The COVID-19 pandemic shows us what universal basic income could look like in Canada
When the novel coronavirus pandemic took hold in Canada and shutdowns began — closing businesses, leaving hourly workers hanging, and forcing many of those laid off to apply for unemployment — millions of Canadians worried how they would make ends meet.
In late March, the Trudeau government released a statement announcing the Canada Emergency Response Benefit, which allowed many of the Canadians affected by the pandemic to collect $2,000 per month. “No Canadian should have to choose between protecting their health, putting food on the table, paying for their medication or caring for a family member,” read the Department of Finance press release on March 25.
The move was heralded by many for providing essential financial support during a difficult time. But, some advocates have asked, what happens once the pandemic is over? Even before the pandemic, countless Canadians were forced to choose between essentials, like food or medication, due to a lack of economic resources. And after the pandemic, the number of Canadians experiencing hardships is likely to be much greater. Addressing these needs long-term will require a more comprehensive approach.
The concept of Universal Basic Income (UBI) — a policy where governments provide a basic economic safety net through recurring payments paid out to all citizens — has been around for a long time, and UBI programs have been attempted around the world with notably positive effects. A study from the Stanford University Basic Income Lab found that in low and middle-income countries, UBI policies led to poverty reduction and, across all of the countries studied, improvements to health and well-being were observed.
Canada has flirted with the idea of UBI twice in the past: first during a study based in Manitoba in the 1970s, and another in Ontario between 2017 and 2018. Unfortunately, both were stopped before a proper wide-scale analysis could be completed.
However, a 2011 review of the Manitoba study found a number of positive outcomes for the more than 2,000 households who received support, including a decline in hospitalizations, reduced doctor visits, as well as improvements to mental health. Results in Ontario — though limited due to the study’s premature cancellation — were also positive, with respondents improving their diets, smoking and drinking less, and reporting lower levels of anxiety.
One of the main arguments in opposition to UBI as a policy is that many believe it would discourage people from working, since they could simply stay home and collect benefits instead. However, the evidence found in Canada doesn’t seem to support that concern — in both the Manitoba and the Ontario studies, participants continued working despite receiving benefits.
Predictably, programs like this can be expensive, but the Ontario study suggests the savings to health-care services could at least partially offset the costs of the program itself. And overall, economists that have modeled the effect of UBI show that the net economic effect would be beneficial. A U.S. study conducted by the Roosevelt Institute found that a UBI that paid each American $1,000 per month would grow the economy by about 12 to 13 per cent.
UBI Works, a Canadian organization comprised of supporters from the business community, researchers, and economists, has made the business case for why a basic income plan should be introduced in Canada. On their website, they state that “UBI is an economic need that puts markets in service to humanity, installing the plumbing into capitalism that adds resilience and robustness to the economy, ensuring everyone can fully participate to their potential.” Though many tend to focus on the economic costs of UBI, there are also considerable economic benefits as well.
UBI addresses the material conditions of citizens directly by giving them the financial resources to meet their needs. In this way, it can help improve the persistent inequalities in health, education, and economic security that disproportionately affect BIPOC citizens. A basic income is also a way to address the sizable wealth gap between white and BIPOC citizens: data from 2016 found that the average white household in America had ten times the wealth of the average Black household, and around eight times the wealth of a Latinx household. Though UBI wouldn’t necessarily fix this wealth gap, it would be a great place to start.
The way that CERB was implemented widely and quickly in the weeks following the start of the pandemic shows that, if given the incentive, the government could implement a universal basic income program across the country. And in the same way that CERB has helped millions of Canadians stay afloat (and, in some cases, earn more than they were earning in their previous positions), the same benefits could be seen if UBI was implemented permanently.
Most of all, UBI transforms the relationship between individuals and their labour and helps us envision a different way of living that is not centered on gruelling work, exploitation by employers, and various kinds of discrimination. With so many jobs being lost due to automation in recent years; the gap between rich and poor growing ever-wider; and the economic impact of COVID-19, maybe it’s time to consider some of the ways that having a basic financial safety net could have a positive effect on the lives of Canadians.