Canada's minimum income experiment and the fight against poverty

| February 15, 2016
Photo: flickr/ KMR Photography

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Eric Richardson still has the dining table and chairs his parents bought during the Mincome social experiment of the 1970s.

The carpentry instructor, who grew up in the small Manitoba town of Dauphin, was about 12 years old when the four-year guaranteed annual income program was implemented in his rural hometown in 1974.

Dubbed Mincome, the program provided about 1,000 low-income families -- including the Richardsons -- with monthly cheques that topped up their household income to a base amount.

Funded by the provincial and federal governments, Mincome was originally devised as a way to test whether basic income guarantees discouraged people from working.

Due to budget problems, a final report on the data from program researchers was never completed. However, later research found no evidence that Dauphanites were significantly less motivated to work during Mincome.

Richardson, the youngest of six children, says the program gave people in the small prairie community a bit of freedom.

"My mum and dad managed to buy a few extra things for the house," he recalls.

"At the time, this brand new set of table and chairs showed up. We'd never really bought one before," Richardson says.

During Mincome, his mother Amy worked as a hairdresser.

Richardson's father, Gordon, was semi-retired and performed odd carpentry jobs in the area.

"We didn't starve or anything, but there were no extras," he says.

Having a few hundred dollars extra each month meant people could do things that were not an option in previous years.

"I went to the dentist for the first time and I had like 10 cavities.

"It was a bit traumatizing at the time, but I have a full set of teeth now," Richardson says.

"At the time, it was also quite acceptable to drop out of high school and go get a job."

Mincome enabled people to consider how staying in school could improve job opportunities or lead to higher education in the future, Richardson says.

For his best friend's family, the program helped in securing a work truck for their farm.

"It still chugs around at the farm [today] but it's not used every day," he says.

"It's the same with the table and chairs. My parents never bought a new table and chairs after that, and now I have it," Richardson says.

Mincome: What it found

While it took decades for a proper analysis of the Mincome program to occur, results based on health and social outcomes proved it to be a success.

Research from Dr Evelyn Forget, a professor in the Community of Health Sciences department at the University of Manitoba, used data collected by program researchers to analyse health outcomes for Mincome participants. Outcomes were analysed against a comparative group formed from census data. Forget's findings were published in 2011.

"We saw an increase in high school completion, we saw a reduction in hospitalizations, specifically for accidents and injuries and mental health, and an improvement in mental health in terms of access to family doctors," she says.

A slight decline in work effort during Mincome, identified in research by University of Manitoba economic professors Dr Derek Hum and Dr Wayne Simpson, was deemed to be minor.

"The reduction in work effort was modest: about one per cent for men, three per cent for wives and five per cent for unmarried women," the pair's 2001 paper states.

"These are small effects in absolute terms."

Forget's research also highlights the overall positive effects for the entire town of Dauphin -- even though only about a third of families qualified for Mincome supplements at any one time.

"Mincome offered stability and predictability; families knew they could count on at least some support, no matter what happened to agricultural prices or the weather. They knew that sudden illness, disability or unpredictable economic events would not be financially devastating," Forget's report states.

Guaranteed annual income: Where to now?

Forget believes the success of Mincome, combined with research around guaranteed annual income schemes, proves a similar program applicable to all of Canada would be most beneficial.

"The increase in precarious employment and the fact that people are working with far less security in their jobs than they were 35 years ago means the need for a guaranteed annual income is so much greater today."

Figures from Statistics Canada show just over two million people were in temporary employment last year, amounting to 13.4 per cent of all workers in Canada.

In 1997 -- the first year this type of data was collected -- 11.3 per cent of workers were classed as temporary employees.

And while aspects of Canada's social assistance scheme, like the national child benefit and the guaranteed income supplement to the Old Age Security pension, are forms of guaranteed income, expansion into other demographics -- particularly in the 18 to 65 year group -- should occur, Forget says.

Dr Philip Berger, medical director of the Inner City Health program at St Michael's Hospital in Toronto, says Canada's bourgeoning health costs support arguments for a minimum wage policy.

Data from the Canadian Institute for Health Information show health expenditure was expected to reach $219.1 billion last year. Overall, this was estimated to be 10.9 per cent of Canada's GDP, up from seven per cent in 1975.

"In all our services, whether it be family medicine, the emergency department, even specialty services, there are disproportionate number of poor people and people from other traditionally disconnected communities [like] refugees or newcomers, the homeless, people with addictions and people with serious mental illnesses," Berger says.

"What crosses all the categories is poverty and the need for a decent income."

Lifting people out of poverty will improve the socio-economic situation of hundreds of thousands of Canadians heavily reliant on the health system, he says.

About 4.6 million people, or 13.5 per cent of Canadians, were from low-income homes in 2013, according to Statistics Canada. The agency, which does not use "poor" as a descriptor, defines low-income households as those which have an income level less than half of the overall household median income.

"In health, less than a quarter of what we do medically actually determines someone health status or outcome, Berger says. At least half of illnesses and subsequent treatment requirements stem from socio-economic situations.

Ensuring all Canadians have a decent income enabling them to buy food they need, attend school and live in an adequate home in a safe neighbourhood is the best way forward, he says.

The Canadian Association of Social Workers says a basic income program should be the foundation for a national poverty reduction policy.

"Combined with other policies, like a national affordable housing plan and a national child-care strategy, basic income can really go a long way to eliminating homelessness and poverty in Canada," says Fred Phelps, executive director for the association.

Mincome: How much did people get?

  • Each family received 60 per cent of Statistics Canada's low-income cut off (LICO) threshold at the time.

  • The LICO threshold is based on average income and average living costs. Those earning below the threshold are estimated to be spending at least 20 per cent more of their income on food, clothing and shelter compared to those earning above the threshold.

  • Payments from other social assistance programs were also factored into the amount Mincome families received.

Follow this series on Canada and the minimum wage:

Part 1: Wages vs. workers: How Canada's minimum rates compare

Part 2: Scraping by on the minimum wage and the Fight for $15

Part 3: Canada's minimum income experiment and the fight against poverty

Part 4: The business of the living wage

Part 5: Despite campaign pressure, minimum wages remain stubbornly low

Teuila Fuatai is a recent transplant to Canada from Auckland, New Zealand. She settled in Toronto in September following a five-month travel stint around the United States. In New Zealand, she worked as a general news reporter for the New Zealand Herald and APNZ News Service for four years after studying accounting, communication and politics at the University of Otago. As a student, she had her own radio show on the local university station and wrote for the student magazine. She is rabble's labour beat reporter this year.

Photo: flickr/ KMR Photography



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