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The Coronavirus Pandemic Proves We Need Universal Basic Income

Canada’s COVID-19-related unemployment crisis makes the case for a guaranteed liveable income. Economists say the CERB and wage subsidies show the need for a universal basic income.

by Anne Gaviola
Apr 7 2020, 12:27pm

Photos from the Humans of Basic Income gallery by Jessie Golem.

The daily grind of holding down three jobs was exhausting for Jessie Golem. She walked dogs and taught piano while trying to build up her photography business and could never make enough to make ends meet. The 31-year-old Hamilton resident was stuck in a career rut and lived below the poverty line for years—until she got access to a basic income.

Not only did it help her figure out what she wanted to with her life, but it also gave her a temporary break from worrying about money all the time.

“There’s that constant fear where you’re putting your debit card in the machine and hoping it says ‘approved.’ I’ve lived with that fear for years and it takes a huge mental toll on you,” she said.

Golem was part of Ontario’s short-lived Basic Income Pilot Project, which for nearly two years until March 2019 gave 4,000 Ontarians on low or no income up to $17,000 annually. It was the largest experiment of its kind in the world.

Under the project, Golem doubled the $700 she was earning monthly doing survival jobs to $1,400 (participants who made money during the pilot had half of anything they earned deducted from their benefit). It allowed her to focus on her passion and eventual viable business of portrait photography. And she didn’t have to worry about making rent.

“I had no formal training but I wrote out a business plan and looked for clients. I’d been shooting photo projects, events, weddings for 10 years before that, but I’d never been able to break into it full-time because I never had a financial floor to be able to take the risk,” she said. One of her most successful endeavours was a series of 70 portraits of people who were part of the project, called Humans of Basic Income.

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Photo from the Humans of Basic Income gallery by Jessie Golem.

Ford cancels basic income pilot

After sweeping into power, however, Doug Ford’s Conservative government announced in the summer of 2018 that the basic income project would be cut short. The government said the program, which cost $50 million a year and was supposed to run for three years, failed to help people become “independent contributors to the economy.”

Now, as Canada faces a wave of unemployment unlike anything we’ve ever seen because of the coronavirus pandemic, there are calls to bring back a universal basic income.

A universal basic income is a government benefit that covers the cost of living plus a little extra to provide financial security. It comes with no strings attached and recipients can spend it any way they choose. The unprecedented job crisis underscores the need for a system that can quickly and easily reach anyone in need—not just during the economic fallout but after, as well.

NDP leader Jagmeet Singh told VICE that the COVID-19 pandemic highlights how the Employment Insurance (EI) system abandons Canada’s most vulnerable workers. “The crisis that we’re in right now has shown the gaps in our social safety net and particularly shows how ill-equipped we are to take care of people when they need immediate and direct financial support,” he said.

Sixty percent of workers—part-timers, gig workers, and freelancers—don’t qualify for EI, which is why the federal government created the CERB (Canadian Emergency Response Benefit). The CERB gives jobless people who don’t qualify for EI access to $2,000 a month for up to 16 weeks.

But according to analysis by the Canadian Centre for Policy Alternatives (CCPA) published Thursday, a third of unemployed Canadians, about 862,000 people, aren’t eligible for either EI or the CERB.

On Monday, Prime Minister Justin Trudeau said more help was coming soon to those who don’t qualify for the emergency relief, and Golem and others are hoping he will announce a universal basic income, even if only temporarily.

VICE reached out to Trudeau’s office for comment but did not hear back.

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Photo from the Humans of Basic Income gallery by Jessie Golem.

The case for a universal liveable income

Because so many of Canada’s unemployed can’t be helped by the government’s emergency measures, a universal basic income makes sense, said Kwame McKenzie, the CEO of the Wellesley Institute think tank. He was also a special adviser with the Liberal government on Ontario’s Basic Income Project (his contractual obligations limit his ability to discuss the project’s findings).

He said our social safety system needs an overhaul because it was created for a time when most people had jobs with full benefits—and support when they became ill or unemployed. Now, 53 percent of Canadians live paycheque to paycheque, making them more vulnerable when significant economic shocks like the COVID-19 crisis hit.

“It’s geared on the premise that if people become unemployed, you really don’t want to give them too much to dissuade them from desperation jobs,” McKenzie said. “But the economy’s not like that anymore. Most people work in service economies, most of them work in the thought economy—they have to be able to generate ideas and they also have to be able to go to work,” he said.

McKenzie said rising inequality makes it even worse for lower income earners. “Thirty years ago, in real terms, the average family in Toronto made the equivalent of $100,000. Now, the average family in Toronto makes the equivalent of $70,000. Normal working people, especially young people, have been pretty well screwed over,” he said.

“People now have to pay for more things themselves and because of that wages don’t go as far, which means that their savings have decreased. Not only are they going in and out of work, but they’re going in and out of work at times when they have fewer savings and more debt,” he said.

McKenzie disputes the narrative pushed by critics that a universal basic income is an extreme option by political progressives that costs too much. “People think it’s radical, but the stuff pays for itself,” he said.

Canada can afford universal basic income

Before the coronavirus pandemic hit, Canada’s parliamentary budget watchdog estimated that a federal UBI program would cost $43 billion in its first year and benefit 7.7 million people. According to economist Evelyn Forget, that isn’t a huge sum of money when you consider that Ottawa spends $23 billion on the Canada Child Benefit (CCB), and provinces spend $20 billion on income assistance and $50 billion for Old Age Security (OAS).

Her research shows that a universal basic income can decrease health care costs by 8.5 percent and produce “significantly reduced health system savings.” Forget looked at the data produced from the Mincome experiment in Manitoba in the 1970s that guaranteed low-income participants enough to live on for five years. A family of four received $4,800 a year (equivalent to about $29,000 today), which was slightly more than they would have received from social assistance from the province.

“One of the big reasons they were hospitalized less often was because they had better mental health and they had less accidents and injuries,” she said. “We are using the healthcare system to pay for and patch up the consequences of poverty.”

Another consequence she found was that the high school graduation rate increased dramatically because there was less financial pressure on children to drop out of school and start working to help support the family. “Those kids went on to college and university so it looked like the basic income had a very positive effect,” she said.

Ruth Westcott is a Thunder Bay resident who took part in Ontario’s pilot project. She has an autoimmune condition that gives her migraines and bad headaches, and, for most of her life, has made it difficult for her to keep previous jobs as a researcher and financial analyst.

She said that getting rid of the chronic stress she felt when she worried about money and paying rent allowed her to focus on her health. Westcott says she was able to get enough sleep and eat well—and keep working as a research assistant, which is a job she still has today.

“I’m very concerned about the million of us on social assistance in Ontario who are living so far below the poverty line that we have no reserve to deal with any crisis, let alone one of this magnitude. We need more support and we need it now,” she said.

Westcott receives a disability benefit from the provincial government but she worries about the right-wing narrative suggesting that a national universal basic income replace or claw back other forms of government support.

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Photo from the Humans of Basic Income gallery by Jessie Golem.

Help for the poorest across Canada

A national universal basic income was part of Singh’s campaign platform. He said his vision for this program does not include reducing other types of support that people like Westcott receive. He says a Canada-wide solution is urgently needed.

“During this crisis the best way to help people right now is to make it not an application process—where you have to test who gets it and who doesn’t,” Singh said. “Just send out the support to everybody and we can tax it back afterwards. Some people don’t need it, but that’s why our tax system can recover that in the next tax cycle.”

Spain, which is currently dealing with Europe’s worst COVID-19 outbreak, has committed to a basic income. Economy minister Nadia Calvino said the plan is to keep the basic income as a tool “that stays forever, that becomes a structural instrument, a permanent instrument.”

According to Forget, the crisis has the potential to change the discussion around a universal basic income only being temporary. She said all the uncertainty and the massive job losses caused by the coronavirus may be an opportunity to foster empathy for vulnerable workers and others who need a guaranteed annual income.

“In the past it’s been very easy for those of us who have regular jobs to imagine that we’re somehow different from the people who need income assistance,” Forget said. “One of the things I think the current pandemic is doing is making it obvious to a whole lot of middle-class people that the security they thought they had doesn’t exist. The jobs and the lives that we thought were very secure are actually very precarious.”

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