Canadian CEOs are deeply worried about the future of the economy. They shared those concerns in a letter to the Ontario Government last October.
October 18, 2018
To: Premier Doug Ford and Minister Lisa MacLeod,
As Canadian business leaders, we urge the Ontario government to continue the Ontario basic income pilot. We see a guaranteed basic income as a business-friendly approach to address the increasing financial precarity of our citizens and revitalize the economy.
It is urgent that we let this pilot run because we see basic income as part of a solution that could help Canadians stay competitive in the face of:
- Accelerating technological job displacement due to advances in automation, software, and AI1
- Globalization of jobs which has gone beyond manufacturing and textiles to entry and mid-level information work2
- The ongoing transition of work to part time, contract, and gig-work3
- Winner takes all markets where companies such as Amazon are absorbing greater shares of economic activity4
These global trends are causing structural changes to the economy that are depressing wages,5 reducing the number of middle class jobs available to Canadians, and affecting a decline in entrepreneurship.6
Therefore it is time we recognized that structural changes in the economy are occuring that make obsolete basic income related left vs. right views on welfare reform and laziness. Such arguments reflect a 1970s viewpoint when wages were rising with productivity7 and the middle class was not in decline.8
We don't need to wait to see if advances in automation eliminate many existing jobs; we can already see how decades of automation and globalization have affected the economy. Despite unemployment in Canada at its lowest rate since 1976,9 the share of low-income jobs is increasing: nearly doubling to 30% of Ontarians since 2001, with the percent of Canadians in minimum wage jobs increasing five fold since 1997.10 Over half of Canadians do not have access to $200 in case of an emergency,11 with similar numbers in the US.12 Most Canadians who are in poverty are already working13 (again a global trend14). This is why two thirds of the recipients in the Ontario basic income pilot were working,15 including self-employed and small business owners.16 These are hard working people and critically, these are your voters.
What kind of economy and society will we have, if the share of low income jobs doubles again from 30% to 60%, with the share of national income of the bottom half of earners continuing to decline to subsistence levels, while the share of income of the top 1% continues to accelerate?17 We can already see the impact of declining opportunity for the bottom 60% of society, causing a slowing of economic growth.18
As business leaders, we see basic income as good economics and enlightened self-interest: it is a pro-growth, pro-business, pro-free-market economic stimulus that will grow the economy and create jobs. 1000 economists in 1968 signed a letter endorsing a version of basic income.19
Businesses create jobs in anticipation of growing consumer demand and purchasing power. There are over 36M Canadians. If we want to optimize our economic growth we could ensure all 36M are included in that growth and can participate in the economy without precarity. Being unable to escape poverty even while working is not only inhumane: it's also a huge opportunity cost for Ontario and Canada's businesses.
Those who have the least, spend the most by share of income. Cash from a basic income will go right back into local businesses. This approach is proven. The Bank of Canada Governor Stephen Poloz in 2017 credited the Canada Child Benefit, which is a cash transfer program giving up to $541.33 per child per month to families with children, as having been the reason for a 0.5% increase in GDP,20 which appears correlated to dislodging a multi-year flat line in unemployment rate.21
As for objections around cost, several funding models are available. For instance, a three percent increase in GST federally has been projected as the net cost to pay for a basic income, and that sounds like a good deal to us.22 A three percent increase in GST could be the backbone of a major economic stimulus while simultaneously ending poverty.
Debates around basic income seem to center around ideological approaches to welfare reform. We believe in the potential for basic income to replace inefficient welfare programs, encourage work, and eliminate the welfare trap. We believe it is better that people decide how to spend their assistance rather than government bureaucrats, which is why basic income is pro-free market.
We feel basic income would also be more effective than minimum wage increases or worker subsidy programs which exist in Canada, the US, and the UK.23 Unlike those programs, a basic income would compensate for unpaid forms of work such as caregiving, community service, and entrepreneurship. It would also reduce personal risks associated with taking time to retrain or relocating to find jobs. Basic income reduces stress, improving health24 and reducing crime,25 all which are good for society. Rural areas and small towns would also be the biggest winners economically, from a basic income.26
If the Ford government truly believes that basic income will discourage work, then you should allow the pilot program to continue so can have data on your side. If however it encourages work, then this idea is one that all parties can build off. We have no partiality to the scheme designed by the previous Ontario government, but we do feel it is good enough to test the main theses of basic income.
While other governments all over the world are beginning to design their own programs, ours is already running, making Ontario a world leader. The results of this experiment once complete will inform policy decisions all over the world.
As business leaders, we urge you to reverse this decision to cancel the basic income pilot program.
Co-Authored: Floyd Marinescu CEO of C4Media Inc., and Paul Vallée CEO of Pythian Inc.
Signed: 120 Canadian CEOs, Private Business Owners, Presidents and Cofounders.