Alana Baltzer bought her first new winter coat recently. She’s eating vegetables and fruit now instead of junk food. And, because she’s not worrying about money, she’s having fewer bipolar episodes. The money-stress triggers are gone. She’s also applied to college and is looking for work.
“I grew up in poverty and I never thought I would get out of it,” she says over the phone. “This is giving me the opportunity and I don’t want to waste it. I know this is one of the very few I’m going to get and I’m not going to let it go.”
Baltzer’s optimism is the result of something basic: She has more money in her pocket. The Hamilton resident is part of Ontario’s basic income experiment, which will see up to 4,000 residents receive guaranteed monthly stipends. Baltzer, who is 28, has been on disability support since 2008, and received $722 CAD a month before enrolling in the trial last year (that’s $571 USD; all the dollar figures here will be in Canadian dollars). Now she gets $1,915 a month, and she says the extra money is a “life changer.”
The pilot, one of several now starting around the world, stretches across three metro areas of Ontario: Hamilton, Thunder Bay, and Lindsay. Single recipients, like Baltzer, get up to $16,989 per year. Couples get up to $24,027 annually. If people choose to work as well, that’s fine, but you’ll be taxed at a 50% rate for anything over $200 you earn working. The stipends are roughly 75% of Canada’s official poverty line, which is about 50% of median incomes.
The idea of paying people guaranteed amounts to meet their basic needs is catching on in all kinds of places. GiveDirectly, the New York cash assistance pioneer, is organizing a big experiment in Kenya. Finland has a nationally run trial. There is a basic income pilot in Oakland, California, organized by Y Combinator, the startup accelerator. Everywhere from Scotland to India is considering similar programs, large and small.
All this basic income experimentation is driven by two main factors. Some places, like Ontario, want to find more efficient and effective ways of bringing people out of poverty. Other cities and states are focused more on the changing nature of work, including the increasing scarcity of jobs paying inflation-matching wages and full benefits, and the rise of robots and artificial intelligence that could one day put millions out of work for good.
“In our social assistance system, there is not enough focus on enabling and there’s too much focus on holding people to account for the money that they get,” Ontario’s premier, Kathleen Wynne, tells Fast Company. “There are all sorts of rules and regulations that people have to go over to get an amount of money.”
“I believe we need to inject more respect into the system. We need to believe that people want to work and be part of society in a respectable way. They don’t want to be looked down on and seen as not useful parts of society,” Wynne says.
Moving on from welfare-to-work
Like many other places in the developed world, including the U.S., Ontario moved away from unconditional welfare in the 1990s to a system predicated on encouraging people into work. It now has the Ontario Works program, which gives financial support while people search for jobs, as well as a disability support program. Ontario Works sounds like a reasonable social contract, trading the right to public support for the responsibility to look for work. But Wynne says it has the unintended consequence of being highly bureaucratic. People need to prove they can’t support themselves but are actively checking out job listings. So the program needs to keep track of every client’s working circumstances (they are called clients, not citizens), their level of financial assets, and whether they’re receiving other support, from housing allowances to winter clothing packages. All that increases government’s costs and makes claiming benefits a daunting task. “It’s a full-time job to keep yourself in a sustenance situation,” Wynne says.
Moreover, programs like Ontario Works have a limited conception of what work is–something that basic income advocates are keen to expand. It doesn’t respect the unpaid work that parents and caregivers do quietly inside the home, or the volunteer work that officially “unemployed” people do in their communities. A basic income could reward such work and strengthen social structures, supporters say.
“I’ve met lots of people on social assistance who give a lot to the community and I have often thought ‘why aren’t we paying you to do this?'” Wynne says. “I envision a world where we help people to do the work that they can do. By work, I mean involvement in human society. I hope that, as we go through this project, we will see how that will work better.”
Talking to several early basic income recipients in Ontario, the program seems to be having the desired effect. And not only because they now have more money than they used to. People enrolled in the program also have to spend less time and energy claiming benefits and negotiating the social assistance system than they used to.
“Hamilton is a generous community, but it takes hours in a day to live at subsistence levels,” says Dave Cherkewski, another Hamilton resident. “Basic income frees up personal time to think about the contribution I can give back to the community.” For example, he no longer has to wait in line at the local food bank, or prove to anyone he’s still worthy of disability support.
Cherkewski worked at a local telecom company for 12 years before losing his job in 2002. He’s lived on disability ever since–he’s had mental health problems since his teens–receiving $1,078 a month. He now gets an additional $750 a month in basic income, or $9,000 a year, for a total of about $23,000 annually. With the extra money, Cherkewski’s enrolled in a psychology course and he’s hoping to set up a personal mentoring business. He says he wants to help others to find work.
Cherkewski and Baltzer say signing up for the trial was easy. Baltzer took an introductory class about basic income, filled in a baseline survey (which took about 45 minutes), gave her bank details, and signed a couple of consent forms. “It’s freeing,” Baltzer says. “It’s like you are a regular citizen without having to report everything to your welfare workers or your disability workers. It’s much more dignifying than social assistance.”
But how do you pay for it?
The $50 million pilot, which finishes enrollment in May, will run for three years. Researchers plan to track each participant and measure the impact of the basic income on their lives compared to a control group. It will also look at community-wide effects, comparing Lindsay with the other two areas.
“Does it take your life on a different trajectory and increase your capacity to work? Does it improve your health and decrease your use of health services? Does it improve your mental health? We’ll be looking at all those things by surveys, but we’ll also be linking people’s names to other data, like their tax records,” says Kwame McKenzie, who leads the research and evaluation group for the project.
Another key question is how expensive the program is to administer. Is it cheaper to pay someone a basic income, no strings attached, than means-testing their benefits and assessing their work arrangements? Also, does it lead to savings in other parts of the budget–for example in healthcare costs–which could be used to justify a basic income’s costs? (Other basic income trials, including one in Manitoba in the 1970s, reduced hospital visits). Such tradeoffs may be crucial if basic income is to go from pilot stage to a full-blown government program.
“One of the challenges of my political life is to get accountants to help us show on the books where we’ve saved money by doing certain things,” Wynne says. “We’ve moved so many people off smoking and saved billions of dollars, but does it show anywhere in our accounting? I’m certainly going to be asking those questions as we go through the basic income pilot.”
Wynne is arguably the most progressive political leader in North America. As well as the basic income pilot, she’s also raised the minimum wage in Ontario to $14, from $11.60 (it will go up to $15 in 2019). She’s offered free college tuition for 210,000 students, and covered drug prescriptions for people under 25. At the same time, in an effort to make housing more affordable, she’s brought in a non-resident speculation real estate tax and introduced inclusionary zoning.
At a recent event in New York City, the Toronto-based urbanist Richard Florida, who was interviewing Wynne, said she was setting an example for U.S. progressives to emulate. “You are one of the few political leaders in this world who says ‘we don’t want to destroy capitalism, we’re here to make it work equitably and inclusively.’ That ball has to get rolled in this country not just by projecting hopes and dreams on the next presidential candidate but by doing it locally and state [by] state,” he said.
Wynne is up for reelection this June, so it’s possible that her progressive agenda, including the basic income pilot, will come to nothing. But, should she win again, she may engineer the boldest government attack on inequality and job insecurity on this continent. “The changes in the workforce, in technology, and the potential for dislocation of people forces us to try different things,” she says. “Our experience in Ontario is that there’s a real expectation that government is going to look for ways to make society fairer.”