To all Canadian political parties and leaders,
As Canadian business leaders, we urge our country’s political parties to commit to exploring a guaranteed minimum income as part of their platforms. We see a guaranteed basic income as an approach to address both the increasing financial precarity of our citizens and structural challenges facing the Canadian economy.
We consider basic income as part of a solution that could help Canadians stay globally 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 effecting a decline in entrepreneurship.6
It is time we recognized that structural changes in the economy are occurring that make basic income-related left versus right views on welfare reform and laziness obsolete. Such arguments reflect a 1970s viewpoint when wages were rising with productivity and the middle class was not in decline.7
We don't need to wait to see if advances in automation will eliminate many existing jobs; we have already witnessed how decades of automation and globalization have affected the economy. Nearly half of Canadians were $200 or less away from being financially insolvent.8 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 percentage of Canadians in minimum wage jobs increasing five-fold since 1997.10
What kind of economy and society will we have if the share of low-income jobs doubles again? We don’t wish to find out. 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.
Job creators like us, do so in anticipation of growing consumer demand and purchasing power. If we want to optimize our growth, we could ensure all 36 million Canadians are given the chance to participate fully in the economy without precarity. Being unable to escape poverty even while working is not only inhumane; it also represents an enormous opportunity cost for Canada's businesses.
Debates around basic income generally center around ideological approaches to welfare reform. We believe in the potential for basic income to replace inefficient, paternalistic welfare programs, encourage work, and eliminate the welfare trap. We believe individual citizens are better equipped to make decisions about their own economic future than process-laden government programs.
A basic income would further compensate for unpaid work such as caregiving, community service, and entrepreneurship. It would also reduce personal risks associated with taking time to retrain or relocate for work. We already know that basic income reduces stress, improves health24 and reduces crime.25
A pilot study conducted in Manitoba between 1974 to 1979 showed that a minimum income improved the overall health of the community considerably, in effect lowering health care costs.26 While a more recent study in Ontario has been prematurely interrupted, it was widely reported that young people used the money to enroll in schooling, people living with disabilities returned to college, others used the financial security to start small businesses and single mothers were able to meet basic expenses, pay for child care and find meaningful employment.
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
While other governments all over the world are beginning to design and implement their own programs, Canada must step forward and take this opportunity to help Canadian workers meet their needs in the face of increased labour-market changes.
As business leaders, we urge you to consider a guaranteed basic income in Canada for all Canadians.
Floyd Marinescu, CEO of C4Media Inc.
Paul Vallée, CEO of Pythian Inc.