The Pearson Centre for Progressive Policy

Progressive Dialogue and Policy for a Better Canada

Time for a Guaranteed Working Income? (Hunsley)

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April 13, 2020

Time for a Guaranteed Working Income? (Hunsley)

By

by Terrance Hunsley, (author, Future of Work Policies for the 2020’s(1). This article is co-posted on SocialCanada.org)

It was happening before. But the pandemic is going to speed it up, even catapult us into the future of work.

A recent article by economists Kevin Milligan and Tammy Schirle(2) discusses the difficulties that Statistics Canada will have with the Labour Force Survey during the pandemic. The old categories like employed, unemployed and looking for a job, could be misleading.  We can imagine all of the different situations people are finding themselves in. In work, with no income, out of work, in subsidized work, part time, on call, self employed part time, a few gig jobs, under the table work. Actually, the variety of work-related situations started increasing several years ago. Work arrangements have been proliferating in combinations of employment, self-employment, contract and gig work, contingent work, etc. This has been given a huge boost by COVID.  And when the economy struggles back to life, that fragmentation of the labour market will remain.

Many businesses will recuperate,  but they may stumble along with reduced high debt loads. We will see bankruptcies and new ventures. Employees will be displaced. Some employers will reorganize their functions and reduce their work force. Some will take the opportunity to invest in new technology to save on labour costs in the return to a new normal. A study by Microsoft and the McKinsey Group suggests that up to half the work in the USA could be automated by 2030(3). That may be overstated, but regardless, this will push the process ahead.

Many workers will also reorient themselves, either because they are forced to by changing circumstances, or they discover new ways to generate income. Some will gain new skills or retrain for other occupations during the enforced time off. Some will start new enterprises, perhaps in partnership with their spouse or friends. Networked startups will be tried.  Some in receipt of emergency benefits may decide to work under the table for awhile and see how that goes. Both old and new work are going to be more fragmented, unpredictable, and precarious.

More people will work in the online-platform economy. These drivers, cleaners, designers, translators, technicians and others are often formally contracted as independent and their working arrangements tend to exhibit features which are difficult to square with the traditional employment relationship. These include use of their own materials (such as the driver’s car), autonomy concerning working hours (logging into work via a smartphone app), the short duration of the relationship.

People will combine roles and sources to make money and provide themselves a lifestyle they wish, or simply because they have to to survive.

In some cases, as Sacha Garben(4) wrote in Social Europe …prior health problems may in fact be a main reason initially to engage in digital online-platform work, such as on microtask platforms. While this means that online platforms can provide an alternative means for people with health impairments to carry on work and earn some income, contributing to social and labour-market inclusion, it also means that many online-platform workers are already in a vulnerable situation…

The bottom line is that  people will be scrambling to make a living. Job security and related benefits such as sick leave, retirement savings and disability insurance will be problematic.

This is not just a problem of complexity. Canada already has one of the largest proportion of low wage workers as defined by the OECD.  About 22% of the work force earns less than two-thirds of the median wage,  about twice as high as several European countries. They form an economic underclass.  And by sad coincidence, many of these are the people we are dependent on during the crisis, to care for our elderly, stock our food, keep vital supplies available.

We can anticipate that subsidies for wages will continue for some time, even after the immediate danger of infection subsides. Workers and businesses will be struggling to find their feet in a very unpredictable economy. It is also likely that the increased transfers through the Canada Child Benefit and the GST credit will be extended for awhile. It will be important to keep consumption from falling rapidly off.

As we see a light at the end of the tunnel, we will undoubtedly want to express our gratitude to the essential workers who risked their health to look after the rest of us.  What better time, as the stimulus spending is gradually withdrawn, to consolidate the income support programs for vulnerable workers? We need a broad-based program that ensures that working people have a living income, regardless of their source of income or conditions of work. A working income guarantee could be set above the threshold of low wage work: for example, 75% of the median full time wage in the economic region. (At a national level the current median is about $25/hour).  Where current wages do not reach the guarantee level, workers would be supplemented to the threshold through the Working Income Benefit. As business recovers, minimum wages could be moved up.

This program could be efficiently delivered by the Canada Revenue Agency, which currently collects the income information necessary to administer it. Income earned from any source would be considered in calculating the subsidy, which could be transferred electronically into individual bank accounts monthly. As a side benefit, this program would encourage workers to stay in the legal economy rather than work under the table.

We have already put the infrastructure in place with the emergency benefits and wage subsidies. What better time to make the move?    

1 The Pearson Centre, Future of Work Policies for the 2020’s thepearsoncentre.ca,

2 Milligan, Schirle, A Labour Force Survey Pandemic Primer, C D Howe, 2020

3 The Class of 2030 and Life-Ready Learning: The Technology Imperative, Microsoft, 2020

4 Social Europe, March 11, Tackling Precarity in the Platform Economy – and Beyond