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Guaranteed income ‘could lift 3.2 million families out of poverty’ and boost economy: study

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Guaranteed income ‘could lift 3.2 million families out of poverty’ and boost economy: study

A federal guaranteed income—or universal basic income program could lift 3.2 million families out of poverty and could “make positive contributions to Canada’s economy”, according to a study by the Canadian Centre for Economic Analysis (CCEA).

The independent research group released an analysis of the potential short and long-term economic impacts of basic income programs.

The CCEA measured the economic impact in terms of GPD, jobs, government revenues, and “other metrics”— highlighting how drawing on households, businesses, and government debt to varying degrees shapes these outcomes.

The report also explores the notion of sustainability for basic income programs and examines the outcomes for different program delivery methods.

READ MORE: Hamilton showed that a universal basic income is the solution

The primary model used by the CCEA involved recipients receiving $24,000 per year ($2,000 per month). It also assumed that a basic income program would replace some of the current welfare programs in place.

According to the report, a basic income program could:

  • Grow the Canadian economy by $80-billion per year
  • Generate $400-billion in additional GDP within five years—or up to $2-trillion in 25 years
  • Add nearly 600,000 full-time equivalent jobs within five years—or over 900,000 jobs in 25 years

The economic findings are based on the educated assumptions that individual spending and investing will increase, leading to a greater demand for business products and services—increasing the need for production and jobs.

“Basic income could grow the economy more than it costs in the long term, making this a sustainable investment over time,” added the advocacy group, UBI Works. “It could generate $22-billion a year in new government revenues—more per year than all EI Premiums paid by employees and employers.”

Additionally, the CCEA found that:

  • Basic income could grow Canada’s businesses by $32-billion per year on average in gross operating surplus (GOS) within five years
  • GOS could grow up to $745 billion in 25 years
  • Basic income could increase private capital investments (PCI) by $15-billion per year on average within five years
  • PCI could grow up to $336 billion in 25 years

As for individual Canadians, the report found that basic income could grow aggregate wages by 2.6 per cent by year five while aggregate wages could grow up to $621-billion in 25 years.

Meanwhile, economic activity from basic income would cause businesses to hire, adding up to $32-billion a year in total wages, according to the study.

Read More: Hamilton Chamber of Commerce joins call for federal basic income pilot

Hamilton and Thunder Bay were two communities chosen by the previous provincial government for a three-year basic income pilot project. That project was cut short after one year due to a change in government.

Individual participants received $17,000 for the year, paid monthly; while low-income couples received $24,000. Whatever income participants earned was deducted from their basic income at 50 per cent. In other words, once someone made $34,000, they would no longer receive basic income.

Despite the newly elected premier, Doug Ford cancelling the pilot after only a year, McMaster and Ryerson University, in partnership with the Hamilton Roundtable for Poverty Reduction, conducted their own evaluation of the program.

According to the study, not only did the vast majority of those employed before the pilot report that they were working while receiving a basic income, but many reported moving to higher-paying and more secure jobs.

While an appetite for a government program that guarantees citizens a minimum regular paycheck has always existed, 2020 has seen an unprecedented level of support—not only from social service and advocacy groups but also from organizations that have historically taken a more capitalistic stance on such matters.

In October, the Hamilton Chamber participated in the Canadian Chamber of Commerce’s (CCC) Virtual Annual General Meeting, where chambers from across Canada voted on policies the network will advocate for in Ottawa.

“The Hamilton Chamber advanced a resolution, co-sponsored by the Thunder Bay Chamber of Commerce, calling for the Canadian government to create a basic income pilot project and assess the potential costs, benefits, pitfalls, challenges and outcomes of a nationwide basic income social assistance program,” according to a media release from the Hamilton Chamber.

With holes in Canada’s social safety net being exposed as businesses closed in March to help curb the spread of the COVID-19 pandemic, the appetite for a system overhaul has intensified. Now, what was once considered a radical solution to growing financial disparities, has taken centre stage—receiving support from not only social service organizations but business leaders, as well.

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