Social Welfare in Canada: Contextualizing Universal Basic Income

At its core, Universal Basic Income (UBI) intends to level out economic opportunities for a population by eliminating persistent wealth gaps: a guaranteed income without work requirements and guidelines for spending. These two components set it apart from most welfare alternatives with fixed eligibility criteria and restrictions.

In Canada, political interest in UBI was sparked in the 1930s under the right-wing social credit movement, and Manitoba’s “Mincome” pilot project from 1974 to 1978 was the first of its kind in North America. The recent momentum gained by UBI stems from the changing composition of the job market, with a negative trend between job creation and national income growth as low-paying employment opportunities are growing more quickly than in mid and high-paying industries. In uncertain labour market conditions, the premise of UBI would be to provide a safety-net for retraining and job searching while ensuring basic living conditions for low-income individuals. 

Worldwide, many UBI pilot programs have been launched at various regional levels. Examples include the ongoing 18-month trial in Stockton, California, which involves the transfer of an unconditional monthly allowance of $500 to 125 adult residents living below the city’s income average. Additionally, a broader two-year study took place in Finland, following 2000 adult recipients of government unemployment benefits. At the provincial level, Ontario’s short-lived  2017 basic income pilot was designed to administer approximately $13,000 ($19,000 for couples) per year to 4,000 low-income people between 18 to 64 years old in selected communities.

The design of a UBI program allows for flexibility in its key features, such as the regularity of income transfers, who receives them, and whether to replace or add on to current welfare compensation. But that depends on a jurisdiction’s goals, which are contingent on societal and infrastructural factors which shape the interaction between basic income, features of the social environment (like the accessibility of services such as healthcare), and the people targeted. For instance, the Stockton pilot program had a diverse demographic profile, which was vital in establishing one of the study’s goals of reducing the stigmatization of people of colour. Ontario, on the other hand, had the broader objective of observing changes in poverty rates among participants, government costs savings, and labour market participation. Finland’s pilot was more streamlined, focusing on the potential for basic income to increase labour supply. However, preliminary results showed no significant improvement in employment rates despite positive effects on well-being. Whether the pilot was a success depends on whether a purely economic outcome is preferred to subjective well-being, which is difficult to measure after only a year of follow-up. 

Not all UBI programs are created equal, and very different income-support programs have been labelled as ‘universal basic income’ due to disagreement over what UBI should achieve. In Canada, for example, gearing a UBI policy towards households living below the $37,500 poverty line is different than gearing a policy towards alleviating the burden of marginal tax rates (the relative increase in taxes per additional dollar of income), highest on households earning between $30,000 and $60,000. Firstly, because these groups make up 9.5% and approximately 31% of the population respectively, thus yielding different price tags, and second, because of unknown social and economic outcomes. One such feared result is a reduction in work participation, but evidence from 25 years of the Alaska Permanent Fund suggests that “cash transfer[s] can lead to an increase in consumption, and therefore an increase in employment in the non-tradable sector” via stimulation of labour demand to offset potential reductions in employment.

For a country like Canada, a barrier between determining whether a basic income policy is on the table is erected by the global expectation of UBI not only to fulfill financial need, but also to improve social indicators such as health, educational attainment, employment opportunities, and more. Political partisanship aside, given the breadth of the existing welfare system and the potential of income transfers to replace it, evaluating the efficiency of current programs relative to costs of operation and bureaucracy is a first step.