Social Policy in Ontario

An end to the perpetual welfare trap? Guaranteed incomes debated

Posted on August 27, 2012 in Social Security Policy Context

Source: Winnipeg Free Press — Authors: Mary Agnes Welch

WinnipegFreePress.com – local
22 August 2012.   Mary Agnes Welch

Bringing back a discarded government program could save taxpayers millions in health-care and bureaucracy costs and dramatically shrink poverty, just as it did in Dauphin almost 40 years ago.

The problem is, even the province’s left-leaning NDP government likely doesn’t have the political will to use it.

That was the feeling Tuesday at a standing-room-only lecture about a hot public-policy idea — a guaranteed annual income that would replace welfare.

It’s an idea with roots in Manitoba. Nearly 40 years ago, Dauphin was the site of an experiment on the effects of a guaranteed income. Every low-income person in town, including the working poor and people not eligible for welfare, got a top-up to ensure a basic level of income.

At a discussion hosted by Winnipeg Harvest, University of Manitoba researcher Evelyn Forget said the results were remarkable: People had much better health, far more children graduated from high school and people didn’t stop working just because they were guaranteed an income.

Several inner-city and poverty activists at Tuesday’s forum said the idea is a no-brainer. Replacing Manitoba’s complicated welfare system could free up social workers to do what they do best — help people deal with addictions, get skills training and find daycare and decent housing, instead of parsing a huge menu of welfare rules.

And it could shrink the city’s burgeoning poverty industry — food banks, charities, non-profits and social-services agencies that eat up millions in government funding.

Manitoba’s new minister in charge of welfare, Peter Bjornson, wasn’t available for comment Tuesday, and neither was staff in the province’s employment and income assistance branch.

A government spokeswoman said the province is “interested” in the Dauphin experiment, but she also touted the province’s five-year-old back-to-work strategy and the recent move to merge the welfare program with provincial training programs.

It’s that approach to welfare, which favours moving people into jobs and makes welfare a last resort rather than a basic income guarantee, that makes it unlikely the Selinger government will touch radical welfare reform.

Several activists, including former NDP MLA Marianne Cerilli, said it’s unlikely any government would risk the political backlash.

Forget said one hurdle is convincing the public that people, especially able-bodied men, won’t stop working if a guaranteed income is created.

And, it would also likely need to be Canada-wide, instead of piecemeal.

“It’s very hard to conceive of 10 provinces and the feds getting together to agree on it, and it would be hard to do it any other way,” said Wayne Simpson, an economics professor at the U of M. “It has to replace what exists, in particular social-assistance programs, which are jealously guarded by the provinces.”

maryagnes.welch@freepress.mb.ca

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THE DAUPHIN EXPERIMENT

What was Mincome?

Between 1974 and 1978, The Dauphin area was part of a groundbreaking study, one of five at the time across North America. Everyone in town was guaranteed an annual income, an amount roughly similar to welfare but where people wouldn’t see big clawbacks if they had a job and where the eligibility rules were more relaxed. And, the money — roughly $3,800 at the time — was theirs to do with as they wished. There where no rules such as the ones that govern today’s welfare allotments. The pilot project helped mostly the working poor, ensuring they could afford a little cream for their coffee, in the words of one participant.

The Dauphin experiment, including all the researchers and staff, cost $17 million.

The experiment was meant mostly to study the effect of a guaranteed annual income on the labour market. If you give people money and don’t make them work, will everyone quit their job? The answer was no, followup research by University of Manitoba economics professor Wayne Simpson found. Adults didn’t stop working full time, but married women stayed home longer after having children and teens waited a little longer before getting full-time jobs.

What was the effect?

A few years ago, University of Manitoba community health Prof. Evelyn Forget used reams of data to test the health and social impacts of Mincome. She found huge spikes in Grade 12 enrolment during the years Dauphin was part of Mincome. There were more kids in Grade 12 in 1977 than there were in Grade 11 the year before, meaning dropouts returned to school.

Hospitalization rates dropped 8.5 per cent, especially for accidents and injuries, since poor people often work more dangerous jobs and are more susceptible to violence, including family violence. Folks in Dauphin also ended up in hospital far less often because of mental-health problems. That could have a huge impact on Canada’s ballooning health-care budgets, including $50 billion spent on hospitals. But, “when the money stopped flowing, the effects started to disappear,” said Forget.

And, people in Dauphin also had fewer babies — the drop in birth rates was higher than the continent saw through the mid-1970s.

Why did Mincome end?

New provincial and federal governments lost interest and never analyzed the results of the experiment — data squirrelled away in 1,800 boxes. And economic turbulence caused by oil-price shocks and inflation made the idea of a GAI politically unpalatable.

Why is it coming up now?

Tags: economy, ideology, poverty, rights, standard of living, tax

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