Towards a Better Income Security System for Canadians
(Notes for my presentation to a recent workshop on the concept of a basic income.)
Over the years, we have put in place an effective income security system for older Canadians â€“ CPP plus OAS/GIS have come close to providing an adequate basic income for the elderly.
And we have the instrument we need to address child poverty â€“ namely income tested child benefits which could and should be raised to match the cost of raising children.
The big gap in our system is income security for working age adults.
In my view, the key issue is the lack of sufficient high quality jobs.
We have high unemployment in bad times but, even in so called good times, very high levels of employment in insecure, precarious and low paid jobs. One in five people work in temporary jobs or in solo self self employment. One in four adult women and one in ten adult men are low paid â€“ earning less than two thirds of the median or less than $12 per hour – this is the second highest rate of low paid work in the OECD, and much higher than in most European countries.
Canada needs a higher wage floor â€“ which should be set by higher minimum wages and by easier access to collective bargaining , especially for workers in low paid private service industries.
It is not global competition which holds down wages at the bottom, but a lack of government support for labour market institutions which can and do make a huge difference.
A high wage floor not only raises wages at the bottom, it also narrows wage differences between the bottom and the middle, and the bottom and the top. In Canada, wages at the middle and the bottom have been stagnant or falling for many years, while rising national income has gone to the top, especially the top 1%.
It is striking that it is countries with the most equal wages which are also most committed to providing public services to citizens and income transfers to individuals and families. Highly unequal countries like Canada have a combination of highly unequal wages, and low rates of spending on transfers.
In an abstract way we might say that we shouldn’t worry about low wages and should devote all of our attention to improving income transfers â€“ but the reality is that we have to do both.
We also have to take account of the fact that income security programs are difficult to pay for if they are not built on a foundation of decent jobs. Indeed such programs risk being turned into subsidies for low wage employers if the wage floor is set too low. Higher wages are also important in terms of pushing low wage employers to invest in skills and to raise productivity.
When it comes to income support programs, we in the labour movement continue to argue in favour of major improvements to EI.
The defects of the current system are well known.
Many unemployed workers are excluded because they can’t get enough hours of paid work â€“ the hurdle is as high as six months of full time work.
And when they get in, the maximum benefit is just 55% of the average industrial wage, or just over $400 per week â€“ and the average is more like $330.
And very few workers qualify for the theoretical maximum of 50 weeks of benefits – which applies only to those with long work histories in very high unemployment regions.
We are fighting a major campaign to fix EI.
In debates over income security reform in the past, there were some well-meaning people who wanted a very narrow EI system â€“ perhaps no EI system at all â€“ so that resources could be redirected to other income security programs.
We think that would be a mistake for two key reasons.
First, EI is not just about basic income security. It is also about stabilizing the incomes of individuals, many of whom make only occasional use of the system.
Second, EI is not family income tested, whereas most income supplementation programs are tested in that way. Individual entitlements are important from the perspective of gender equality.
That said, even if we fix EI, big holes will remain given the nature of our job market.
Even if we lower the hours needed to get into EI, many will get in with only very low benefits.
And EI does not and probably cannot respond to the reality that many low wage workers are self-employed (or are miscategorized as self employed .)
Those who fall through the EI safety net face acute poverty because social assistance benefits are far too low. And the welfare system is dysfunctional and punitive in a number of ways â€“ creating a wall between those who get on and jobs.
So, there is indeed a need for something like a basic income program to complement policies to improve jobs and a better EI system.
We need a program to supplement low incomes for the working poor and near poor to create a decent income floor.
My view is that priority should be given to those who are working but cannot work full time, full year â€“ such as single parents of young children (mainly women) and persons with disabilities.
We have the beginnings of an instrument to hand in the Working Income Tax Benefit – which could and should be paying out higher benefits to many more people. Expansion could and should be financed by raising top tax rates, especially on those making more than $250,000 per year.
Many would argue that a low wage income supplement program is not the same as a basic income paid to all citizens. That is true, and the latter would be more desirable in many ways. But I suspect it will be easier to convince people and politicians of the need for the former.