When Ottawa unveiled emergency payments of $2,000 to individuals who lost work because of the coronavirus, the program looked to be a stepped-up version of the decades-old Employment Insurance program.
But as the government has moved to fill gaps in the Canada Emergency Response Benefit, the nature of the program is quickly evolving into something that resembles a universal basic income.
A universal basic income, or UBI, would set a minimum income that all Canadians would be eligible to receive, whether they are working, unemployed or unemployable. There are many variations on the idea (which has never been tried on a large scale in Canada) but they all have in common the precept that the benefit continues even if an individual has additional earnings.
Prime Minister Justin Trudeau signalled a big step in the evolution of emergency assistance to individuals on Monday, when he said the government is looking to address three significant gaps in the CERB: people who have lost most, but not all, of their paid work; students who, rather than losing a job, won’t be able to secure one; and full-time workers whose gross pay was less than the $500 weekly CERB benefit.
Seven provinces have minimum wages that, using a 37.5 hour work week, result in gross wages lower than that $500 benefit, as the chart below indicates. Only Alberta, Ontario and British Columbia outpace the CERB; once commuting and other costs of working are considered, that gap would narrow for those three provinces.
Tammy Schirle, professor of economics at Wilfrid Laurier University, said it makes sense to look at topping up the wages of lower-paid employees who need to be at work to provide essential services. "We want to make sure people are adequately compensated if they’re going to work,” she said. “We need them there.”
With those three groups included in the CERB, it now appears to be “definitely leaning” toward a UBI-like benefit, said Todd Hirsch, vice-president and chief economist at ATB Financial, adding that the temporary program could be a launching pad for a permanent universal basic income benefit.
That will open up a debate, he said, between left-leaning advocates that would want to add such a program on top of existing benefits, and conservative proponents who would instead use it to replace current programs such as EI and welfare.
One group that hasn’t been mentioned in the discussion are welfare recipients, whose monthly benefits are significantly lower than the $500 a week paid out under the CERB, as the chart below indicates. No province provides individual benefits that come even close to the level of the CERB, even when benefits beyond monthly welfare payments are included. The gap narrows considerably for a single parent with a child, but even then, benefits fall short of the CERB. In the most generous province, Newfoundland and Labrador, a single parent with a child has a total household income of $23,436, still shy of the $26,000 that the CERB would pay if it were offered for an entire year.
On the other hand, the $500 in emergency benefits is lower than the maximum weekly payment under EI of $573.
David Macdonald, senior economist at the Canadian Centre for Policy Alternatives, says he still views the CERB as more similar to employment insurance than a universal basic income. One key difference, he said, is that individuals must apply for the CERB rather than simply receiving benefits.
He said that it will be difficult for the government to phase out policy changes introduced with the CERB: a guaranteed minimum payment for all recipients, the inclusion of gig economy and other contract workers, and no regional variation in qualifying for payments.
All of those changes could be included in a reformed EI system after the current economic crisis fades, he said.
Prof. Schirle agrees that EI could very well evolve to better cover contract workers, but says she is skeptical about the notion of a permanent floor being set on benefits.
She says she is similarly pessimistic about the prospects of a universal basic income program arising from the coronavirus crisis. Right now, it’s clear that the millions of Canadians who have lost work are victims of circumstance and need help, she said. This is a suspension of the usual moral judgment that those not working have brought their fates on themselves.
That forbearance will fade as the economic crisis eases, she predicted, creating a political barrier to a universal basic income. “I still think people still tend to have a sense of the deserving and the undeserving poor.”
Tax and Spend is a new series that examines the intricacies and oddities of taxation and government spending.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.