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A Town Without Poverty?

September 5, 2011

A Town Without Poverty?

Canada's only experiment in guaranteed income finally gets reckoning

by Vivian Belik

Photo: Dave Ron

WHITEHORSE, YK—Try to imagine a town where the government paid each of the residents a living income, regardless of who they were and what they did, and a Soviet hamlet in the early 1980s may come to mind.

But this experiment happened much closer to home. For a four-year period in the '70s, the poorest families in Dauphin, Manitoba, were granted a guaranteed minimum income by the federal and provincial governments. Thirty-five years later all that remains of the experiment are 2,000 boxes of documents that have gathered dust in the Canadian archives building in Winnipeg.

Until now little has been known about what unfolded over those four years in the small rural town, since the government locked away the data that had been collected and prevented it from being analyzed.

But after a five year struggle, Evelyn Forget, a professor of health sciences at the University of Manitoba, secured access to those boxes in 2009. Until the data is computerized, any systematic analysis is impossible. Undeterred, Forget has begun to piece together the story by using the census, health records, and the testimony of the program's participants. What is now emerging reveals that the program could have counted many successes.

Beginning in 1974, Pierre Trudeau's Liberals and Manitoba's first elected New Democratic Party government gave money to every person and family in Dauphin who fell below the poverty line. Under the program—called “Mincome”—about 1,000 families received monthly cheques.

Unlike welfare, which only certain individuals qualified for, the guaranteed minimum income project was open to everyone. It was the first—and to this day, only—time that Canada has ever experimented with such an open-door social assistance program.

In today’s conservative political climate, with constant government and media rhetoric about the inefficiency and wastefulness of the welfare state, the Mincome project sounds like nothing short of a fairy tale.

For four years Dauphin was a place where anyone living below the poverty line could receive monthly cheques to boost their income, no questions asked. Single mothers could afford to put their kids through school and low-income families weren't scrambling to pay the rent each month.

For Amy Richardson, it meant she could afford to buy her children books for school. Richardson joined the program in 1977, just after her husband had gone on disability leave from his job. At the time, she was struggling to raise her three youngest children on $1.50 haircuts she gave in her living room beauty parlour.

The $1,200 per year she received in monthly increments was a welcome supplement, in a time when the poverty line was $2,100 a year.

“The extra money meant that I was also able to give my kids something I wouldn't ordinarily be able to, like taking them to a show or some small luxury like that,” said Richardson, now 84, who spoke to The Dominion by phone from Dauphin.

As part of the experiment, an army of researchers were sent to Dauphin to interview the Mincome families. Residents in nearby rural towns who didn't receive Mincome were also surveyed so their statistics could be compared against those from Dauphin. But after the government cut the program in 1978, they simply warehoused the data and never bothered to analyze it.

“When the government introduced the program they really thought it would be a pilot project and that by the end of the decade they would roll this out and everybody would participate,” said Forget. “They thought it would become a universal program. But of course, the idea eventually just died off.”

During the Mincome program, the federal and provincial governments collectively spent $17 million, though it was initially supposed to have cost only a few million.

Meant to last several more years, the program came to a quick halt in 1978 when an economic recession hit Canada. The recession had caused prices to increase 10 per cent each year, so payouts to families under Mincome had increased accordingly.

Trudeau's Liberals, already on the defensive for an overhaul of Canada's employment insurance system, killed the program and withheld any additional money to analyze the data that had been amassed.

“It's hugely unfortunate and typical of the strange ways in which government works that the data was never analyzed,” says Ron Hikel who coordinated the Mincome program. Hikel now works in the United States to promote universal healthcare reform.

“Government officials opposed [to Mincome] didn't want to spend more money to analyze the data and show what they already thought: that it didn't work,” says Hikel, who remains a strong proponent of guaranteed income programs.

“And the people who were in favour of Mincome were worried because if the analysis was done and the data wasn't favourable then they would have just spent another million dollars on analysis and be even more embarrassed.”

But Forget has culled some useful info from Manitoba labour data. Her research confirms numerous positive consequences of the program.

Initially, the Mincome program was conceived as a labour market experiment. The government wanted to know what would happen if everybody in town received a guaranteed income, and specifically, they wanted to know whether people would still work.

It turns out they did.

Only two segments of Dauphin's labour force worked less as a result of Mincome—new mothers and teenagers. Mothers with newborns stopped working because they wanted to stay at home longer with their babies. And teenagers worked less because they weren't under as much pressure to support their families.

The end result was that they spent more time at school and more teenagers graduated. Those who continued to work were given more opportunities to choose what type of work they did.

“People didn't have to take the first job that came along,” says Hikel. “They could wait for something better that suited them.”

For some, it meant the opportunity to land a job to help them get by.

When Doreen and Hugh Henderson arrived in Dauphin in 1970 with their two young children they were broke. Doreen suggested moving from Vancouver to her hometown because she thought her husband would have an easier time finding work there. But when they arrived, things weren't any better.

“My husband didn't have a very good job and I couldn't find work,” she told The Dominion by phone from Dauphin.

It wasn't until 1978, after receiving Mincome payments for two years, that her husband finally landed janitorial work at the local school, a job he kept for 28 years.

“I don't know how we would have lived without [Mincome],” said Doreen.“I don't know if we would have stayed in Dauphin.”

Although the Mincome experiment was intended to provide a body of information to study labour market trends, Forget discovered that Mincome had a significant effect on people's well being. Two years ago, the professor started studying the health records of Dauphin residents to assess the impacts of the program.

In the period that Mincome was administered, hospital visits dropped 8.5 per cent. Fewer people went to the hospital with work-related injuries and there were fewer emergency room visits from car accidents and domestic abuse. There were also far fewer mental health visits.

It's not hard to see why, says Forget.

“When you walk around a hospital, it's pretty clear that a lot of the time what we're treating are the consequences of poverty,” she says.

Give people financial independence and control over their lives and these accidents and illnesses tend to dissipate, says Forget. In today's terms, an 8.5 per cent decrease in hospital visits across Canada would save the government $4 billion annually, by her calculations. And $4 billion is the amount that the federal government is currently trying to save by slashing social programming and arts funding.

Having analyzed the health data, Forget is now working on a cost-benefit analysis to see what a guaranteed income program might save the federal government if it were implemented today. She’s already worked with a Senate committee investigating a guaranteed income program for all low-income Canadians.

The Canadian government's sudden interest in guaranteed income programs doesn't surprise Forget.

Every 10 or 15 years there seems to be a renewed interest in getting Guaranteed Income (GI) programs off the ground, according to Saskatchewan social work professor James Mulvale. He's researched and written extensively about guaranteed income programs and is also part the Canadian chapter of the Basic Income Earth Network, a worldwide organization that advocates for guaranteed income.

GI programs exist in countries like Brazil, Mexico, France and even the state of Alaska.

Although people may not recognize it, subtle forms of guaranteed income already exist in Canada, says Mulvale, pointing to the child benefit tax, guaranteed income for seniors and the modest GST/HST rebate program for low-income earners.

However, a wider-reaching guaranteed income program would go a long way in decreasing poverty, he says.

Mulvale is in favour of a “demo-grant” model of GI that would give automatic cash transfers to everybody in Canada. This kind of plan would also provide the option of taxing higher-income earners at the end of the year so poorer people receive benefits.

A model such as this has a higher chance of broad support because it goes out to everybody, according to Mulvale. GI can also be administered as a negative income tax to the poor, meaning they'd receive an amount of money back directly in proportion to what they make each year.

“GI by itself wouldn't eliminate poverty but it would go a heck of a long way to decrease the extent of poverty in this country,” says Mulvale.

Conservative senator Hugh Segal has been the biggest supporter of this kind of GI, claiming it would eliminate the social assistance programs now administered by the provinces and territories. Rather than having a separate office to administer child tax benefits, welfare, unemployment insurance and income supplement for seniors, they could all be rolled into one GI scheme.

It would also mean that anybody could apply for support. Many people fall through the cracks under the current welfare system, says Forget. Not everybody can access welfare and those who can are penalized for going to school or for working a job since the money they receive from welfare is then clawed back.

If a guaranteed income program can target more people and is more efficient than other social assistance programs, then why doesn't Canada have such a program in place already? Perhaps the biggest barrier is the prevalence of negative stereotypes about poor people.

“There's very strong feelings out there that we shouldn't give people money for nothing,” Mulvale says.

Guaranteed income proponents aren't holding their breaths that they'll see such a program here anytime soon, but they are hopeful that one day Canada will consider the merits of guaranteed income.

The cost would be "not nearly as prohibitive to do as people imagine it is," says Forget. “A guaranteed minimum income program is a superior way of delivering social assistance. The only thing is that it's of course politically difficult to implement.”

Vivian Belik is a freelance journalist based in the frozen northlands of Whitehorse, Yukon. She was, however, raised in Manitoba where she has spotted many of the provinces small-town statues including the giant beaver in Dauphin.

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Comments

Mincome and the attitudes towards the poor.

I was astounded to read this article but can see why the program was never implemented. It's because taxpayers do not like the idea of anyone getting money for free. "Probably just spend it on beer, junk food, and drugs. Let them work for a living for a change."

Ironically, following the economic collapse in the USA, the very same people who would deny minimum income to those who need it demanded - and received - a bailout from the federal government to keep their banks solvent and ensure the survival of the auto industry and the jobs it provides. Despite that, people lost their homes and have had to declare bankruptcy - while the "brightest and best" who built the financial house of cards walked away with their gold plated severance packages and bonuses. But of course, the ones who profited earned their money, right?

Yes, if you are willing to regard the people who invested their savings as poor saps who trusted the advice given them. But then I believed that misrepresentation, fraud, and breech of trust were illegal and had serious consequences under the law. Apparently not.

Back to the topic at hand...

Consider the costs that are incurred without such a program, as preliminary data analysis has provided. For example, increased health care costs (mental and physical) in both short and long term. Plus $125,000 per person per year if poverty lures them into crime - and that on top of the legal defense and court costs.

The major drawback is inflation and most especially inflation during a period of recession and increasing unemployment. In some cities (Toronto, for example) the cost of rent may prove to be too big a burden on the program.

Inflation

Contrary to the deliberately bogus statistics put out by the government (so that they do not have to pay higher inflation adjusted amounts) the real inflation rates over the last 30 years in Canada have been consistently around 7% not the 1 or 2% used by the government.
In order to verify this number go back through local newspapers every 10 years & check the prices.

I think the idea that this

I think the idea that this sort of program would increase employment is a counter-factual utopian fantasy.

The idea that people presently not working would seek employment for, fictionally, 30 hours at 10 an hour for $300 plus another $200 government top up when they could sit at home doing nothing and collect a "mincome" of $500 simply doesn't make sense.

This could only be exacerbated by a no-questions asked entitlement structure in which breathing qualifies you for a guaranteed government stipend.

I'm certainly interested in reading more about the facts found as the research is analyzed, but a 4 year program operated in a small rural town under tightly controlled (and observed) conditions hardly seems like a solid foundation on which to roll out a larger program.

I did read the claim that employment only dropped in 2 demographic sectors, but I think at least part of that can be put down to the fact that the program was temporary, and the residents knew it. It's not in one's self interest to quit a job in favour of a couple of years of subsidies if one can't be certain of re-obtaining it when the program ends.

I do see benefits for students of working and school age, but given the sizable tax benefits and subsidies already paid, I'm not sure that this should be implemented, though I can imagine a program in which some civil service is provided and monies paid.

I'd like to see more detailed analysis of the alleged health care savings, as I can imagine a number of other causes of a reduction in costs--I'd also want to see if the discontinuance of the program saw a quick return to the pre-program levels.

I can imagine a variety of savings in the efficiencies and department of scale approach to delivering this sort of a program, and I agree that better education and less crime is a net social good. But I don't think that "higher taxes for many" should so lightly be endorsed, particularly in the case of taxing citizens who work so that others don't have to. I find that prospect so utterly personally repugnant that it unquestionably colours my perspective on this issue.

who the hell works for 7.5

who the hell works for 7.5 hours per week as a job?

It didn't say that everyone

It didn't say that everyone started working, just that it didn't make people stop working.

Some info about the project

The Guaranteed Income Supplement provides additional money, on top of the Old Age Security pension, to low-income seniors living in Canada. To be eligible for the GIS benefit, you must be receiving the Old Age Security pension and meet the income requirements explained below.
Applying for the Guaranteed Income Supplement

You can also re-apply for GIS by filing your income tax return. The Seniors section of the Canada Revenue Agency's Web site contains information on filing your tax return.

If you did not qualify for the GIS benefit in the past, but you think you might be eligible now, you should apply as soon as possible.

Normally, individuals must apply for the GIS benefit on their own behalf. If you are applying for someone else, please contact us for more information.

What documents will you need?

The type of documents you are required to provide will depend on your marital status, the type of application you are making, and whether you are applying for the first time.

The application kit will describe what documents, if any, you need to provide. If you are married, you may be asked to provide a marriage certificate. If you are living with a common-law partner (same sex or opposite sex) you may be asked to complete and sign a "statutory declaration" and provide other supporting documentation.

Best regards,
sasha grey

Skeptical

When the government initially starts a program it’s always with the best intensions. The original participants of these programs seem to agree with it and voluntarily participate. They do this for the greater good. The problem usually starts when this greater good idea deteriorates over time. The original intent of the programs diminishes to the point of being redefined completely or simply forgotten. Many things could happen as a result… but history has shown these to be generally negative for certain individuals or groups(my opinion). Sustainability and corruption prevention are always in question too.

Makes Sense to Me

This study could hopefully open the eyes for many skeptics out there. We have to redefine our values as a society and let go of stereotypes about poverty, labour, and incentive. Almost everyone seems to think poverty comes from a lack of motivation/incentive, and we are always reluctant to hand out money in fear that most people will abuse it and decide to "free-load." If we were to survey people, we would find that a significant percentage of people would choose to work. And with our current state of technology, there's no need for every citizen to work. I'd be happy to contribute to society so long as I did not have to worry about having enough money to support myself and my family, and I'm sure there are many more out there who would agree. And who cares if a small percentage of people choose to "free-load?" It seems that ego-centered people are the ones who don't agree with hand-outs because somehow, they believe, it belittles their own efforts to know someone else is doing less work.

We have to learn to let go of these petty differences in class, labour, and income, and start realizing that we are all in this together. If we want to have a safe nation or community to live in, we need to close the social gap and start meeting the needs of everyone, no matter their "contribution" efforts. Think of it like a family. You don't force each member to get a job now do you? You've got mom who stays at home with the kids, the kids who play and go to school, grandpa and grandma who are retired and come to visit the grandkids, and dad, who works and comes home to a loving family. Those who are able, will likely work, and do so for two reasons. First, because we all have ambitions and things we aspire to do, and second, because we know that what you put into society you will get back. We don't have that today, working senseless jobs that don't fulfill our aspirations, only to scrape by and falsely believe somehow things will get better.

We are also creating jobs simply for the sake of creating jobs. That is completely backwards to technological innovation. The whole point of inventing the wheel, fire, irrigation, electricity, etc, is to reduce our workload so that we have more time for the pleasures in life. With a guaranteed income, we wouldn't have to worry about job creation. In fact, we could eliminate a large percentage of jobs that serve no purpose to sustaining society, and people wouldn't have to work as much. Reduced work weeks would relieve stress and put people back into our communities and neighborhoods. We have lost a sense of community as both men and women are running the rat race to make money, neglecting their children and their community (not intentionally of course, but all to make ends meet).

With guaranteed income, there's less crime because there's no need to steal or abuse substances because everyone's life would be more rewarding when we eliminate the struggle for survival. The idea is to give people a choice. Until now, we've all been forced into work for need of money, and that need reduces the choices one has, depending on the level of wealth they inherit from their parents or life circumstances. When you give people more options, including the option not to work, a huge burden will have been lifted from their shoulders.

Some would call this a "hand-out," but I would call it an investment. An investment in people, community, and our future. We reached the capacity to sustain ourselves with minimal effort, at least 50 years ago, and only now we are realizing that the days of serfdom are obsolete. This would be the biggest change, not only for Canada, but for humanity, should we implement such an idea as "Basic Income." We can show the world what it truly means to be a free nation. Free to choose our life and career paths, free from monetary slavery, and free from petty crime.

Get the word "utopian" out of your head and realize that things won't be perfect, but things could definitely be a lot better.

When the government runs the

When the government runs the program it is always with the best of intentions. The original participants of these programs seem to agree with this and voluntarily participate. They do it for the greater good. The problem usually begins when this big good idea deteriorates over time. The original purpose of the program is reduced to the point revised completely, or simply forgotten. A lot can happen as a result... but history has shown that this is generally negative for individuals or groups(my opinion). The stability and the prevention of corruption is always in the same question.

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The Dominion is a monthly paper published by an incipient network of independent journalists in Canada. It aims to provide accurate, critical coverage that is accountable to its readers and the subjects it tackles. Taking its name from Canada's official status as both a colony and a colonial force, the Dominion examines politics, culture and daily life with a view to understanding the exercise of power.

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