada and around the world.
“Does it produce better outcomes in terms of education for the kids? Does it produce better health status after three years of this kind of living? Does it produce better affinity with the workplace if there is not a total disincentive to work?” said Hugh Segal, a former Canadian senator consulted by the Ontario government for the pilot project.
Those eligible for the experimental program are people aged 18 to 64 who are unemployed or with an annual income below $34,000 — or under $48,000 if they are a couple living in certain test regions. Single people receive up to $17,000 of basic income and they can keep half of what they earn from working. Canadians on welfare normally would have to subtract all of what they earn from their monthly benefit, so this is an incentive to work. Couples get $24,000.
Technology leaders such as Facebook CEO Mark Zuckerberg and Tesla founder Elon Musk have promoted the idea as a way to address the potential loss of jobs to automation and artificial intelligence.
Ontario Premier Kathleen Wynne said the experiment is rooted in a fear there will be a mass dislocation of jobs not seen since the Industrial Revolution that governments will have to address.
“I see it on a daily basis. I go into a factory and the floor plant manager can tell me where there were 20 people and there is one machine,” Wynne said. “We need to understand what it might look like if there is, in fact, the labour disruption that some economists are predicting.”
Finland is conducting a similar experiment, distributing money to 2,000 randomly selected people. It hopes to learn how it might adapt its social security system to a changing workplace, incentivize people to work and simplify the bureaucracy of benefits. It also being tried on a smaller scale in Oakland, California.
David Wakely, a labour lawyer, said it sounds like a great idea, but he doubts it could be rolled out on a larger scale.
“I just don’t think it’s affordable,” Wakely said. “The numbers are just completely unmanageable. The expense of this thing is huge. It is monumental.”
Wakely thinks it would create a disincentive to work. Other critics say it doesn’t result in any meaningful change and is only a backdoor way to eventually cut other benefits.
Officials running the program in Ontario have found that some people are reluctant to participate, fearing a hidden catch or being caught short when the grant runs out. As of Friday, a total of 793 people have enrolled in the pilot project, up from 400 in October. It’s too soon to gauge whether it has substantially changed their lives.
But Elizabeth McGuire, who heads the Campaign for Adequate Welfare and Disability, has seen a transformation in former welfare receipts already.