Last Updated: November 26, 2021
Our economy is leaving most Canadians worse off, with similar trends across OECD countries. Jobs aren't working for most people, because wages are not growing faster than costs of living. A key reason for this is that technology is cheaper than workers. We are in the fourth industrial revolution, and the job and wage displacement is accelerating.
When billionaire investor Ray Dalio says that capitalism is not working for most people, when former Conservative Prime Minister Brian Mulroney says a guaranteed basic income needs to be looked at with “great priority”, and even Canada’s former Bank of Canada Governor Stephen Poloz called for an ongoing CERB-like mechanism—the time for band-aid solutions and incremental measures is over.
The COVID-19 pandemic has laid bare the financial precarity that has long plagued Canadians. Too many of us discovered we were surviving close to the edge of insolvency. The warning signs were clear but went unheeded. For decades, average Canadians have seen it become harder and harder to find good paying work and support rising costs of living.
This trend is due in large part to the fact that advances in technology have made the work that many Canadians do less valuable, as machines take on an ever-greater share of value creation in our society at a lower cost than people.
The result has been a polarization of job quality and wage growth, with most Canadians being undercompensated for decades, spurring increased wealth inequality and lowered quality of life for people. Things are getting worse for most, not better. A healthy economy should be moving people up, not down.
Wage growth for most people is no longer coupled to economic growth or productivity growth. People are working harder and longer and getting less results than their parents or grandparents did.
Technology is now cheaper than workers. It is claiming an ever-greater share of the value being created for those who own the capital at the expense of workers’ wage growth.
As a result of these trends, most Canadians have been undercompensated for decades, spurring increased wealth and income inequality.
Since the 1980s, a majority of the population's incomes stagnated or fell, while the top 1% and 0.1% of earners had their incomes grow at a staggering rate. (PressProgress)
Whereas economic and productivity growth used to drive wage growth for everyone, the median wage earners haven’t had a raise in 40 years when factoring in rising costs of living. In fact, between 1982 to 2014, the share of income going to the bottom 50% of Canadians has actually declined by 28%, while the share of income going to the top 1% has increased by 53%.
Unlike previous waves of automation, recent advances in artificial intelligence are putting both blue and white collar jobs at risk of displacement. We know that people displaced by technology suffer earnings losses as high as 25% per year, 6 years after displacement. High seniority Canadian workers who are displaced suffer earnings losses as high as 35%.
We are in the middle of the fourth industrial revolution, where the rapid adoption of artificial intelligence and automation is affecting Canadians at all earnings levels.
Nearly half of the tasks Canadians do at work today are at high risk of of automation over the next 10-20 years. The most at-risk jobs also happen to be our most common jobs: truck drivers, retail salespersons, administrative and clerical workers, and food workers.
In an industrial revolution, we simultaneously see both the displacement of the value of human work for most of us and an increase in the value of our most skilled. This same phenomenon is occurring throughout the developed world.
Technology has also resulted in the erosion of the middle class over the last several decades. Since the 1970s, we have seen a drop in the share of middle-income jobs, and in their place, an increasing share of higher-pay jobs, and an even larger share of low-pay jobs.
For more and more Canadians, the only jobs available are low-pay, low-quality work. These Canadians are facing a crisis of income, an underlying cause of many other crises we are familiar with: rising debt levels, unaffordable housing, working poverty, and falling income security for part-time workers.
A guaranteed minimum income rebuilds the pathway into the middle-class, lifting them out of a cycle of poverty that had once seemed impossible to climb out of. It provides a floor for displaced workers to stand on while they train and acquire skills for the jobs of the future, rather than jumping to the first available, low-income job.
Basic income buys people the time they need to find the jobs that fit them best. It gives them leverage to negotiate better pay and working conditions, a way to offset the decades of declining job quality and earnings seen in Canada and throughout the industrialized world.
We saw this with the Ontario Basic Income Pilot, where two-thirds of the recipients were already working. (More in Lessons from the Ontario Basic Income Pilot section below.)
The security of a long-term income gives people the ability to negotiate higher salaries, go back to school to improve their skills, or consider alternate careers—things that may have been out of reach before a basic income.
By unlocking people’s risk tolerance, basic income would unleash a whole new class of entrepreneurs, creating jobs, growing our economy, and fuelling Canada’s leadership in innovation.
People receiving a basic income have been found to be up to 4X more interested in entrepreneurship. The guaranteed income of the Canada Emergency Response Benefit (CERB) has led Canadians to start new businesses or find new forms of work to contribute back to the community.
In a study of CERB recipients, 50% learned a new skill, 42% took an online class, and 10% started a business.
A guaranteed minimum income gives students the freedom to focus on education, while acknowledging the work of caregivers and volunteers, who do some of the most challenging but important work in our society. It fills a gap for the millions of Canadians gig workers who have no employment benefits, and thus cannot get EI when work opportunities dry up.
When people have the economic security of guaranteed income, they are better able to take risks in life that are beneficial for their careers, for their families, and for their communities.
Programs that provide a guaranteed minimum income, like the Ontario Basic Income Pilot, would ensure all Canadians are moved out of poverty—a great social achievement. This new income floor would free people from the hundreds of conditional income supports that are currently in place that require complex applications and satisfying arbitrary conditions. It would free those living with disability or in retirement from the fear of losing or having their benefits rolled back.
This can be particularly liberating to those living in poverty. An unconditional program removes the stigma of receiving this money and the disincentive to seek more income. Many choose to go back to school, start a business, or volunteer in their communities.
The Ontario Basic Income pilot helped Luis and Leanna build their business in Lindsay, Ontario.
(Credit: Humans of Basic Income, by Jessie Golem.)
A 2020 survey of Ontario pilot recipients showed that more than one-third of those continuously employed saw their hourly pay increase following the start of the basic income program. More than a quarter of respondents decided to start an educational or training program.
The Ontario pilot showed us that basic income helps Canadians build better incomes, live healthier, give Canadians the freedom to pursue meaningful paths in life, and contribute more fully as members of their communities.
There cannot be a robust and inclusive economic recovery while the bottom 50% continue to experience wage stagnation amidst higher costs of living. A guaranteed minimum income is therefore a necessity to ensure a fairer and faster economic recovery.
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.
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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