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As we reach depression-era levels of joblessness, millions ofCanadians will not have jobs to go back to after we emerge fromlockdown. Many working Canadians will not see their incomesrecover to what they were before the recession, and the Canada Emergency Response Benefit will not be a justifiable long-termanswer for our nation’s recovery.
Over 40% of recent layoffs could result in permanent job losses and it could take more than a decade torecover. Meanwhile, 8 in 10 Canadians have 3 months of savings or less. As consumerspending drives nearly 2/3 of our economy, many businesses willcontinue to suffer for years.
Demand a Recovery Universal Basic Income
This crisis has revealed that our economy is broken.
As we reach depression-era levels of joblessness, millions of Canadians will not have jobs to go back to after we emerge from lockdown. Many working Canadians will not see their incomes recover to what they were before the recession, and the Canada Emergency Response Benefit will not be a justifiable long-term answer for our nation's recovery.
Over 40% of recent layoffs could result in permanent job losses and it could take more than a decade to recover. Meanwhile, 8 in 10 Canadians have 3 months of savings or less. As consumer spending drives nearly 2/3 of our economy, many businesses will continue to suffer for years.
Canadians don't need another short-term fix. We need a permanent solution for our economy.
We urge the Government of Canada to make $2,000/month a new income floor for all Canadians, decreasing as earned income grows, to a minimum of $500/month as a dividend for all Canadians earning over$36,000/year. As technology and automation continue to depress wages, a Recovery UBI will give all Canadians a much-needed raise while supporting Canadian business owners across the country.
Companies have not only laid off workers—many have also permanently closed. Businesses are replacing jobs with modern software and hardware automation at an unprecedented pace in order to survive. In the last 3recessions, nearly 90% of jobs lost were easy to automate. Meanwhile, employers are finding workers to be more expensive than existing technologies, which can already automate 4 in 10 tasks Canadians do at work today.
Previous economic recoveries have been highly polarized in ways that are un-Canadian, leaving most Canadians worse off while working harder and longer than generations in the past. Over the last 40 years, growth in the economy has gone mostly to the highest earners, while a growing number of Canadians work in low-income jobs.
This recession will accelerate the widening inequality, as Canadians with low-incomes suffer the greatest losses and those with high incomes remain relatively unaffected.
We cannot have a fast and equitable recovery when the share of our nation’s income going to the bottom half of Canadian earners continues to fall, while technology continues to push income away from workers and towards capital holders.
This time we can do better.
A Recovery UBI recognizes the changing relationship between work, capital, and technology by putting money directly into the hands ofCanadians and allowing each of us to share in the vast wealth that technology is creating.
UBI is not social assistance. It is not a handout or a form of charity. It is how Canadians across the country can reclaim their slice of the economic pie. This is why a Recovery UBI should be the same amount paid to all working and retirement age Canadians on top of—rather than replacing—existing social assistance.
Recovery UBI is an important foundation for a future of abundance and opportunity for all. It ensures that as we emerge from this crisis, all Canadians can play their part in our nation’s recovery.
We call on the Government of Canada and all opposition parties to support a better and faster post-pandemic economic recovery by implementing a Recovery Universal Basic Income upon which Canadians can build better incomes, better careers, and better businesses.
It is urgent that we do this.
When is the last time you had a raise?
Recovery UBI is a $500/month dividend for all Canadian adults, growing to as much as $2,000 per month to ensure everyone makes more than $24,000 / year. For families, two adults receive a minimum $1,000 per month that increases to $3,121 to ensure every family is receiving at least$37,456 /year.
Recovery UBI will leave you better off when you go to work once lock-down restrictions are lifted, ensuring a better and faster post-pandemic economic recovery.
Front-line Essential Service Workers
A front-line essential service worker making $30,000 a year would receive a 30% raise to$39,000 a year.
Truck Drivers
Median-wage truck driver making $40,000 a year would receive a 15% raise to $46,000.Truck driving jobs will soon be automated.
Entrepreneurs
An entrepreneur driving for Uber part-time making $28,000 while building their business could see an increase of 35% to $38,000 a year. Some entrepreneurs may simply live off$2,000/month with no income as they build their startups.
Part time single mom in retail
A retail worker only able to work part time due to child care needs at $20,000 / year would receive a70% raise to $34,000 a year.
For Students
Students not receiving an income could focus on school with the full $24,000 income guarantee, increasing graduation rates.
For Seniors
All seniors would be better off with a RecoveryUBI, since a $24,000 minimum annual income for individuals and $37,000 for households is higher than and replaces OAS/GIS.
How you pay for it depends on what problems you want to solve.
Summary
A basic income in Canada is affordable and how it can be paid for depends on what problems you want to solve, and that is very much a question of one’s personal identity and value system. Ending poverty and bringing about human-centered capitalism where job-displacing technology pays you a dividend could be part of a package of reforms that appeal to right or left wing values alike.
At a price tag of $175B a year, UBI Works’ proposed Recovery UBI is three times less than over $700B of problem-solving funding proposals we have compiled in this article. At less than X% ofCanada’s GDP, it is quite doable. Depending on your political stripes this one program could also be partially paid for by anywhere from $40B to $112B a year of tax dollars that go towards apathwork of hundreds of existing federal and provincial poverty poverty alleviation programs.
Tax policies gamify the incentives in a market economy: a series of reforms that can incentivize pro-social economic activity and disincentive unsustainable or damaging economic activity can be part of a recovery package that would bring about a fairer and faster post-pandemic economic recovery while addressing a core problem that UBI fixes: reversing generations of polarization of wage growth and job quality caused by the ongoing advancement of technology.
Recovery UBI would restore sustainable capital flows in society that will unleash a new generation of entrepreneurs, compensate human work that is not valued by the market such as caregivers and volunteers, as well as facilitate the time and means people will need for the massive retraining required as we move through the painful displacement of the 4th industrial revolution.
Deep Dive - What problems do you most want to solve?
Let’s take a look at some of the key problems in society right now that could be solved through a tax system that would fund a UBI. For those of you in upper income brackets in Canada, consider that a UBI is also a form of tax rebate that offsets the increasing costs that these proposals would create:
Rising Costs of Rent and Housing
If rising costs of rent and housing is a top priority for you, then a Land Value Tax (LVT) would raise over $50B a year and is a solution that would simultaneously increase both the money people have to pay for housing as well as the incentives to create more housing over the long term. Lower income Canadians would now have a larger market of private-sector properties that they could afford to move into, while the incentives are set that could lead to a new boom in development of multi-family residential buildings.
Said to be the least bad of all taxes by economist Milton Friedman, an LVT taxes a shack and a skyscraper in the same neighbourhood the same amount if they are using the same amount of land, lowering the tax burden for people in multi-unit buildings (compared to property taxes) and incentivizing the replacement of downtown mansions and low-rises by a more productive pro-social use of the land - multi-residential buildings. Land in our city centers is being massively under developed, and the reason that our subway corridors are mostly surrounded by expensive houses instead of apartment buildings is that underlying land is accumulating wealth for people who already have it instead of being used to build homes for everyone else.
The Environment
We have a limited amount of time to lower our carbon emissions and we must rework the rules of the economy so that businesses are factoring in the costs of pollution to encourage their investmentin more environmentally sustainable ways of operating. $50B a year can be raised by increasing the Carbon tax to XX/ton, and putting that money towards a basic income is compensation to you forthe damage done to your birthright of a livable planet, as well as creating market incentives for businesses to reduce their emissions while improving the cost advantage of greener sources of energyand production to replace older dirtier variety.
Reducing the Size of Government
A Conservative MP told me that the reason the Federal government didn’t pursue a basic income when it was being seriously looked at in the winter of 2018 was that it would have resulted in the lossof hundreds of thousands of government jobs, and the political risk of such a maneuver would have been too risky. Well now millions of Canadians are out of work, and helping them is more importantthan a few hundred thousand government jobs.
The first party to win an election campaigning on a UBI will be able to implement it in their own image. Anywhere from $40B to $112B a year of tax dollars that go towards a patchwork of hundreds ofexisting federal and provincial poverty poverty alleviation programs can be saved by this one single program that provides people currently in poverty with the type of help they need most - money.
Economic Growth & the Cost of Poverty
So far we’ve two problem-solving taxes that together with replacing similar social programs can raise anywhere from $140B - $212B a year in revenues, more than covering the cost of a RecoveryUBI at $175B /year that would end poverty and give anywhere from a 10-40% raise to the working incomes of the bottom 60% of Canadians as well as a $6000 a year tax rebate to the top 40% ofincome earners.
The math is improved if you factor in the cost savings of ending poverty on our public services at over $80B a year. Having people with low or no income find the psychological safety, mental wellbeing, affording stable housing and healthy food, having the ability to hope, dream, and make long term plans would have a drastic reduction in the use of our healthcare, poverty reduction andcriminal justice systems. Imagine eliminating both the financial and the real human costs of allowing poverty to go on like this.
But our Recovery UBI would also drive economic growth. We know from the Canada Child Benefit, a national basic income for families, that for every dollar invested, two dollars of GDP growthresulted and fifty-five cents came back to the government in tax revenues from this economic stimulus, driving over 453,000 full time jobs and $85B a year in corporate revenues.
This means that even the introduction of an LVT and higher Carbon Taxes would in combination with economic growth, reduced costs of poverty, and cost savings from eliminating competing social programs could pay for the annual costs of a Recovery UBI more than two fold.
But let’s not stop there, depending on your priorities, there are still more problems that could be solved if part of a package that finances a UBI.
What problem does a basic income solve?
An income floor style basic income ends poverty, while a universal basic income fixes capitalism.
The word “basic income” is often used to refer to both types of programs but they solve different problems for different people. In this article we differentiate the two and show how a combination ofboth may be the best way forward for Canada at this time, as proposed by UBIWorks’ Recovery UBI for a fairer and faster post-pandemic economic recovery.
An income floor you can access when needed
An income floor basic income, also called a basic income guarantee (BIG) or minimum income, provides a floor on which people can stand on. It pays out more the less you make and in Canada a generous income floor can supplement the income of the bottom half of Canadians, ending working poverty (two thirds of the recipients of the Ontario Basic Income Pilot were working).
It provides the means to pay for the time and expense that students need to focus on higher education, entrepreneurs to develop new products, caregivers and volunteers to do uncompensated work. It fills a gap for people in the gig economy who have no employment benefits and thus cannot get EI and today 63% of work in Canada is hourly paid.
A basic income guarantee raises people on social assistance out of poverty while replacing hundreds of bureaucratic and distrust-based programs with just one program which imparts faith in the individual, removing the stigma as well as the disincentives in the social assistance system that keep people from going back to work. We’re already spending billions on social assistance, we may as-well spend it more efficiently.
For millions of people on the CERB who may not find jobs to go back to when pandemic restrictions are lifted, it provides a longer runway that they can rely on without asking anyone for help since a basic income is an automatic right that is available to all.
For people whose jobs were lost to robots and modern software, a basic income guarantee is a floor on which they can rely on to invest the time needed to retrain with new skills, instead of jumping on the next low income job they can find. People whose careers were displaced make anywhere from 25-38% less income in their next jobs, and an income guarantee can ensure people can find the jobs that fit them best.
A basic income guarantee is always discussed at a level that would solve poverty and is proposed in Canada by the Basic Income Canada Network to be $22,000. The political establishment inCanada as well as long time basic income advocates favour a BIG primarily because paying for it could be achieved by realistic incremental changes in the tax code. For instance, a smaller basic income of YYY tested in the Ontario pilot was costed at merely a 3% increase in federal GST provided it took a conservative flavour and replaced ALL similar government programs.
A common ideological misunderstanding of a basic income is that it is a social program that takes from people who work to give to people who don’t work, which is why many people with right leaning views prefer a universal basic income.
Universal basic income for all
A universal basic income (UBI) is a dividend, received in equal part by all, and is how capitalism lifts all boats directly. It is our slice of the economy, and therefore it is not a hand out or a form of charity or social program. Like the Alaska oil dividends, it is our slice of economic activity, since everyone gets the same amount.
If a UBI is big enough, it can also solve poverty and achieve all of the benefits of a basic income guarantee described above while also providing a massive RAISE to people at all salary levels and especially to median wages. Even a small UBI of $500/month would mean a raise of 10% for median wage workers in Canada and an average raise of Y% for the bottom 30% of the country.
A UBI acknowledges the changing nature of work, technology and capital that is causing job market polarization: the top 40% and top 1% in particular are enjoying most of the wage growth in our high tech world while the bottom 60% of Canadians are being undervalued, having experienced low or negative wage growth for over 40 years while cost of living continues to increase.
UBI therefore directly prevents income polarization that began with the rise of computing and robotics. Technology is increasingly pushing income away from people who work and towards shareholders and executives who can do more with less people. X hundred billion dollars that used to go to wages now goes to holders of capital, that would mean an average raise of Y forCanadians working prior to the rise of computers and robotics.
Modern technology has caused a decline in demand for wage labor as businesses can do more with less, as well as enabling further downward competitive pressure on wages due to technology’s causal effects of globalization, gig economy, and winner takes all economics.
Whereas economic and productivity growth used to drive wage growth for everyone, the middle class hasn’t had a raise in 40 years compared to rising costs of living, while the share of income going to the bottom 50% of Canadians has actually declined by 30%, while the share of income going to the top 1% has increased nearly 50% since 19XX.
The result has been a crisis of income, that has been an underlying cause of many other crisis we often blame on other causes such as the debt crisis, housing crisis, crisis of working poverty, and falling income security for the rising class of part time workers (of which 63% of all jobs are now hourly paid).
UBI therefore fixes capitalism by changing the flows of capital to flow from the bottom up, sharing widely in prosperity, which is often called trickle up economics.
Even if a UBI is not big enough to solve poverty, it would go a long way to helping people escape poverty and working poverty in particular. When Andrew Yang ran for President of the United States, he explained that his Freedom Dividend of $1000 / month offered optionally to people on welfare would help people get off welfare, since they can keep the $1000 / month on top of their employment income, unlike welfare which you lose when you do go to work.
Sharing in the gains from our productivity is why this dividend is a tech cheque, your share of our inheritance of modern technology that is meant to help increase the wealth of time and money for all of humanity. It can restore the income distribution that existed before the rise of computing and robotics while also ending poverty.
Best of both worlds: Combined with a BIG with a UBI
Until the political will is there to pay for a UBI big enough to solve poverty, the best outcome would be combining two programs together since each solves different problems at different levels of cost. We can both solve poverty and rework the economy to give everyone a dividend.
UBIWorks’ Recovery UBI proposal does this could form a basis of a fairer and faster post-pandemic economic recovery that would leave Canadians far better off.
There is precedent for two programs working together. In Canada our seniors have the Guaranteed Income Supplement (GIS) which is a basic income guarantee providing up to $15,000 to singles and more to couples, part of the Old Age Security Program.
We also have CPP which pays more depending on how much you put in as well as private employer-paid pensions - these are like the dividend / tech cheque paid to our seniors not as a socialprogram but as a right.
We don’t rely on one program. GIS/OAS is like a BIG, while CPP is more like the dividend/tech cheque. It is quite straightforward to have two basic income programs: a basic income guarantee and a dividend.
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A world where everyone can pursue their potential and not be held back by basic material constraints or unsafe environments. Realize the compassionate potential of capitalism to end poverty, reduce violence, and secure our personal freedoms.
