Tuesday, October 15, 2013

On Living Wage, Minimum Income and Corporate Feudalism

I have ranted on this blog in the past about Corporate Feudalism and how this is resulting in larger and larger corporations which end up abusing their employees - usually in the form of trying to push wages down as low as they can, and trying to avoid paying benefits as much as possible.  

In the grocery business, we are watching the various major players (Superstore, Sobeys, Wal-Mart, Target) engage in a race to the ethical bottom.  Superstore in Alberta just experienced a worker strike in part because the company wanted to hack 30% off wages - of employees who are already underpaid.  Wal-Mart's wages are notoriously low and we seem to hear about questionable policies which are clearly designed to make it impossible for workers to even make a basic living at their jobs - scheduling policies which insist that part time staff cannot be scheduled for more than a certain number of hours a week, and yet they have to be available to the company "around the clock".  

To call such things exploitative is an understatement.  So, to my surprise, on CBC's "The 180" program last week, I heard Senator Hugh Segal speaking favourably about a minimum income construct.  Like the concept of a "Living Wage", the concept of "Minimum Income" is an attempt to come up with a public policy tool to combat the ever growing problem of poverty.  (Yes, I know I am oversimplifying both notions here - please bear with me)  

With Switzerland holding a referendum on a proposal to implement one, it seems worthwhile to take a closer look at Hugh Segal's position.  (To be honest, I am somewhat surprised to see this position being publicly expressed by the Senator, given the current government's desire to micromanage every utterance of its members.  
The wrong approach is to ignore the problem, letting the ideological conceit that a rising tide lifts all boats obscure the hard reality that many Canadians have no boat or access to anyone who has ever had a boat. Our prisons are disproportionately filled with younger people, First Nations people and representatives of the ten per cent of Canadians who live beneath the poverty line -- as is the case with Afro-Americans in the United States.The cost of keeping every one of these human beings in prisons is between five hundred to a thousand per cent more than what an automatic top-up would cost. Knowing that poverty is the most reliable predictor of trouble with the law, early use of our health care facilities, lower life span, illiteracy, family violence and unemployment, all of which cost tens of billions of tax dollars at a time when tax dollars are hard to find, should spur innovation. Never mind the core inhumanity of not helping the people whom we need as productive, taxpaying, full participants in our economic mainstream. And for those on the far right who resent "paying people to do nothing" remember this: The vast majority of folks living beneath the poverty line are working, on occasion, in more than one job, just not earning enough to get by.
What I was quite unaware of was that Canada had actually experimented with a minimum income project back in the 1970s, under the name "Mincome".
Mincome was an experimental Canadian Basic income project that was held in Dauphin, Manitoba during the 1970s. The project, funded jointly by the Manitoba provincial government and the Canadian federal government, began with a news release on February 22, 1974, and was closed down in 1979. The purpose of this experiment was to determine whether a guaranteed, unconditional annual income caused disincentive to work for the recipients, and how great such a disincentive would be. 
It allowed every family unit to receive a minimum cash benefit, with every dollar over the benefit amount taxed at 60%.[citation needed] The results showed a modest impact on labor markets, with working hours dropping one percent for men, three percent for wives, and five percent for unmarried women. [1] However, some have argued these drops may be artificially low because participants knew the guaranteed income was temporary. [2] These decreases in hours worked may be seen as offset by the opportunity cost of more time for family and education. Mothers spent more time rearing newborns, and the educational impacts are regarded as a success. Students in these families showed higher test scores and lower dropout rates. There was also an increase in adults continuing education.[3][4]  
It's hard to complain about those outcomes, really.  However, as Senator Segal alludes to in his commentary, the far right will complain bitterly about any such program, largely on the basis of false stereotypes about the faces of poverty.

Equally interesting is a study by Dr. Evelyn Forget which analyzed the data from the Dauphin experiment from a health outcomes perspective.  The upshot of that study was that the demand on the health care system was significantly reduced.

I don't have any expectation that a large scale Mincome style program is likely to be implemented in Canada anytime soon.  I don't think that any of the major political parties have this on their collective radar as an objective - and that includes the NDP and Green parties.  This simple fact is that in the last decade or so, nobody has taken the flag up to pursue the issue of poverty and its side effects on our political stage.

The results of the Mincome experiment are intriguing.  I think that there are some interesting additional questions that need to be asked (and answered) about Mincome:

1)  Does this kind of program break the dependency cycle that has been so clearly identified as a criticism of current welfare programs?

2)  Dauphin, Manitoba is a fairly small population.  When scaled up to a larger population, do we continue to see similar outcomes?

3)  How does it compare with other approaches to poverty reduction?

4)  What are the implications with respect to government revenues and how they are collected?

5)  Does this approach intersect with existing programs, or does it supplant them? ... and how?

The concept bears further investigation, and I must applaud Senator Segal for having the courage to start the dialogue, especially at a time when corrupt neo-liberalism holds sway in the corridors of power.  Perhaps Switzerland will begin the process of a larger scale experiment that we can follow carefully.  

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