by Kate McFarland | Mar 23, 2017 | Research
Three University of Manitoba economists, Wayne Simpson, Greg Mason, and Ryan Godwin, have jointly authored a new research paper about the Manitoba Basic Annual Income Experiment (“Mincome”), a trial of a guaranteed income that took place from 1974 to 1979.
The Mincome experiment consisted of randomized studies in Winnipeg and rural Manitoba, as well as a saturation study in the town of Dauphin, where all residents were eligible for participation in the study. Participants received an income supplement that was phased out as personal earnings increased, and several combinations of minimum income level and taxation rates were tested. The guaranteed income scheme tested, a negative income tax, is equivalent in its distributional effects to a basic income that is taxed back with personal income over a certain amount. Decades after Mincome ended, its outcomes were analyzed by economist Evelyn Forget. The results are now frequently mentioned as evidence of the effectiveness of basic income / negative income tax.
At present, the province of Ontario is preparing a new major trial of a guaranteed income (which, as in Mincome, is likely to be designed as a negative income tax). In a lengthy discussion paper about the new trial, project advisor Hugh Segal notes that the Dauphin saturation study, showed “population health improvements, the potential for government health savings, and no meaningful reduction in labour force participation.”
In their new article, Simpson, Mason, and Godwin re-examine Mincome, and consider how it might answer questions about contemporary experiments in Ontario and elsewhere.
Abstract
The recent announcements of the Ontario Basic Income Pilot and Finland’s cash grants to jobless persons reflect the growing interest in some form of guaranteed annual income (GAI). This idea has circulated for decades and has now been revived, no doubt prompted by concerns of increased inequality and employment disruptions. The Manitoba Basic Annual Income Experiment (Mincome), conducted some 40 years ago, was an ambitious social experiment designed to assess a range of behavioural responses to a negative income tax, a specific form of GAI. This article reviews that experiment, clarifying what exactly Mincome did and did not learn about how individuals and households reacted to the income guarantees. This article reviews the potential for Mincome to answer questions about modern-day income experiments and describes how researchers may access these valuable data.
Wayne Simpson, Greg Mason and Ryan Godwin (2017), “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later,” Canadian Public Policy.
Reviewed by Cameron McLeod
Photo: Northern Lights in Manitoba, CC BY-NC-ND 2.0 AJ Batac
by Kate McFarland | Mar 20, 2017 | Opinion
I appreciate André Coelho’s recent response to Francine Mestrum’s article “The Alternative Facts Of The Basic Income Movement“, especially his clarification of the role of Basic Income News. However, I believe that Coelho’s reply fails to give due attention to what struck me as Mestrum’s main contention: that organizations like BIEN should not use the term ‘basic income’ to refer generally to guaranteed minimum income programs (which are typically means-tested rather than universal).
We must make no mistake here: the terminology is confusing. Although BIEN has adopted one specific definition of ‘basic income’, this definition is not universal. Indeed, even some of BIEN’s affiliates adopt definitions of the term that are not coextensive with BIEN’s. Many of the discrepancies between here reflect a different dimension of the semantic dispute: whether, by definition, a policy called a ‘basic income’ must provide a livable income. BIEN itself has rejected this constraint, but not without controversy (for more on this dispute, see Basic Income News articles by Toru Yamamori and Malcolm Torry). Mestrum is correct, though, to identify what we might call the question of “universality” or “uniformity” as another source of discrepancies between different uses of term.
Since I began writing for Basic Income News, I have managed to internalize a certain dialect (“BIENglish” if you will). I must admit, however, that the relationships between terms in BIENglish sometimes make little antecedent sense. For one, in BIENglish, ‘basic income’, ‘universal basic income’, and ‘unconditional basic income’ are mutually synonymous (defined as “a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement”). If I ignore my familiarity with a certain quasi-technical dialect, thinking merely as a competent user of the English language, this semantic equivalence might seem surprising. It might make more sense, it seems, to suppose that ‘basic income’ refers to something more general, of which ‘universal basic income’ and ‘unconditional basic income’ name specific variants. More confusing still, however, is the use of ‘basic income guarantee’ — which, in BIENglish, is not synonymous with ‘basic income’. Instead, in the dialect I have now internalized, ‘basic income guarantee’ seems to be roughly synonymous with ‘guaranteed minimum income’ — and is likely to extend even to some means-tested programs that Mestrum would support (but refuse to call ‘basic income’).
It is worth expanding on the latter point. BIEN’s US affiliate, the US Basic Income Guarantee Network (USBIG), defines ‘basic income guarantee’ (‘BIG’) as a “government ensured guarantee that no one’s income will fall below the level necessary to meet their most basic needs for any reason”. According to USBIG, a basic income is a specific type of BIG, one that “gives every citizen a check for the full basic income every month”. However, on USBIG’s definition, BIGs also include policies like the negative income tax (NIT), which “pays the full benefit only to those with no private income and phases out the benefit as people earn more private income” (thereby, perhaps, avoiding Mestrum’s main complaints against a truly “universal” basic income). We should stop here to note that, in the dialect of USBIG, the following sentence would seem to be true: “Francine Mestrum supports a basic income guarantee and opposes a basic income.” And we should expect ordinary English speakers to be at least a bit confused by something like that, assuming that they’re not already immersed in USBIG or BIEN lingo. This is the sort of potential linguistic weirdness to which we should be sensitive whenever we speak in “BIENglish” to a general audience.
To further confound the situation, however, we must mention the Canadian dialect. BIEN’s Canadian affiliate, Basic Income Canada Network (BICN), defines ‘basic income guarantee’ similarly to USBIG: “A Basic Income Guarantee ensures everyone an income sufficient to meet basic needs and live with dignity, regardless of work status.” Once again, this definition does not imply the absence of means test, and both a basic income and NIT (to use USBIG’s terminology above) would fall under its extension. In the Canadian context, however, I have not seen sharp definitional boundaries drawn between the terms ‘basic income’ and ‘basic income guarantee’. Notably, BIEN’s affiliate does call itself ‘Basic Income Canada Network’ — not ‘Basic Income Guarantee Canada Network’ — and seems to use the terms interchangeably on its “About Basic Income“ page (where the term ‘demogrant’ might be used roughly synonymously with the term ‘basic income’-as-used-by-USBIG). The latter is consistent with the Government of Ontario’s use of ‘basic income’ in naming and describing its upcoming (so called) Basic Income Pilot (which, in fact, is most likely to test an NIT rather than a “demogrant”).
Finally, we should stop to note that, given their names and affiliation with BIEN, one might reasonably assume that USBIG and BICN are concerned only with a universal and uniform basic income (i.e. a demogrant), paid out to all citizens regardless of means. This, however, would be incorrect. The stated primarily focus of each organization is a “basic income guarantee” — which, by definition, needn’t involve the payment of money to those who don’t need it (as Mestrum finds so problematic in traditional basic income proposals).
Now, I wish to make no claim as what the focus of these respective organizations ought to be. (After all, I am on the executive boards of both BIEN and USBIG.) I want only to use these examples to illustrate one claim: our terminology is confusing, unintuitive, and, at times, even conflicting.
We must not, however, pin too much of the blame on ourselves (though we are not fully innocent). The term ‘basic income’ is often used sloppily and, worse, equivocally in popular media. I sometimes witness speakers and authors who initially define ‘basic income’ as an unconditional cash grant paid equally and uniformly to all individuals — to go on later to claim that a “basic income” was tested in Manitoba’s Mincome experiment, championed by Martin Luther King Jr or Milton Friedman, or nearly introduced by President Nixon. That is, they use ‘basic income’ in a narrow sense (e.g. BIEN’s use) when defining it, but switch to broadest sense (e.g. the Canadian use) while illustrating it. This practice is misleading and deceptive.
This practice is in no way excused by the fact that, in some cases, an NIT could have the same ultimate distributional effects as a universal basic income. First, a basic income could be financed by means other than an income tax, in which case the final distributional effects would most likely differ. Second, even if we consider cases in which the distributional effect are the same, there remain other non-trivial differences between the two types of policies. They might differ, for example, in administrative cost or efficiency — and psychological and behavioral effects on recipients might vary depending on whether basic income checks are issued and later taxed back, or whether the initial payouts never occur. Beyond all this, however, the two types of policies are simply conceptually distinct — and there is no excuse to elide the difference between them without, minimally, alerting the audience and defending the decision to treat them as equivalent in context.
It is extremely doubtful that BIEN and Basic Income News lie at the source of this problem. (To claim otherwise would surely be to overstate the extent of our influence!) At the same, however, I believe that we merit some blame for doing too little to address or even acknowledge this terminological quagmire. I myself am not exempt from this charge. I have always, in my own writings, aimed to be precise in describing how the term ‘basic income’ is used by the speakers or groups on which I report, especially when their implicit or explicit definitions diverge from that of BIEN. Still, for me, a desire for “politeness” — a resistance to policing or condemning usage — has often led to my not being as forceful and overt in noting linguistic discrepancies as I otherwise might. It has always seemed pretentious and condescending to resort to scare quotes whenever another entity (e.g. the Government of Ontario) uses ‘basic income’ differently from BIEN — let alone to accuse said entity of misuse of a term — even if, at the same time, it reeks of equivocation not to.
If I were to offer a somewhat radical suggestion, I might encourage groups like BIEN and its affiliates to abandon the attempt to provide necessary and sufficient conditions for ‘basic income’. Now that uses of the term have proliferated in the mainstream, its definition is out of our control. In the hands of diverse and disperse natural language users, words have a way of acquiring different shades of meaning across regions and groups. (Think, for example, of how speakers from different geographical regions might argue about qualifies as ‘barbecue’.) There is no reason to assume that ‘basic income’ would be immune from such fracturing and fragmentation of meaning. While BIEN must aspire toward precision and accuracy in its own publications, it cannot place itself in the role of policing the linguistic practices of ordinary speakers. This is, by now, a losing game.
In the present context, in fact, we might hope to do little better than to offer a prototype. The prototypical basic income, we might say, is unconditional, universal, individual, stable, lifelong, and sufficient to meet basic needs (for example). At the same time, however, we would need to acknowledge — loudly and clearly — that the term ‘basic income’ is frequently used to denote programs and policies that, while possessing most attributes of this prototype, might lack one or two (e.g. that it might be sometimes be used to refer to programs that means-tested, or paid to households, or insufficient to meet basic needs). Writers would, of course, still bear responsibility for clearly and precisely articulating what their subjects mean by ‘basic income’ — but this is already necessary practice, given that we can seldom take for granted that speakers use ‘basic income’ to mean precisely the same thing as BIEN. However, if BIEN abandons the claim to provide necessary and sufficient conditions, we might mitigate the confusion that might arise when readers assume that occurrences of ‘basic income’ in our publications, which are not otherwise explicitly defined, correspond to BIEN’s definition.
Possibly, it will eventually become necessary that we consider the adoption of new terminology — should ‘basic income’ simply become too imprecise or ambiguous to contribute adequately to the understanding of what it is, exactly, that we study and promote.
Image: “Ambiguity” CC BY-SA 2.0 Lori Greig
by BIEN | Mar 6, 2017 | News
Sarah Gardner, a reporter for Marketplace, published three articles in December 2016 on the topic of universal basic income (UBI): How to support yourself after the robot revolution, Finland to test a basic income for the unemployed, and On the Canadian prairie, a basic income experiment.
In How to support yourself after the robot revolution, Gardner describes the prediction of Lawrence Summers, Former Undersecretary of International Affairs, that by the middle of the 21st century, one third of men between the ages of 25 and 54 will be out of work. The reason is automation.
Sam Altman, Gardner says, also sees automation, including software automation, as a factor for future unemployment. Altman and others are raising millions of dollars for a basic income experiment in Oakland, California.
In Finland to test a basic income for the unemployed, Gardner talks about the “buzz” around UBI in Silicon Valley, the Netherlands, and Finland. Finland, specifically, is facing a hard time with high youth unemployment. — general unemployment is at 8%, while young adults have a 20% unemployment rate. Olli Kangas, the director of government and community relations for KELA (the government agency responsible for public benefits), said, “In the present system they are a little bit afraid of accepting job offers, say, for two months or three months, because they think that, okay, how much would I benefit, in terms of money?”
In On the Canadian prairie, a basic income experiment, Gardner notes, as in the other articles, that automation and temp work are modern issues. Previously, however, there were the Mincome experiments in Manitoba, which trialled a payment similar to UBI.
While these trials were conducted in several parts of Manitoba, “the most interesting pilot was in Dauphin, a small farming town more than three hours northwest of Winnipeg,” Gardner says. Dauphin was a tight-knit Ukrainian community, and the Canadian government gave money, through the program, to ensure families “would never fall below a basic amount.”
Read the full articles here:
Sarah Gardner, “How to support yourself after the robot revolution“, Marketplace, December 7, 2016.
Sarah Gardner, “Finland to test a basic income for the unemployed“, Marketplace, December 13, 2016.
Sarah Gardner, “On the Canadian prairie, a basic income experiment“, Marketplace, December 20, 2016.
by Kate McFarland | Feb 26, 2017 | News
The city of Barcelona is preparing to test an income maintenance program in one of its poorest districts. While it has been called a ‘basic income’, the tested programs diverge in several ways from BIEN’s definition of the term.
Urban Innovative Actions (UIA), an initiative of the European Commission that supports projects investigating “innovative and creative solutions” in urban areas, has allocated €4.85 million (about $5.15 million) to fund a three-year pilot study of guaranteed minimum income (GMI) in Barcelona, Spain. The project is dubbed “B-Mincome” in reference to Mincome, a well-known study of GMI conducted in the late 1970s in Manitoba, Canada.
In the B-Mincome experiment, 1,000 randomly selected households in the Besos district — one of Barcelona’s most economically disadvantaged areas — will receive cash subsidies of an amount sufficient to ensure that their earnings exceed the poverty line. At the time of this writing, the City Council of Barcelona is still finalizing the design of the study. However, the city plans to test several types of GMI schemes, and it plans to investigate them in conjunction with improvements in public services.
According to Project Manager Fernando Barreiro, the objective of B-Mincome is to “test and analyse how effective forms of universal economic support, combined with access to services such as housing, education, work and community participation can reduce poverty.” Results from the pilot will be used in a comparative analysis of the cost and effectiveness of different anti-poverty policies, “with the ultimate goal of developing more efficient welfare services.”
While the B-Mincome pilot bears some similarity to a universal basic income (UBI), and has been called by this name, it should be noted that the program to be tested is neither universal nor individual. Moreover, some of the GMI schemes to be tested may not be unconditional.
First, the B-Mincome program will provide a cash supplement to boost low incomes rather than a uniform and universal cash grant (as was also the case in the Manitoba’s Mincome experiment). These supplements will guarantee that no participant in the study has a household income below poverty level. However, as typical of GMI schemes, the amount of the supplement will be reduced if a household’s income increases during the course of the experiment.
Moreover, the design of the study will promote the targeting of the most disadvantaged recipients. Researchers will employ a randomized block design to ensure the representation of various types of households that tend to suffer the most poverty (e.g. immigrants, single-parent families, the long-term unemployed, and unemployed youth).
Second, as already implied, the payments will be to households rather than individuals.
Finally, some of the variations to be examined are likely to impose conditions of the receipt of the benefit. Barreiro has related, for example, that the city is considering testing a GMI program that makes benefits conditional searching for a job, participating in a training program, or doing work for the community. Such a program would be analyzed for its efficiency and effectiveness against a GMI lacking these conditions.
To develop B-Mincome, the Barcelona City Council has partnered with four research organizations and institutions: the Young Foundation, the Institute of Governance and Public Policy (IGOP) at the Autonomous University of Barcelona, the Polytechnic University of Catalonia, and the Catalan Institution for Evaluation of Public Policies (IVALUA). The city is also consulting with contacts within the governments of Finland, the Canadian province of Ontario, and the Dutch municipality of Utrecht, which are currently running or about to run their own similar pilot studies.
Sources
The Young Foundation, “Young Foundation partners with Barcelona City Council to help deliver radical project in the fight against poverty” (press release), October 28, 2016.
“Linking the Urban Development Network and the Urban Innovative Actions in Barcelona,” Urban Innovative Actions, January 9, 2017.
“B-MINCOME – Combining guaranteed minimum income and active social policies in deprived urban areas,” Urban Innovative Actions.
Fernando Barreiro, personal communication.
Photo: “Homeless in Barcelona” CC BY-NC 2.0 Melvin Gaal
Note: A previous version of this article incorrectly listed IESE as one of the City of Barcelona’s partners in the pilot. It has been corrected to IVALUA. (Edited March 2, 2017.)
by Guest Contributor | Jan 27, 2017 | Opinion
Written by: Pierre Madden
Basic Income, it is argued, provides an effective and efficient means of conquering poverty. What, exactly, is the problem that we are trying to solve? Mention poverty to someone and they are likely to immediately think of the Third World. Bringing the focus back to poverty in developed countries is fraught with preconceptions. People have predispositions to think about issues in certain ways. They share these predispositions with all other members of society regardless of specific opinions on social questions. Various models are utilized rather than others based upon how we frame the issue.[1] And so we feel that we have an intuitive grasp of the subject.
Courts will accept eyewitness testimony that someone was drunk. If a person were to get in an accident while driving and damage another’s car, then during the time of car accident settlements, the defense lawyer can bring in an eyewitness who can testify to the fact that the driver was intoxicated. The witness is not an expert. No Breathalyzer test was done; no blood sample was taken. They can just tell from a person’s demeanor and the nature of the accident whether or not it could have been a DUI case. It is considered common knowledge. The same can be argued for poverty. Broad definitions of poverty exist, such as: “the condition of a human being who is deprived of the resources, means, choices and power necessary to acquire and maintain economic self-sufficiency or to facilitate integration and participation in society.”[2] “In 1958, John Kenneth Galbraith argued, ‘People are poverty-stricken when their income, even if adequate for survival, falls markedly behind that of their community.'”[3]
The problem is translating this qualitative information into numbers so that policies can be implemented and progress tracked.
Some people accept that poverty is undefinable because it is a personal experience. This complexity is highlighted in the expression ‘poverty and social exclusion.’ A concept that you can’t define is difficult to measure. We may be evaluating actions taken to reduce poverty by a method which measures something completely different. Just counting the poor turns out to be a daunting task.
Many approaches are taken to arrive at a threshold value that defines poverty. I will present examples from Canada, Europe in general, the United States and the United Kingdom. Debates surrounding the various metrics are discussed as they come up. Some work incomes and welfare benefit numbers provide context.
In Canada, no official definition of poverty exists. Statistics Canada has been making this point for almost 45 years[4]. What is measured is low-income. Some countries like the United States have an official definition of poverty even if ‘there is still no internationally accepted definition of poverty-unlike measures such as employment, unemployment, gross domestic product, consumer prices, international trade and so on.’[5]
Statistics Canada tracks three low income statistics.
- The Low Income Measure (LIM) is 50% of the adjusted mean income of Canadians[6]
- The Low Income Cut-Off (LICO) starts with the spending of the average Canadian family on shelter, food and clothing (43% of after tax income).[7] The threshold is set at 20% more.[8] Any family earning less is below this Low Income Line.[9]
- The Market Basket Measure (MBM) ‘is a measure of low income based on the cost of a specific basket of goods and services representing a modest, basic standard of living.’[10] It takes into account the ability to reasonably participate in community activities as well as physical health. It varies by geographical location.
This last metric developed in the late 1990s by Human Resource and Skill Development Canada is different from the other two, introduced by Statistics Canada. The first two statistics are unambiguously relative. Strictly speaking they measure income inequality. While the Conference Board of Canada does not hesitate to refer to the MBM as absolute[11], the specialist I spoke to at Statistics Canada was not so sure.[12] However, he felt that the basic-needs poverty line (BNPL) proposed by Professor Chris Sarlo of the Fraser Institute might qualify as absolute. Sarlo himself nuances this view:
This basic-needs approach to poverty is often referred to as an ‘absolute’ measure. This label is misleading insofar as it suggests that the list can never change and is therefore completely out of place in our rapidly changing society. While the basic needs line does propose a broad list of necessities that remains in place over time, the nature, standard of quality, and the quantity of each of the components will vary across societies and will vary over time in a given society. In other words, the basic-needs approach is partly absolute (the list is limited to items required for long-term physical well-being) and partly relative, reflecting the standards that apply in the individual’s own society at the present time.[13]
Stepping back a bit, you can often use absolute poverty as a synonym for extreme poverty, a term applicable to deprivation in very poor countries. Even so, relative elements remain: you can’t compare the situation of someone with no heating in the Arctic to that of someone with no heating in the Tropics. Moreover, Sarlo’s BNPL is approximately 30% lower than the MBM using a similar approach. Clearly, relative and absolute measures overlap and both involve a degree of judgment and arbitrariness.
There are many other variations on these themes. I will cover just a few.
In Europe, they use a measure called the at-risk-of-poverty threshold to define poverty. It represents a ‘percentage of the median or mean value of the Equivalised disposable Income after social transfers.’[14] ‘A threshold of 60% is the most commonly used.’[15] EU countries simply referred to the 60% level as ‘generally accepted.’ [16] Tables sometimes show statistics calculated at 40%, 50%, 60% and 70%, without comment.
The official United States poverty threshold has a fascinating history.[17] Based on the work the Social Security Administration economist Mollie Orshansky, it is often referred to as absolute. However its creator labelled it ‘arbitrary but not unreasonable.’[18] As early as 1959, Orshansky was aware of the pitfalls and limitations of the standard budget (usually called market basket today) approach to defining poverty. At the time, and even today, only with food, because of its nutritional value, can we reach some consensus about what minimal requirements are. Orshansky used the two lowest budgets devised by the Department of Agriculture: the low-cost food plan and the even less expensive economy plan. For the non-food portion, she used Engel’s Law (named for the statistician Ernst Engel not Marx’s collaborator Friedrich Engels), a normative principle establishing that a family spends one third of its total income on food. Using a multiplier of three for food costs under both plans, with adjustments for childless couples and single people, 124 thresholds were developed for farm and non-farm families of various compositions. With a few minor modifications and yearly inflation updates, this measure, based on the economy plan, is still in use today to count the poor in the United States.
A novel variant of the market basket approach, the Minimum Income Standard for the United Kingdom (MIS) is maintained by the Centre for Research in Social Policy at Loughborough University in Leicestershire, UK. [19]
MIS is based on detailed research with groups of members of the public specifying what items need to be included in a minimum household budget. The groups are informed by expert knowledge where needed, for example on nutritional standards. The results show how much households need in a weekly budget and how much they need to earn in order to achieve this disposable income.’ [20]
MIS is not an absolute measure like the US poverty line nor is it entirely relative.[21] ‘MIS also seeks to ensure that minimum income is looked at in the context of contemporary society, but does so in an evidenced way.’[22] Rather than make assumptions about societal standards, public input is used. Also, the UK’s Joseph Rowntree Foundation, which created the MIS, does not consider it to be a measure of poverty[23] and uses the 60% of mean measure in reports it publishes such as Monitoring poverty and social exclusion 2016.
To understand how different the figures are and to visualize the impact they have on the number of poor that are counted, I have converted all the metrics discussed into dollar amounts, in the table below. I make no claim that these numbers are comparable, only that they are reasonably accurate and up-to-date. The last three numbers are actual welfare payments rather than poverty statistics. They are strikingly lower than the rest and this fact does not speak for itself. It does, however, tell a story, if I may digress. The usual reaction when seeing these numbers is: how can someone live on such little income? I would ask: how does one get out of poverty under such straitened conditions? 5 In Quebec, a welfare recipient is allowed to earn $200 per month without penalty. Over that amount, for every extra dollar made their benefits are cut by a dollar (a 100% marginal tax rate). In France, every Euro earned is deducted. This is what is known as the poverty trap. The system is structured so as to remove any incentive to get out of poverty.[24] When governments set payment schedules so far below poverty lines and also discourage the poor from improving their situation, what message does that send?[25] And in case you were thinking that the answer is ‘Get back to work’, item 11 shows what those who cannot work receive about 50% more, still nowhere near any threshold, except Sarlo’s BNPL (item 4), which has been ‘criticized as being too stringent and even “mean-spirited”.’13 More on that later.
Items 8 and 9 are incomes for a 40-hour workweek. These numbers indicate that poverty is not an issue confined to the unemployed. For example, in 2014, ‘Walmart’s low-wage workers cost US taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing.’[26]
| |
Annual thresholds for a single person in 2016[27] |
CDN$ |
US$ |
| 1 |
Canadian Low Income Measure (LIM) [28] |
$22,652 |
$16,904 |
| 2 |
Canadian Low Income Cut-off (LICO) [29] |
$20,788 |
$15,513 |
| 3 |
Canadian Market Basket Measure (MBM) for Montreal [30] |
$17,944 |
$13,391 |
| 4 |
Sarlo of the Fraser Institute: Basic-Needs Poverty Line (BNPL) (Canada) 13 [31] |
$12,205 |
$9,108 |
| 5 |
European low-income measure (60% of mean income) applied to Canada. |
$26,941 |
$20,105 |
| 6 |
US poverty threshold [32] |
$16,202 |
$12,091 |
| 7 |
Minimum Income Standard MIS (UK)[33] [34] [35] |
$28,533 |
$21,293 |
| 8 |
Pre-tax full-time earnings at minimum wage in Quebec [36] |
$22,360 |
$16,687 |
| 9 |
Pre-tax full-time earnings at US federal minimum wage [37] |
$20,207 |
$15,080 |
| 10 |
Actual welfare payment in Quebec for those deemed fit for work. [38] |
$7,476 |
$5,579 |
| 11 |
Actual welfare payment in Quebec for those deemed unfit for work. [39] |
$11,340 |
$8,462 |
| 12 |
French Revenu de Solidarité Active (RSA) [40] |
$8,752 |
$6,531 |
As mentioned previously, the most striking pattern in the table is how the last three entries are low, compared to the rest. The others cluster together with the notable exception of item 4 (Sarlo’s Basic-Needs Poverty Line) and Item 10 (the US poverty threshold). Both of these statistics tend towards absolute measures, which are meant to focus on deprivation rather than income inequality. Which measure is appropriate in a developed country? If all you have achieved is to avoid destitution, are you no longer living in poverty? Not if integration and participation in society is beyond your reach. This is why relative measures of poverty are deemed more appropriate choices, especially in developed countries: they account for social inclusion.
I have tried to frame the question of poverty in such a way as to provide a better understanding of the numbers that inevitably come to define it at some point. Many judgments and choices are involved in calculating these numbers. Agreeing on a number requires social consensus. Unfortunately, focusing on the numbers is not conducive to building such a consensus and is even counterproductive, in that it immediately evokes highly emotional questions of cost and fairness. The whole debate sidesteps issues of social exclusion and lack of opportunities, to which people can better identify in their own lives.
Getting back to the original question, we need a definition of poverty to implement Basic Income. However, labeling it with a threshold number is both necessary and self-defeating. It is not possible to implement Basic Income without pinning down the benefit and cost numbers, yet focusing on these numbers distracts from the positive principles that would muster support for them. Framing the question of what poverty is in such a way that principles are explored before we formulate a numerical definition is more important than the number itself. This reframing is thus a prerequisite to Basic Income.
Author biography: Pierre Madden is a zealous dilettante based in Montreal. He has been a linguist, a chemist, a purchasing coordinator, a production planner and a lawyer. His interest in Basic Income, he says, is personal. He sure could use it now!
Sources:
[1] Volmert, A., Gerstein Pineau, M., & Kendall-Taylor, N. (2016). Talking about poverty: How experts and the public understand poverty in the United Kingdom. Washington, DC: FrameWorks Institute.
[2] An Act to Combat Poverty and Social Exclusion, CQLR c L-7 Quebec, Canada, art. 2
[3] Galbraith, J. K. (1958). The Affluent Society. Boston: Houghton Mifflin. Quoted in Wikipedia: Poverty threshold
[4] On poverty and low income by Ivan P. Fellegi, Chief Statistician of Canada September 1997
[5] Ibid.
[6] Statistics Canada Table 206-0091 Low income measures (LIMs) by income source and household size in current dollars and 2014 constant dollars.
[7] Statistics Canada Low-income cut-offs
[8] “Twenty percentage points are used based on the rationale that a family spending 20 percentage points more than the average would be in ‘straitened circumstances.'” Ibid.
[9] LICO for a single person in a metropolitan area in 2012 = $19597
[10] Market Basket Measure (2011 base)
[11] https://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx#ftn12
[12] Andrew Heisz, assistant director of the Income Statistics Division of Statistics Canada, personal communication, October 19 2016
[13] Sarlo, C. (2006). Poverty in Canada: 2006 Update. The Fraser Institute.
[14] E-mail from Geoffroy Fisher, Eurostat User Support, Eurostat helpdesk December 28, 2016.
[15] Ibid.
[16] Institut national de la statistique et des études économiques (Insee)
[17] All of the information in this paragraph and much more, as well as a wealth of references to primary sources can be found in Gordon M. Fisher, The Development of the Orshansky Poverty Thresholds and Their Subsequent History as the Official US Poverty Measure, May 1992-partially revised September 1997
[18] Orshansky, “Counting the Poor: Another Look at the Poverty Profile,” Social Security Bulletin, Vol. 28, No. 1, January 1965, p.4. Quoted in Fisher (see previous note)
[19] https://www.lboro.ac.uk/research/crsp/mis/
[20] https://www.lboro.ac.uk/research/crsp/mis/whatismis/
[21] “…We would not expect the content of a MIS basket to stand still. But we also don’t think that changes in the average AUTOMATICALLY trigger proportionate changes in the minimum, and in this sense it is not a relative measure.” Donald Hirsch, Director of Centre for Research in Social Policy, personal communication, Nov 1 2016
[22] Donald Hirsch, Director of Centre for Research in Social Policy, personal communication, Nov 1 2016
[23] Joseph Rowntree Fondation Press Office, personal communication, January 11, 2017
[24] John Stapleton Why is it so tough to get ahead? How our tangled social programs pathologize the transition to self- reliance. Metcalf Foundation November 2007
[25] There is no question that low welfare payments are a political choice. In 1969, when Quebec introduced its first welfare legislation, benefits for people under 30 were set at 70% of the amount provided to everyone else. Accounting for inflation, this still represents more than what someone unfit for work receives today.
[26] Forbes April 15 2014
[27] Throughout, $US1 = CDN$1.34
[28] Statistics Canada Table 206-0091 Low income measures (LIMs) by income source and household size in current dollars and 2014 constant dollars.
[29] Statistics Canada Table 1 Low-income cut-offs (1992 base) after tax. 2014 figures for large metropolitan areas adjusted for inflation.
[30] Statistics Canada Market Basket Measure thresholds (2011-base) for reference family of two adults and two children, by MBM region Data for Montreal converted to single person (see note 1 in table)
[31] $10314 X 129.1/109.1 = $12,205
[32] US Census bureau Poverty Thresholds for 2015 by Size of Family and Number of Related Children Under 18 years $12082 adjusted for US inflation (0.1%), 1 US$ = 1.34 CDN$
[33] https://www.lboro.ac.uk/research/crsp/mis/
[34] Minimum Income Calculator
[35] £1 = US$1,23
[36] Minimum wage in Quebec = CDN$10.75
[37] US$7.25 per hour as of July 2016
[38] Emploi Quebec How benefits are calculated
[39] Ibid.
[40] Le revenu de solidarité active (RSA)
