by Terrance Hunsley, Editor, SocialCanada.org
The coordinated actions of MP Leah Gazan and Senator Kim Pate are brilliant. They each tabled members’ bills in Parliament and the Senate proposing Guaranteed Livable Basic Income for the nation. They propose that a guaranteed income, based on the actual cost of living in each economic region, be designed and implemented by the federal Minister of Finance. The wording of the Bill revives terms used in the Universal Declaration of Human Rights. Every adult is to be guaranteed security of the person with an income sufficient to live in dignity in their community.
Canada was an early champion of the UN Declaration, with the federal parliament and eventually every provincial legislature committing to implement it. In the 1960’s, under Prime Minister Lester Pearson, the federal government enacted the Canada Assistance Plan which shared fifty percent of provincial costs to provide a minimum guaranteed income based on a needs test which calculated the difference between a person’s income and the cost of a minimal existence living in the community. It was stringently implemented for sure, but it did establish a basic guarantee related to living costs. In the 1990’s, under Jean Chretien, the federal government abandoned that standard and curtailed the Canada Assistance Plan. Provinces immediately slashed the benefits of anyone who did not look disabled by as much as 50%, forcing people to look for minimum wage jobs or beg in the streets. They did both. Since the federal and provincial governments had also let minimum wage levels fall far behind inflation in the 80’s and 90’s, people were forced to work for less than it cost to live without two or more incomes. The result is that Canada has almost the largest proportion of workers who fall below the low wage threshold used by the OECD – about 20% where some European countries are below 10%.
Now you might ask, “How could this happen?” Good question. It was enabled by several changes which converged to create huge numbers of people looking for work, and the bargaining power of individual workers disappeared. The baby boom happened. At the same time, women decided to go into the work force and stay there. Over the course of a decade in the 70’s Canada changed from two-thirds of families being one-earner to two-thirds being two-earners. Unions were undermined by the glut of workers, franchising of retail business and by offshoring of manufacturing jobs.
Employers were now in the driver’s seat and governments helped them by freezing minimum wages and permitting the fragmentation of work into part-time jobs with no benefits. So if you tihink about it, you can see that employers thrived in that period, not because they were increasing productivity (the rate of productivity increase declined by about fifty percent), but because they were paying general labour less than a living wage. They were in fact being subsidized by their workers. It was good for profits, great for the pay of CEO’s and good for the incomes of people with specialized education and skills. The people on the top half of the income scale pulled away from those on the bottom. Over time, income inequality became widely recognized, and the pandemic showed us how unequal our society has become.
So this bill, which would be a small step toward reducing inequality, will probably face opposition from people who say it will be too expensive and that a guaranteed income will permit people to stay at home and not work for a living.
I have an answer to that. Reduce the cost of a guaranteed income by making general labour jobs pay more. The federal government could invoke another clause of the UN Declaration, which calls on countries to guarantee that people who work will be paid enough to live in dignity and support a family. Surprising, maybe? A minimum wage set high enough to allow a person to live in dignity and support a family? Our low end wages come nowhere near that. The Canada Child Benefit helps, but the minimum wage won’t support independent living, even for an individual. For years, our businesses and our affluent professionals have had our costs subsidized by our low wage work force. Now is the time to right that balance, and make work pay a living wage. I propose that minimum wages should be set at two-thirds of the average wage in the economic region where one works. It would work out to be a bit more than the basic income. Except that business would have to pay it.
Of course they would pass some of the costs on to consumers and that would spur some inflation. But the bottom third of workers would gain substantially more than they lose through inflation.
Some of the bottom feeder employers may go apoplectic at the thought, but the policy could be phased in over perhaps five years. Besides, with relatively fewer workers due to demographics, they are going to have to increase wages anyway. This will permit them to do so on a level playing field.
And sure, some jobs would disappear through automation. That would be a good thing. Since the demographic worm has turned and retiring baby boomers are opening up opportunities, there is no longer a surplus of workers who can be exploited. We can let some jobs disappear and take the bonus of a more productive economy.
When we look at the huge increases in wealth that have accrued to businesses and wealthy savers during COVID, we can see how easily our society can afford to stop subsidizing our living standards by exploiting workers. They work as hard as the rest of us and they deserve to be paid a living wage.
So why not move ahead on both fronts? A guaranteed basic income and an guaranteed livable minimum wage?