The major overall impact of this UBI pilot was that recipients worked less and replaced time working with leisure, not upgrading skills or looking for a better job. Photo Credit: Depositphotos.
The Universal Basic Income (UBI) debate has raged for decades, with proponents arguing that it would be a boon to an economy by providing all citizens with a basic level of income, providing an incentive for people to work for additional income and permit time off so individuals could upgrade their skills occasionally during their careers. It is also claimed that a UBI would improve people’s health by lowering stress over money and freeing up funds for healthier pursuits and replace other forms of government social assistance. Many UBI trials have taken place around the world, and all have been ultimately abandoned because the desired results were not attained.
UBI supporters are never swayed by these constant failures. A recent study published by the US National Bureau of Economic Research (NBER) detailed the results of a recent UBI trial which was conducted in two US states, Texas and Illinois. It was comprised of 1,000 randomly-chosen households earning less than $29,900 annually, and included residents that lived in urban, suburban and rural areas. Each household was given an additional $1,000 per month for three years, and the funds could be spent however the recipients wanted. A control group of 2,000 low-income households received $50 dollars per month. All participants kept records on how they spent their time, how much they were working versus not working, were they studying or otherwise upgrading skills, how was their health situation, etc. The additional $1,000 per month represented a roughly 40 per cent average increase in the income of the recipients, so was deemed significant enough to affect behaviour.
And affect behaviour it certainly did! What happened was the test group worked less when receiving the additional funds, such that their total income actually fell by about $1,500 annually relative to the control group, excluding the monies transferred. Weekly hours worked fell by 1.3 to 1.4 hours on average. More time was spent on leisure activities instead of work. The partners of study participants also cut down on their working hours. No impacts were found on quality of employment, putting the lie to the notion that a UBI would help people find better jobs. Participants were not found to have invested more time in upgrading their education or skills either, another presumption often made by UBI supporters.
Proponents of a UBI also claim that health outcomes will be better as there is less stress about money and more funds available for healthier activities. This study found that initially there may have been some minimal benefits in these areas, but that they dissipated quickly and overall, there was no enduring impact. The major overall impact of this UBI pilot was that recipients worked less and replaced time working with leisure, not upgrading skills or looking for a better job. If the test subjects became unemployed during the period of the study, they remained unemployed for about a month longer than the control group. Participants in the test group also reported higher levels of disability than they previously had, limiting the type of work they could do. Once again, a UBI study finds that if you pay people not to work, a goodly number of people will choose not to work.
The study was funded by several Silicon Valley companies, some of which were involved in AI (artificial intelligence). The recent threat of AI replacing many jobs currently held by people has boosted the notion of the need for a UBI. Of course, if a UBI was being implemented in the real world it would not be funded by technology firms but by tax dollars. Every estimate of the cost of a UBI system has been exorbitant. Some studies have found that a UBI adequate enough to make an impact would require a tax rate of over 50 per cent on average for everyone. A recent British Columbia study on universal income concluded that such a system would cost the equivalent of the entire BC provincial budget, displacing all other areas of expenditure such as health care and education. Clearly this is very impractical, especially as study after study shows little if any benefit of a UBI in improving people’s well-being, health, job prospects or the economy in general.
What was also striking when this study was publicized was the lack of attention it received in the media or government policy circles. Left-leaning media are prone to under-report or ignore news items that aren’t helpful to leftist causes, and this is but one example. This report just came out last month, so more coverage could take place in future but that doesn’t appear likely considering that the results of the study were very negative for a UBI.
Just like socialism in general, however, repeated bad results never seem to discourage the pro-UBI forces who have always responded to these failures by saying the experiment just wasn’t done properly and needs to be tried yet again or the amounts of money involved were insufficient. Not surprisingly, the main common conclusion of the various UBI tests is that when people are paid not to work, quite of few of them choose not to work. The notion that a UBI program would replace existing social welfare programs is also highly unlikely as every one of these programs has a constituency that supports it and would fight hard against its cancellation.
The current political climate in Canada has the Trudeau Liberals seriously behind the Poilievre Conservatives in public opinion polls. Liberals have tried to change the channel by more spending programs in successive budgets, imposing a capital gains tax hike on the so-called rich in an attempt to divide Canadians and trotted out the usual wedge issues such as abortion, identity and gender-related matters to try and increase their support.
Canadians have wisely not fallen for these phoney gambits on the Liberals’ part. As we’re likely about 14 months or so away from a federal election, there has been speculation that prior to that election Trudeau will pull a UBI rabbit out of his hat as a desperate Hail Mary to entice Canadians to once again vote Liberal. Considering that Canada’s dire financial circumstances courtesy of the current Liberal government would not accommodate such a pricey program, that all reputable evidence shows a UBI would not achieve any of the goals its proponents claim, and that Canadians already know the value of Trudeau promises are pretty much zero, it’s doubtful Canadians will fall for this one either.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
