Universal Basic Income is better than a minimum wage increase

Last week, an opinion piece was written in The Brock Press about the increase to the minimum wage. The wage in Ontario increased by 20 cents to $11.60 per hour for most workers ($10.90 per hour for students under 18, and $10.10 for liquor servers) on October 1 of this year and is set to increase to $15 per hour ($14.10 and $13.05 respectively) as of January 1, 2018. Last week’s article argued that the increase was not reasonable and likely would not help as much as the Wynne government believes.

As a person who has worked in the service industry for the last 10 years, I agree. The increase to a liquor server’s wage is the same percentage as that for regular workers, not the same dollar amount, increasing the gap in wages to $1.95 and therefore increasing a server’s dependence on tips to earn a living wage. However, with most people assuming everyone is making $15 per hour, the likelihood of receiving a sufficient amount of tips is decreased.

What last week’s article did not address is other solutions to the living wage problem. Obviously, everyone having enough money to live on is the ideal outcome. Increasing the minimum wage is not the only way to do that.

A Universal Basic Income, or UBI, is a system in which everyone, regardless of employment, receives a set amount of money every month. The government provides the basic income, eliminating the need for welfare programs and other types of support programs. That income is guaranteed, which would help out the 40 per cent of those employed in the Greater Toronto and Hamilton area who do not have a steady job, or what the United Way calls ‘precarious employment.’ Having employment that shifts from one position to another makes it difficult to move up, which leads to lower wages and uncertainty when it comes to paying bills, buying food and raising children. Having your basic needs taken care of takes a lot of pressure off.

Systems like this are currently being tested in Finland and the Netherlands, where a limited number of low income and unemployed citizens receive an income every month that does not affect their other unemployment benefits like health insurance and will not decrease if they get a job. Basically, it allows people who get the basic income to take a job that might not have the hours they’re looking for and build themselves up to something better without having to worry that the won’t be able to pay for medication etc.

A modified form of the UBI is currently being tested in Ontario as well. The program, intended to replace the Ontario Works benefit or the Ontario Disability Support Program benefit, is testing with about 4,000 recipients in the province who were already receiving a support payment from the ontario government. Unlike other systems, the Ontario system subtracts from the basic income based on how much the recipient is making. The more you make, the less you recieve, which is basically the same as how OW and ODSP already work, and reduces the incentive for recipients to work. The Ontario test system then is not actually a true UBI system, but really just another name for what’s already there. Since it’s just an experiment there’s no word yet on whether a basic income system, modified to have deductions or otherwise, will be implemented in the province.

A big difference between increasing the minimum wage and instituting a basic income is where the money comes from. Increasing the minimum wage puts the pressure on businesses who, as was pointed out last week, might already be floundering in the current economic crisis. That causes them to charge more for their services, hire fewer people, and reduce the number of hours the people they do hire get to work. A basic income puts the pressure on the government instead, pushing tax dollars back out into the community. The system not only supports people with low or no employment, but also provides cash for spending at local businesses. Potentially millions of dollars that otherwise would not have been available would be in the hands of consumers.

When it comes down to it, increasing the minimum wage doesn’t help people who are unemployed, underemployed, or who cannot work. There are nearly five million people in Canada living in poverty, or one in seven Canadians, says Canada Without Poverty (CWP), a charitable organization dedicated to the elimination of poverty in Canada. Poverty, says the group, can affect anyone, but some are particularly at risk. The UBI could help even the playing field.

“Poverty is a widespread issue across the country and the world, but vulnerable groups such as people living with disabilities, single parents, elderly individuals, youth, and racialized communities are more susceptible. The effects of poverty can be expressed in different aspects of a person’s life, including food security, health, and housing,” says CWP.

Rather than putting pressure on businesses with a minimum wage increase, the Ontario government should test a true Universal Basic Income system. Pick a town, provide the income, and watch the economy change.

 

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