What is universal basic income and what does it mean for job seekers?
A two-year program to test universal basic income was launched in Finland at the beginning of the year, giving unemployed people a monthly, no-strings-attached sum of about $590. The monthly income is given in place of social security or welfare benefits. This spring, the Province of Ontario launched its own three-year basic income pilot in Thunder Bay, Hamilton, Brantford, and the county of Brant.
Hugh Segal, a long-time political strategist who’s worked with Prime Minister Brian Mulroney and Ontario Premier Bill Davis, served as special advisor to the current provincial government on the Ontario Basic Income Pilot. We asked Segal what universal basic income is, how it could take shape here, and what it might mean for job seekers.
Workopolis: What is universal basic income?
Segal: A universal income is something that is now being pilot tested in the Netherlands and Finland. Usually, it refers to a “demogrant,” where everyone gets an automatic monthly transfer, and those who are better off pay more taxes back than others. My proposal for Ontario includes a basic income that brings the annual income to a set minimum level for low-income people, as a way to alleviate poverty.
Finland’s universal basic income test program was launched in January of this year and recipients are already reporting lower stress levels. How is that pilot different from the one you proposed for the Ontario government?
The Finnish pilot is for unemployed people. In Ontario, the pilot is not only for the unemployed – it’s for low-income people, regardless of employment status. The idea is to support low-income workers and find out if a basic income can improve their health and education outcomes, as well as their job prospects and ability to make choices.
How long will the Ontario pilot run, and how many people will be part of it?
The pilot will run for three years, with the results being delivered to Ontario’s next parliament. While private data must be safeguarded, aggregate data should be released as soon as possible.
Four thousand people are to be enrolled in the pilot in total. A remote First Nations community will also be chosen based on feedback from the First Nation’s chiefs of Ontario, within the framework of reconciliation and sovereignty of our First Nations.
Under the pilot, who qualifies?
Everyone who earns less – from all sources – than $1,320 a month, or $2,400 for a couple, would be topped up to that number. Before my proposal, average income for Ontario Works (the provincial financial assistance program) was $640 a month; I recommended that it be doubled. The $1,320 figure represents 75 per cent of the low-income measure, whereas $640 was only 45 per cent. And my proposal would see the disabled, who receive Ontario Disability Support Program (ODSP) payments of about $1,100 monthly, being topped up to $1,700. Also, the first $1,320 is tax free; further earnings – which are encouraged – would be taxed at the 50 per cent rate.
How is basic income different from welfare payments, if there are no strings attached?
When people file their income taxes, those who fall below the low-income cut-off for receiving the basic income would be automatically topped up to the equivalent of $1,320 per month, so the stigma associated with receiving a welfare or ODSP cheque is removed. Today, 70 per cent of the 15 per cent of Ontarians who live beneath the poverty line have jobs. Some have more than one, but do not earn enough to get over the poverty line, so those in the pilot program might end up having more choices – choice and time being the two commodities denied to low-income Canadians. And unlike welfare payments, the basic income would allow people to keep some of their earnings, so it is actually an incentive to remain in the workforce or to seek jobs if they are unemployed. Currently, Ontario Works and ODSP discourages work by clawing back earnings of recipients in excess of $200 dollars a month, on a 100 per cent basis.
Would the plan be for all age groups?
The pilot is being tested on people between the ages of 18 and 65. Some might argue that young people don’t need the assistance, but the reality is most Ontario universities have food banks; just because you’re in school doesn’t mean you have or come from a family with a high income. And being in school doesn’t isolate you from poverty – there are lots of young people in low-paying jobs.
What are the benefits for job seekers and workers who may also be low-income Canadians?
If we have a basic income as an automatic top-up through the tax system, workers will have more time and choice – rather than holding down two or three jobs, they will have more time to upgrade their skills or education and land higher-paying jobs.
For more on universal annual income, check out Hugh Segal in conversation with Steve Paikin: