Does a basic guaranteed income decrease the need for social services?

The idea of a basic guaranteed income is getting a trial run in a Canadian province for three years. Four thousand randomly selected Ontario residents will get thousands of dollars a year, and in exchange, they give up some social supports, while the government gets back some money. Economics correspondent Paul Solman talks with some participants, as well as some skeptics.

Read the Full Transcript

Judy Woodruff:
The economy may be doing well by many measures, but for years, there have real concerns over wage growth and the overall standard of living.
Perhaps it’s not so surprising that at least one recent survey showed growing public support for a new government program that would guarantee some income to citizens.
There are small pilot projects of how it could work.
Economics correspondent Paul Solman traveled to Canada to see one of the larger programs.
It’s part of his weekly series, Making Sense.

Paul Solman:
Cheerios, sans gluten, without gluten.

Alana Baltzer:
I may not speak French, but I have been in a bilingual country my entire life, so I know what the French actually…

Paul Solman:
What sans gluten means.

Alana Baltzer:
Yes.

Paul Solman:
A Tuesday trudge to the local grocery store in Hamilton, Ontario.

Alana Baltzer:
Love the organic vegetables.

Paul Solman:
This is the first time 29-year-old Alana Baltzer has been able to afford the healthy food here at the Mustard Seed Co-op, because, she says, when you’re poor-

Alana Baltzer:
It’s buy the stuff that you can afford, which is generally quick, easy and all processed and high in sugar and trans fats and all the other unhealthy stuff.

Paul Solman:
That’s all that Baltzer could afford on her $575-a-month welfare disability check.
But Ontario will now give her $1,130 U.S., no questions asked, as part of a three-year basic income pilot launched late last year.

Narrator:
Around the world, people believe that basic income could provide a simpler and more effective income support.

Paul Solman:
The idea’s also being piloted in Finland and California. Now it’s Ontario too.

Kathleen Wynne:
How are people’s lives changed, and how are they able to do better in their lives, prevent illness, stay in school, get jobs and keep jobs?

Paul Solman:
Ontario Premier Kathleen Wynne.

Kathleen Wynne:
We should be looking at different ways of providing support, ways that actually don’t punish people, but actually support people in getting on with their lives and produce better outcomes.

Paul Solman:
Four thousand randomly selected Ontarians in three communities will get about $13,000 a year U.S. for a single person, $19,000 for a couple. In exchange, recipients give up some social supports and the government gets back 50 cents of every dollar they earn.

Dr. Kwame McKenzie:
It is definitely the biggest basic income study that there’s ever been in North America. You don’t have to show that you’re sick. You don’t have to show that you can’t work. You get it as a right.

Paul Solman:
Research director Kwame McKenzie and his team will analyze the results.

Dr. Kwame McKenzie:
We’re going to see whether it increases your chance of coming out of poverty. We’re trying to see if it makes your housing stable. We’re trying to see whether it improves your mental health, whether it basically decreases your use of other services, such as hospital beds.

Paul Solman:
Turns out Manitoba launched a basic income experiment in 1974 that the provincial government there later pulled the plug on.

Dr. Kwame McKenzie:
It was an incomplete study.

Paul Solman:
But, long after, researchers studying the data found-

Dr. Kwame McKenzie:
We have got less health service use. We have got mental health improving. We have got people going back to college and they’re getting better, getting better skills to move forward. This is a great thing, right?

Paul Solman:
But was it a fluke? And could the same policy produce like results 40-plus years later?
Well, for Jodi Dean and family, the answer seems to be yes.
Ten-year-old daughter Madison has suffered from both brittle bone disease and epilepsy since toddlerhood. Yes, Canada has universal health care, but not for the E.R. commute.

Jodi Dean:
As far as parking goes, we’re not covered for that. That’s $25 an emergency visit.

Paul Solman:
How many times has she broken bones?

Jodi Dean:
She’s probably had at least 70 breaks.

Paul Solman:
How many times a month do you have to pay for parking?

Jodi Dean:
Two to three times a week.

Paul Solman:
Basic income now covers, in effect, half the parking bill, a huge relief for someone who never dreamed she’d be poor, used to volunteer at the food bank, then found she couldn’t live without it.

Jodi Dean:
How do you go back to where you just gave that time and tell them now you’re in need?

Paul Solman:
Jodi Dean, like Alana Baltzer, lives in Hamilton, a once-thriving steel city of 750,000 within an hour of Toronto.

Tom Cooper:
We used to have 40,000 people working directly in steel, and, today, it’s probably closer to 7,000.

Paul Solman:
Tom Cooper, who directs an anti-poverty project, claims he’s already seen benefits from the program.

Tom Cooper:
Many of the individuals I have talked to who are on the basic income pilot are going back to school, wanting to improve their opportunities to get a better job.

Paul Solman:
Moreover, he says-

Tom Cooper:
There’s not the oversight we see in traditional social assistance systems that requires people to report monthly on their income or their housing status or their relationship status.

Paul Solman:
While most poor Ontarians didn’t make it into the pilot, Baltzer did, and no longer has to deal with the provincial welfare system.

Alana Baltzer:
You do not have the bureaucracy involved with welfare or disability. If you get a job, you simply call, let them know, give them the information, submit your pay stubs, bada boom, bada bing, done

Paul Solman:
And your mom made it on to the program. Has it made a difference in her life?

Alana Baltzer:
Oh, God, yes. She’s more ecstatic about not having to deal with Ontario Works, the welfare workers.

Paul Solman:
The pilot has even induced Baltzer to lose five pounds since November, more exercise, more confidence.

Alana Baltzer:
The first time in years I have been able to wear high heels without groaning in absolute pain and sheer agony.

Paul Solman:
As for the depression she has long struggled to fend off-

Alana Baltzer:
It’s nice to not have a full-blown episode because I’m worried about whether or not I’m going to be able to eat tonight or be able to pay my rent or do something as simple as laundry.

Paul Solman:
Other pluses? Well, from the government’s point of view, it no longer has to subsidize Baltzer’s housing, so the pilot is costing Ontario less than $700 a month more.

Dr. Kwame McKenzie:
It’s important to measure that and measure sort of use of government services.

Paul Solman:
But Baltzer attends college in the fall, as now planned, and then gets a job, government would be off the hook entirely.

Dr. Kwame McKenzie:
And it’s also important to measure whether people are actually generating wealth, because everybody’s thinking often about the cost, but people don’t always think about the possible economic benefits.

Paul Solman:
But, look, say skeptics, basic income will cost a pretty, albeit Canadian, penny going out, while benefits may never actually flow in.

David Wakely:
I don’t think the savings are actually going to be there. So, I think that’s misleading.

Paul Solman:
That’s local lawyer David Wakely, who says, if the program is extended universally, it would cost Ontario two-thirds of its annual revenue. And he doubts recipients will go to school or get a job.

David Wakely:
Where someone can stay home and get a basic income guarantee, this just serves as a security blanket for them, because they have always got this income to rely on.

Paul Solman:
And as I asked former U.S. union leader Andy Stern, isn’t that the time-honored objection to a basic income?
If you pay people to do nothing, isn’t that an incentive for them to continue to do nothing?

Andy Stern:
There are always people who are going to stay at home and take advantage of government programs. There are a lot of wealthy people and children who are paid to do nothing, and it doesn’t seem to affect them being vital and involved in society.

Paul Solman:
John Clarke of the Ontario Coalition Against Poverty doesn’t worry about poor people taking advantage of a basic income. But he does worry that the program is a move to take advantage of them by laying the groundwork for the elimination of government-provided social workers, health care, the eventual privatization of social services.

John Clarke:
So you’re shopping for health care, you’re shopping for housing, you’re shopping for public transportation, child care, all these things. And this is the prevailing agenda at the moment. And a basic income system takes us in that direction.

Paul Solman:
Moreover, says Clarke, a basic income creates downward wage pressure on the working poor.

John Clarke:
If you create a situation where low-wage workers are receiving a significant portion of their wages out of the tax revenues, then the pressure on employers to increase wages is reduced, the pressure on governments to increase minimum wages is reduced.

Paul Solman:
So how to know then if the costs outweigh the benefits?

Dr. Kwame McKenzie:
We can all of these theoretical discussions, or we can say let’s do a test and see what actually happens. What are the costs? Is it a more efficient way of giving people who need it support? What are the benefits? Does it grow the economy or not?
And then we can have a rational discussion based on evidence, rather than just based on theory.

Paul Solman:
And rather than based on promises of breaking the cycle of poverty, which might or might not, in the end, be mainly smoke and mirrors.
For the “PBS NewsHour,” this is economics correspondent Paul Solman reporting, mainly from Ontario.

Read More an See video: https://www.pbs.org/newshour/show/does-a-basic-guaranteed-income-decrease-poverty

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Up ↑

%d bloggers like this: