Promote adoption of universal basic income program
In March 2016, the Canadian province Ontario set out on an experiment to see whether the implementation of an universal basic income would help those affected by poverty. According to , a basic income is “a payment to eligible couples or individuals that ensures a minimum income level, regardless of employment status.” Basic income differs from other social assistance programs in that it can be “given to anyone who meets the income eligibility criterion” of being unemployed or earning under CAN $34,000 annually, is “generally simpler to administer” because payments can be made through a tax credit model, and can consolidate separate welfare programs into one payment system.
The experiment launched in June 2017 in several counties within Ontario. According to a , 4000 people are intended to participate in a year-long pilot program, with 400 currently participating. The way the experiment is set up, participants will be randomly assigned to either the basic income group, which will receive monthly BI payments for the three years of the program, or a comparison group, which will not. The goal of the experiment, according to Ontario’s Basic Income Pilot Commission, is to measure the effects of BI payments on the participants in several categories, including food security, health and well-being, housing stability, education and employment. The BI payments will be set up so that those in the payment group receive 75 percent of the Low Income Measure a year, coming out to about CAN $17,000 a year for individuals, minus half of total earned work income, and CAN $24,000 a year for married couples, minus half of total earned work income. Those with disabilities will receive an additional CAN $500 a month, and those receiving other benefits, such as child support, will still receive those benefits.
While this experiment has been underway for less than a year, it has already begun to show improvement in the lives of those participating in it. According to the abovementioned CNBC article, the participants who were interviewed have all experienced improved quality of living thanks to the additional income. One participant, Tim Button, was able to receive medical and dental treatment he had been putting off, and plans to use the money to take courses to help him find a job. Another participant, Dave Cherkewski, said that the extra $750 a month he is receiving has eased the stress of daily life and mental illness that has kept him out of work since 2002, and will allow him to act on his goal of helping others who suffer from mental illness. Other participants stated that the benefits have given them relief from bills, and removed their worries of how to keep food on the table or a roof over their heads. The improvement in the lives of the participants in this program shows the potential of basic income programs to alleviate poverty and increase quality of life.
The potential benefits of basic income programs have already been shown in just these first 10 months of the experiment. However, some express concerns about the practicalities and expenses involved in expanding the program to a wider level. Critics of the program fear the potential disincentive for beneficiaries of basic income to find work, per the aforementioned CNBC article, or raise concerns about the cost of the program and the prospect that it will wind up being a backdoor method to cut other benefits.
To address the concern that a basic income program will not produce meaningful change or improvement in the lives of its beneficiaries, one need only look at the participants in the current experiment. Of those participants interviewed by CNBC, all reported improvements in their living conditions. Most experienced increased food security, alleviation from financial burdens of bills and mortgages, increased access to medical and dental care, and an overall rise in well-being.
This reported increase in well-being from the BI program, contrary to the concerns of sceptics, has not disincentivized the interviewed participants from seeking work. The two interviewees who reported being unemployed, Tim and Dave, both planned to use their increased benefits income to assist them in their job search and the pursuit of their goals. In addition, according to the CNBC article, the system is set up so that those on the BI program are allowed to keep up to half of what they earn from working. With the current welfare system, Canadians would have to subtract all of their earned work income from their monthly benefits, so the BI program gives more incentive for beneficiaries to work than the current system. Thus, the way the system has been set up, as well as the anecdotal evidence of the current participants, shows that the concern about a disincentive to work is not a serious issue.
The issues of a basic income program being used as a method to cut other benefits, and the issue of paying for a universal basic income program, can be addressed together. According to the BI Pilot Commission, within the current experiment, those participants receiving other forms of aid, such as child support, continue to be eligible for those benefits under the BI program. While this is currently the case, moving forward it may be more practical to have other benefits factor into a UBI system in order to streamline the process. For example, within the current experimental system, those participants with disabilities receive an additional CAN $500 a month. This method could be applied to other benefits, such as child support, unemployment insurance or social security-style retirement payments, so that all welfare payments are made as a part of the UBI system. This could be more cost-effective, since the Ontario BI Pilot Program’s consultant stated that it is easier to administer given thathe BI payments can be done via tax credits.
Finally, to address the issue of cost for the program, the actual costs of administering a universal basic income program still need to be worked out, and the eventual results of this experiment will provide information on the specific costs. In the meantime, we can consider elements we have available to determine potential costs and benefits. If a UBI is able to consolidate all direct welfare payment systems into one, and that system is easier to administer, then the reduction in administrative costs by transitioning to the UBI may reduce overall costs of welfare programs. We should also consider that the benefits of running the UBI program, as shown by the increase in life quality among the current participants, can outweigh the costs of administering the program in terms of returns to the economy. The participants have been able to increase their financial security and find work due to this program, which means that more money will be flowing through the economy as these BI checks are used to purchase goods and services, or pay down debts so that participants are more freely able to spend money in the future. So if a moderate tax increase on wealthier citizens is able to fund this UBI program, which will distribute income among a large number of low income households, then there will be a net benefit to the economy as a whole from increased spending by individuals in their local communities.