Pandemic programs illustrate need for basic income

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This article was published 04/12/2020 (2137 days ago), so information in it may no longer be current.

WHEN public-health measures put the economy on hiatus in March, employment insurance (EI) showed itself to be totally inadequate to the task of ensuring that displaced workers had access to enough money to meet their basic needs. As a consequence, the Canada Emergency Response Benefit (CERB) was quickly put in place.

A simple application process that made use of online accounts, coupled with a directive to administrators to wait until peoples’ lives had stabilized before assessing eligibility, ensured applicants had money in their accounts within days.

After such a smooth ride with the CERB, it was reasonable to expect the transition off the CERB to other benefits might work equally well. So what happened?

On Sept. 26, the CERB ended but replacement benefits were not yet in place. Two weeks later, those whose jobs had still not returned were able to apply to replacement programs — a more generous EI and the Canada Recovery Benefit (CRB).

In order to ensure the CRB only went to people who “deserved” it, applicants were required to attest that they are willing and able to work, even though such a claim is unenforceable. Those with caregiving responsibilities turned to the Canada Recovery Caregiving Benefit (CRCB), while those required to isolate sought out the Canada Recovery Sickness Benefit (CRSB).

Each paid a minimum of $500 per week, but the treatment of earned income and tax obligations differed dramatically.

Those on EI had taxes withheld at source, while those on the CRB were expected to calculate and pay tax on the benefit in April. CRB benefits were not reduced until other income reached $38,000 a year, at which point applicants faced a whopping marginal effective tax rate, while EI benefits were reduced by 50 per cent of earned income from the first dollar.

Application was a bureaucratic nightmare: applicants had to wait for eligibility to be verified, which further delayed payment. Applications were not automatically transferred to the appropriate program; applying to the wrong one meant rejection with no additional information, and an hours-long wait on the telephone.

All of these programs, from the CERB to the CRB, the CRSB, the CRCB and EI, omitted the poorest Canadians — those subsisting well below the poverty line on provincial disability or income assistance. Even though many faced higher costs throughout the pandemic because they were unable to access the charities that supplemented their meager incomes, they had no emergency support.

A miserly one-time $600 payment for people with disabilities was still mired in bureaucracy six months after the initial shutdown. So, how would a Guaranteed Minimum Income help?

A permanent program would be an automatic stabilizer for a volatile economy. If someone loses income, the program would step in to assure they have enough money to meet their basic needs, whether that income loss is due to a society-wide issue such as a pandemic or recession, or a personal crisis, such as a job loss or a death in the family.

We wouldn’t have to rely on politicians and civil servants to dream up emergency programs to be offered on a one-time basis to meet long-standing gaps in the system. Since there is no need to determine whether someone deserves support or not, there is no need to have three different programs — the CRB, the CRSB and the CRCB — to meet a common need for enough income to survive until an applicant is back on their feet.

Applicants would not be confused about where or how to apply or what their tax obligations may be. A single program, rather than a raft of slightly different programs, means that the bureaucracy involved in adjudicating eligibility would be much simpler and, presumably, faster.

Applicants could report their income from all sources monthly or bimonthly through online accounts. Income tax could be withheld at source, so there are no unwelcome surprises in April when income taxes are due. The benefit could be reduced gradually as other income increases so there is no barrier or risk involved in accepting a job offer.

Expanding the program to replace income assistance for people without a sufficient job history would improve their lives and allow everyone to access job training programs. Most importantly, it would be an automatic stabilizer.

A permanent Guaranteed Minimum Income would be available whenever a calamity like COVID-19 strikes, automatically ramping up to meet needs. It would also automatically contract as the pandemic wanes and jobs return.

When people have other opportunities, research shows they accept jobs and, with a regular wage, they need less support or none at all from a Guaranteed Minimum Income. But the program would be permanent, ensuring financial security whenever the need appears.

Evelyn L. Forget is author of Basic Income for Canadians: From the COVID-19 Emergency to Financial Security for All and professor of economics in the Rady Faculty of Health Sciences, University of Manitoba.