Commentary: The problem(s) with a guaranteed annual income
From Italy to India, the basic annual income is back in the news. Around the world, eight jurisdictions — including Kenya, Finland, the Netherlands, Uganda and California — are conducting experiments providing regular payments to cover basic living costs, regardless of recipients’ economic situations.
With welfare programs consuming billions of tax dollars without eliminating poverty, and with robots poised to seize more jobs and make more people redundant, governments are seizing the moment and launching test runs of different types of guaranteed annual income (GAI) programs.
Add Ontario to the list. This month, the provincial government will unveil a basic income pilot project. “It’s a rare opportunity to make some real change,” said Housing Minister Chris Ballard, one of two ministers leading the initiative. “There has been so much talk, so much written. A little bit of study here, a little bit of study there. A lot of theory. We’re going to have an opportunity to do a rock-solid pilot that is either going to prove or disprove it.”
The concept of a guaranteed annual income finds favour on both the left and the right, attracting political bedfellows as strange as U.S. Senator (and former presidential aspirant) Bernie Sanders, the late civil rights champion Martin Luther King, neoclassical economist Milton Friedman and conservative social policy writer Charles Murray.
“Unconditional cash transfers,” the Toronto Star reports, “are even touted as an antidote to the rise of alt-right populism that fueled the U.K.’s Brexit and the election of Donald Trump.”
WATCH: West Block Primer: Canada’s guaranteed annual income experiment
But as with any policy shift, there would be unintended consequences stemming from a guaranteed annual income — and they might not be the ones that first come to mind. Indeed, the real effects of a basic income might be felt less in terms of the work ethic than in family dynamics. And that could pose a serious paradox for some anti-poverty activists — particularly feminists.
A basic income causes people to “work differently, not necessarily less,” according to researchers at the Mowat Centre, a think tank attached to the University of Toronto that studied previous experiments in Canada and the United States.
“Among married women receiving a basic income … annual hours worked decreased by as much as 28 per cent. For married men, the reduction was as high as eight per cent. On the other hand, the Manitoba experiment revealed reductions as small as three per cent and one per cent respectively.”
Another study conducted at Queen’s University found a similar trend in American experiments: Studies showed a reduction of hours worked by single, female heads of households of between seven and 30 per cent.
“If the GAI were to be applied in a Canadian context, it is important to consider the effect on labour-supply the GAI might have, as well as the potential positive impacts resulting from the ability of individuals to stay home to care for children and elderly relatives.”
Ironically, this confirms what a lot of studies have found for years: Given the economic choice, many parents — particularly mothers — would choose to stay home with their young children rather than farm them out to daycare.
A basic annual income would enable more of them to do this, which means more would choose to do it — which would mean less demand for childcare, fewer jobs in the childcare industry and lower female participation in the labour force overall. That’s not to mention how a basic annual income would negate the need for policies like Quebec’s $7.75-a-day (and up, depending on family income) subsidized daycare, or Ontario’s recent pledge to create 100,000 daycare spaces.
WATCH: How a guaranteed minimum income could reduce poverty
From the perspective of children and families, this could be a positive (unintended) consequence of a basic income — but it poses a conundrum for social justice warriors who both want to end poverty and get more women into the work force.
As for supporters of parental choice … would they support giving everyone a basic income, regardless of family situation, when it would cost an estimated $8 billion a year to lift all Ontarians out of poverty?
A British study of a basic income (conducted by advocates of the idea) calculated that it would require significant tax hikes for all income groups: bottom rates would rise from 20 to 48 per cent, top rates from 45 to 73 per cent. Would taxpayers in Ontario be willing to see similar increases when they’re already grappling with the skyrocketing cost of housing and rising hydro rates?
There’s another hidden catch. As Charles Murray points out, “a Universal Basic Income will do … good things … only if it replaces all other transfer payments and the bureaucracies that oversee them. If the guaranteed income is an add-on to the existing system, it will be as destructive as its critics fear.”
That’s the real rub: Would a government embracing a guaranteed annual income actually downsize? It’s hard enough to dismiss civil servants under normal circumstances. Start eliminating entire departments and you’d see outright revolt in the public service, and among the unions who would see their power and income erode.
For Ontario Liberals, sticking it to organized labour is a non-starter; while the results of this pilot won’t be known in time for the next provincial election in October 2018, it’s hard to imagine future politicians promising to, say, eliminate 100,000 government workers made redundant by a basic income program.
Which is why, despite the good intentions it implies, Ontario’s basic income experiment likely will be just that — a test run that will please some, displease others and crumble under the weight of politics.
Tasha Kheiriddin can be heard between noon and 2 p.m. ET on Toronto Talk Radio AM640. She’s also a columnist with Global News and iPolitics.ca, where this piece first appeared.
© 2017 Global News, a division of Corus Entertainment Inc.