Understanding UBI vs GMI

Understanding Universal Basic Income (UBI) vs. Guaranteed Minimum Income (GMI)

Last Updated: July 12, 2021

When people discuss basic income, they usually refer to two different schemes often seen as exclusive of each other.

A Universal Basic Income (UBI) as a flat amount paid to all vs. an income-tested basic income most commonly called a Guaranteed Minimum Income (GMI), which goes to those most in need and phases out as income from work increases.  A GMI tends to go under many names, such as Guaranteed Livable Income (GLI), Guaranteed Livable Basic Income (GLBI), Guaranteed Basic Income (GBI), Guaranteed Annual Income (GAI), Basic Income Guarantee (BIG), Negative Income Tax (NIT).

UBI Works’ Recovery UBI proposal – signed by nearly 30,000 Canadians across all federal ridings – delivers both in a way that works together to achieve different goals. We hope this article helps to explain the differences between what these two schemes accomplish as well as how they can also work together.

Recovery UBI: $500 monthly non-taxable UBI payment to all adults (blue in the graph below), which increases to guarantee each individual an income of $2,000/month ($3,000 per couple, and $1,500 per additional adult in the family) will speed up our economic recovery and leave Canadians stronger (red in the graph below):

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Recovery UBI delivers two complementary components that each solve different problems:

1. The universal dividend (UBI) recognizes that jobs aren't working for most people.

Incomes are not keeping pace with rising costs of living because technology is cheaper than workers. UBI gives each of us a share of our economy, providing a raise for all Canadians and a basis for shared prosperity as we go through a period of rapid and disruptive technological automation of jobs.  Without UBI it is unlikely that western countries will be able to maintain a middle class.

2. The guaranteed minimum income (GMI) buys us time by keeping us out of poverty.

GMI ends poverty and restores pathways into the middle class. It defends against declining job quality by ensuring all Canadians, including seniors and those living with disabilities, will make more than $24,000/year. It could replace low-income support programs with a more efficient, lower cost system that treats people with dignity.

Both of these programs are often individually referred to as basic income, but are generally considered to be implemented exclusive of one another.

Neither GMI nor UBI alone are sufficient to address the structural changes that have made our economic system stop working for most people, or the forces that will continue to worsen these trends. Combined, they will ensure that all Canadian adults have an income of at least $24,000/per year ($36,000 per couple), including seniors and those living with disabilities.

Programs like a guaranteed minimum income would move people just above poverty — a great social achievement on its own—but this solution falls short of addressing the challenges in our 21st century economy, where wage growth is disconnected from productivity and economic growth.

UBI Delivers Shared Prosperity In a Time of Winner-Take-All Economics

A universal basic income (UBI) is a dividend, a regular payment, received equally by everyone.  Variants of it are currently in place in several jurisdictions such as Alaska, where each resident receives a portion of the state’s oil revenues. And technology is the oil of the 21st century.

Technology is the single most powerful enabler we have to create a better life for everyone on this planet, and basic income is how we organize ourselves as a society to take advantage of it.  You can think of it as a “tech cheque” — so that we each get a share of an economy we’re all invested in.  

Basic income is not social assistance. It is not a handout or a form of charity based on need. It is how Canadians across the country can reclaim their slice of the economic pie; it is each person’s right to part of the wealth our country generates. It is a public utility, like roads and electricity, that circulates capital to ensure the economy still serves its purpose: improving human prosperity.

UBI is how we organize ourselves as a society to benefit from the value that technology is creating. It re-connects economic growth and increased technological productivity with improving quality of life. UBI secures and expands the middle class, a hallmark of a successful democracy.

Canadians have long recognized that successful long-term policies are ones that we all pay into and have an equal right in, just like universal healthcare. It is therefore important that all Canadians are entitled to receive a portion of Recovery UBI, even if they do not strictly require it, just as everyone can receive free flu vaccinations even if they can afford it. However, we also recognize that the needs of some Canadians are greater and more pressing than others, which is why the sickest person gets seen first under our healthcare system and the lowest-income Canadians would receive more under Recovery UBI.

A guaranteed minimum income you can access when needed

A guaranteed minimum income (GMI), also called a basic income guarantee (BIG), is an income supplement that gradually phases out with employment income, so that Canadians always make more when working—ending working poverty.

An effective income guarantee should be set at a level that would virtually end poverty. Recovery UBI builds a guaranteed minimum income on top of the $500/month dividend, government cash supports, and other non-employment income, so that every Canadian makes at least $24,000/year ($36,000 per couple).

Built on top of the $500/month universal dividend, the guaranteed minimum income provides substantial raises for people working in low income jobs. 

This guaranteed income gives Canadians a bonus when they go back to work by gradually phasing out by 50 cents per $1 of work income. This is identical to what was tested in the Ontario Basic Income Pilot, as well as the “Back to Work Bonus” proposal by the Conservative Party and the Bloc Québécois to modify the Canada Emergency Response Benefit (CERB), in order to preserve work incentives for Canadians as our economy emerged from lockdown.

Best of both worlds: Combining a GMI with a UBI

The two components together — an equal universal dividend and a needs-based payment — can bring the 21st century upgrade our economy needs, funded through realistic tax reforms. (See our accompanying article: How to Pay for a Universal Basic Income.)

We can both solve poverty with a guaranteed minimum income and expand the middle class—by making the economy pay everyone a dividend.

UBI Works’ Recovery UBI proposal combines these approaches to form a basis of a fairer and faster post-pandemic economic recovery that would leave Canadians far better off.

There is precedent for two programs working together. In Canada, our seniors have the Guaranteed Income Supplement (GIS), a needs-based, basic income guarantee providing up to $11,229 annually to singles, and even more to couples. The other part of the program is Old Age Security, a rights-based program providing monthly payments totalling up to $7,518 annually to seniors for their years of working in Canada. Seniors do not rely on just one of these programs — instead, they enjoy a hybrid model. This approach has been proven to work for seniors and could work for all Canadians if Recovery UBI were implemented.

Looking forward

The best thing for Canada right now is to start with both programs. A $500/month dividend and a $2,000/month guaranteed minimum income will help millions of Canadians through a long and jobless recovery, which could be enacted today with enough political pressure.

However, a universal dividend could achieve the same outcomes as a guaranteed minimum income if it were increased to a range of $1,500-$2,000/month. It would further streamline government services and increase the work incentive, since the dividend is kept in full regardless of income. Given the gross cost ($720B/year), such a change would be extremely challenging in the context of a post-pandemic recovery.

Recovery UBI does however allow for this possibility, laying the groundwork for the gradual expansion of the dividend to the point where it subsumes the guaranteed minimum income entirely. In pursuing this goal, we can build an economy where every Canadian has the right to benefit from our current abundance and reject the notion that scarcity is required for a productive society.

  • $500/month for all Canadian adults (blue portion in image above)
  • Dividend (same amount for everyone)
  • Economic Reform: Circulates money more equitably in a market system and gives greater equality of opportunity to all Canadians
  • Expands middle class
  • Makes us owners / shareholders in our economy
  • Addresses decreasing labour share of income & wage growth stagnation
  • Keep all the money when you work
  • Equally addresses income & wealth inequality
  • Efficient: No means-testing or administrative complexity
  • Increases Income
  • Compensates volunteers, caregivers
  • A tax refund for all
  • Tech cheque - make robots work for us
UBI (Universal Dividend)
$500/month for all Canadian adults
Dividend (same amount for everyone)
Economic Reform: Circulates money more equally in a market system and gives greater equality of opportunity to all Canadians
Expands middle class
Makes us shareholders in our economy
Addresses decreasing labour share of income & wage growth stagnation
Keep all the money when you work
Equally addresses income & wealth inequality
Efficient: No means-testing or administrative complexity
Increases income
Compensates volunteers, caregivers
A tax refund for all
Tech cheque - make robots work for us
  • $2,000/month minimum income that scales back as market income grows (red portion in image above)
  • Progressive
  • Social Reform: Takes the vast majority of people out of poverty, replaces welfare programs, reduces bureaucracy
  • Restores pathways into the middle class
  • Helps our most vulnerable
  • Addresses labor market polarization: growth of low-quality / low-income jobs
  • Benefit reduces as work income increases
  • Equitably addresses income & wealth inequality
  • Effective: means-testing targets those who need it with more support
  • Buys time
  • Also compensates volunteers, caregivers
  • A tax credit for people in poverty
  • Helps people who lost jobs to robots
GMI (Guaranteed Minimum Income)
$2,000/month minimum income; $3,000/couple + $1,500/additional adult in family
Progressive
Social Reform: Takes the vast majority of people out of poverty, replaces welfare programs, reduces bureaucracy
Restores pathways into the middle class
Helps our most vulnerable
Addresses labour market polarization: growth of low-quality / low-income jobs
Benefit reduces as work income increases
Equitably addresses income & wealth inequality
Effective: means-testing targets those who need it with more support
Buys time
Also compensates volunteers, caregivers
A tax credit for people in poverty
Helps people who lost jobs to robots

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Our Mission

To shift the conversation about basic income to recognize it as an economic need and economic opportunity, with the goal of seeing UBI implemented in Canada.

Our Why

We want a Canada where everyone can pursue their potential and not be held back by basic material constraints or unsafe environments.

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