An In-Depth Look at UBI and Its Pros and Cons
When the World Health Organization (WHO) announced COVID-19 as a pandemic on March 11, 2020, the Canadian federal government recognized the need of providing financial assistance to those who have lost their jobs due to the virus or had to stay at home and take care of their loved ones because of quarantine regulations. It launched the Canada Emergency Response Benefit (CERB), a taxable benefit of $2,000 a month over the course of seven months.
It was reported that 240,000 Canadians had successfully applied within the first hour shortly after Prime Minister Justin Trudeau made the announcement, and roughly an hour later, the figure had already jumped to more than 300,000. The final figures released on October 4, 2020 according to Service Canada and Canada Revenue Agency indicate that a total of 27.5 million applications were received and the total benefits payout was $81.64 billion.
With CERB, a lot of people were hopeful that it will pave the way for Universal Basic Income or UBI, a subject that has been in discussions way before COVID-19.
First, the Basics: What is UBI?
UBI refers to a guaranteed livable income provided to everyone in a population on a regular basis. The amount is sufficient enough for someone to “live a modest but dignified life” according to Evelyn Forget, a professor of economics at the University of Manitoba in the Department of Community Health Sciences and a member of the Basic Income Canada Network, a non-profit that’s advocating for UBI in Canada.
Like with every benefit, however, UBI would have certain criteria. For example, if someone doesn’t have an income of any means, then they will receive the full benefit; if someone is working but receives a low-level income, they will receive a partial benefit. Of course, UBI won’t apply to those who are already above the low-income threshold.
There is a similar discussion of UBI in the U.S., which former U.S. Democratic presidential candidate Andrew Yang alluded to, but this one pushes for the same amount for everyone, no matter how much they’re earning.
UBI is nothing new in Canada. In fact, 50 years ago, there was a trial run of UBI that took place in Dauphin, Manitoba — a town of approximately 10,000 people which is about five hours away from Winnipeg. A group of economists was the brains behind the program dubbed “Mincome” (or minimum income) that aimed to address rural poverty. The program ran for five years, where an average four-person family in Dauphin was guaranteed an annual income of at least $3,800 – which is equivalent to $20,000 today.
Then years later, in 2017, Ontario — then under Liberal leadership — unveiled its own three-year basic income pilot with 4,000 low-income participants, where individuals received $17,000, couples received $24,000, and persons with disabilities received an additional $6,000. However, the program was cancelled ten months later by Ontario Premier Doug Ford.
Then-Social Services Minister Lisa MacLeod cited the reason for the program’s cancellation was that the government believed it was failing to help people become “independent contributors to the economy.” This is certainly contrary to a report compiled by researchers at McMaster and Ryerson Universities which revealed that nearly three-quarters of respondents who were working when the project began continued to work, even as they received a basic income.
In both test runs, the results were actually more positive than negative, proving that there are a number of advantages to UBI. For the 2017 rollout, it was revealed that participants also saw better overall health while taking part in the program — more than half said they were smoking less, 48 percent said they were drinking less, 83 percent described feeling depressed or anxious less often, and 81 percent said they felt more self-confident. Participants also pointed to outcomes like improved diets, better housing security, and less-frequent hospital visits.
As for Mincome in the 1970s, researchers who analyzed the data disclosed that the UBI enabled low-income teens to continue pursuing their studies, rather than drop out and make a sacrifice to provide for their families. There was also a decrease in accidents and injuries because UBI allowed its recipients a choice to avoid unsafe work conditions or working dangerous jobs while stressed or overtired. What’s more, there was also a decline in visits to family doctors for depression, anxiety and sleep disorders —and there was a significant decrease in mental-health-related hospitalizations.
Of course, those who opposed the idea of UBI have their own arguments to present. For instance, they believe that the money needed to fund a UBI would cause preexisting social programs, like the Guaranteed Income Supplement for seniors, to be axed, leaving those who rely on them without help. It’s said that during the Ontario pilot, persons with disabilities who received UBI had to give up a lot of supports to access the program. In the end, some persons with disabilities just decided it wasn’t worth it.
A lot still needs to be discussed with UBI, but the government should consider it as an option for eradicating poverty in the country.