How will the basic income plan cover growing underemployment?

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By Sabrina Almeida

On Monday, Premier Wynne launched a basic income pilot plan covering 4,000 individuals to be tested in Hamilton, Lindsay and Thunder Bay. The initiative aimed at reducing poverty, will provide or supplement the incomes of eligible individuals and couples with no strings attached.

Recipients will however lose any other welfare or provincial payments they currently receive.

To be eligible, an individual must earn less than $34,000 and couples less than $48,000 a year. (Which could soon include the entire part-time work industry.) The maximum basic subsidy an individual can receive is $16,989 for singles and $24,027 for couples, less 50% of any earned income.

Sounds good, doesn’t it? But not if you consider the growing number of underemployed—both college/university graduates as well as laid-off experienced workers who must choose between minimum-wage, part-time jobs with not enough hours to support a decent lifestyle, and sitting on the bench.

With offshoring, automation and artificial intelligence, job opportunities and security are evaporating. While Ontario’s basic income subsidy plan might have noble intentions, it seems to be built around the supposition that unemployment and underemployment have no remedy other than being propped up with a subsidy. That’s like providing individuals with a flotation device to keep their heads above the water even though they know how and want to swim.

While the 6.4% unemployment rate for March 2017 was slightly lower (0.4%) than last year, the real concern and one that is largely ignored, is underemployment. The relationship between employment and poverty cannot be simplified by whether or not an individual has a job. As a 2014 paper on the underemployment challenge put forth by the Canadian Labour Congress noted, job numbers published by StatsCan do not paint the full picture. The reality is that job opportunities have not kept up with the population growth among adult workers (15 to 64). Not only has a slow recovery virtually stalled any employment growth in the post-recession period, most opportunities are now part-time positions. As result underemployment is a bigger problem than unemployment.

Newly minted graduates are probably the worst off. A Parliamentary Budget Office 2015 Labour Market Assessment found that the number of workers (25 to 34) with a university degree who were overqualified in their current position has been on an upward trend and reached 40% in 2014. While universities continue to churn out degree holders each year, it takes an average of 18 months to 2 years for them to find jobs, and not necessarily in their field of study. With most companies streamlining their staff count as well as trying to avoid the cost of additional benefits, their chances of winning the lottery are probably higher than securing full-time positions and wages commensurate with their qualifications.

With huge student loans to pay off and anxious to have any kind of work experience on their resumes, many are forced into minimum-wage part-time retail, fast food and factory jobs which are also becoming scarce.

CBC’s story on university graduate Joseph Pascuzzi who has continued to work at a No Frills in Whitby for 6 years is a prime example. Moreover, his hourly rate is lower than full-time workers for the same amount of work.

The fact that even these jobs are harder to come by now is compounded by trying to get enough hours to manage basic expenses when you do find one. A combination of poorly-paid, precarious employment and the high-cost of housing/renting is pushing many young adults towards or under the poverty line. Even if the provincial government is sincere in its efforts to improve quality of life, how does it expect to cover the cost of subsidies for the growing number that might need it?

There is also a concern of misuse as in the case of employment insurance. After all, busting your chops to earn a minimum wage is hardly incentive to work if a government cheque can fetch you the same amount, or more.

Assuming recipients have the right intentions, how does a provincial government with a large budget deficit expect to support what is threatening to become a permanent situation and yet balance its books?

Or is this an election gimmick that will meet its demise once the three-year test period shows what many already suspect, it is not sustainable.

In the meanwhile, full-time employees will desperately hang on to their jobs, low paid workers will face stiffer competition from prospects willing to work for less and hours of part-timers will be reduced further to accommodate staffing increases.

Given this grim economic scenario of shrinking opportunities, working hours and wages, those that hung on to retail positions (and second jobs) despite having gained more lucrative employment, might have been the smart ones after all.

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