How a Guaranteed Annual Income Could Put Food Banks Out of Business
21 Pages Posted: 20 Dec 2013
Date Written: December 18, 2013
The federal Conservative government recently began phasing in a plan to raise the age of eligibility for Old Age Security from 65 to 67. But a more sensible move for improving the effectiveness of Canada’s social safety-net system may be to actually lower the age below 65 and rely strictly on an income test instead, regardless of age. The government could go a lot further toward the reduction of poverty in Canada by building on the success of its income supports for seniors, and making them available to poor Canadians of all ages.
Canada can boast of having one of the lowest rates for poverty among seniors in the world, largely due to its guaranteed income programs for those 65 years and older. When low-income Canadians turn 65 years old and leave behind low-paying, often unstable jobs, their poverty levels drop substantially. What a guaranteed income provides, that their vulnerable job situation did not, is a form of protection against budget shocks — a sudden volatility in income or expenses without the access to savings or credit to smooth things out until stability returns. A guaranteed income provides a kind of “disaster insurance” that can protect someone in a crisis situation from going without necessities such as food or even shelter. Statistics show that the rate of Canadians experiencing “food insecurity” — that is, lack of access to food because of financial constraints — is half that among Canadians aged 65 to 69 years than it is among those aged 60 to 64. Self-reported rates of physical and mental health improve markedly as well after low income Canadians move from low-wage, insecure employment to a guaranteed income at the age of 65.
That dramatic shift in physical and mental health indicates that expanding guaranteed income programs to younger Canadians is more than a simple cost calculation: there are potential savings to be found as poorer Canadians, given a guaranteed income, become healthier and therefore reduce the burden on the public health-care system. Canadian governments already spend billions of dollars on the downstream effects of poverty, but scant emphasis is put on programs targeting poverty’s roots.
There is no evidence, where smaller-scale experiments have been tried, to show that a guaranteed income program creates a serious problem with negative incentives and discourages people from working who otherwise might. But because this is a common worry with working-age guaranteed income eligibility, phasing in the program gradually, by lowering eligibility a few years at a time, will allow ongoing investigation and analysis of the effects, before the program is rolled out on a large scale. The tremendous impact that guaranteed incomes have had on reducing poverty and improving health among seniors is something for which Canadians can be rightly proud. So much so that it is incumbent upon us to investigate whether Canada could use the same policy tools to drastically reduce poverty and improve health among Canadians of all ages.
Keywords: income, poverty, reduction, low, poor, senior, guarantee, pension, policy, food, security
JEL Classification: E61, E64, H55, H51, I32
Suggested Citation: Suggested Citation