GAI, Minimum Wage and the ‘Economic Circle of Life’

Back in March of this year, the United Way of Cape Breton, together with the Cape Breton Regional Municipality, sponsored the Community Impact Summit at Centre 200, a coming together of “business, government and non-profit sector leaders…to commit to specific, positive actions to help citizens living in poverty,” or as Erin Gallagher, campaign manager for United Way, stated, “to create a poverty reduction strategy.”

Peter Bevan-Baker (Source: CBC)

Peter Bevan-Baker (Source: CBC)

Dan Pallotta, activist and fundraiser, whose talk to the assembly was delayed because of weather, eventually made his pitch in which he declared, quite avidly, that people must cast aside a “Puritan distaste for doing well by doing good,” including their reluctance to pay executives six-figure salaries to raise funds for the above-mentioned “non-profits.” Charities, in other words, should be run more like businesses.

Paying big bucks to someone working to raise funds to eradicate poverty, as one local writer suggested, might not be such a great idea, considering that a person earning that kind of money might not be overly anxious to find himself out of work if poverty were eradicated. What is becoming more apparent to many is that raising people out of poverty by instituting a guaranteed annual income (GAI) and raising the minimum wage may be the most creative and sustainable ways to provide a better life for those at or below the poverty line.

Countries like Finland, Kenya and the Netherlands are developing GAI projects, but of more interest to us in Cape Breton is the fact that in December 2016, Prince Edward Island’s Green Party leader, Peter Bevan-Baker, introduced a motion “to work with the federal government in hopes of setting up a basic income pilot project on the island.” The motion, which earned the support of all parties in the legislature, would guarantee a “minimum amount of money in government support each month to those living in poverty.” In Ontario, a statement from the Community and Social Services Ministry on April 24th of this year brought citizens up to date on the progress of a similar basic income pilot-project which is scheduled to begin “later in the spring” and will include 4,000 people from Hamilton, Thunder Bay and Lindsay.



Hugh Segal

Hugh Segal (Photo by Milan Ilnyckyj, own work, CC0,via Wikimedia Commons)

Ontario’s pilot-project was announced in the 2016 budget and retired Conservative Senator, Hugh Segal, who has been promoting a GAI for years, was asked to “provide advice on how best to begin a made-in-Ontario pilot.” Between March 2016 and January 2017, 32,870 citizens responded to a public survey seeking their opinions on “how such a pilot should work.” A total of 2,943 completed an “expert survey,” attended in-person meetings or supplied written responses to the above request giving, as the Toronto Star reported, a clear “thumbs-up” to the plan.

The government believes that a three-year pilot should indicate “whether a basic income can better support workers and give people the security and opportunity they need to achieve their potential.” The program, which will cost the Ontario government $50 million a year, will include people aged 18-64. A single person could receive up to about $17,000 a year, a couple could receive up to $24,000 while those with disabilities could receive up to $6,000 more per year. Half of any income earned would be deducted from the earner’s GAI.

The federal Liberals named a guaranteed annual income a priority during their May 2016 convention and University of Manitoba Professor Evelyn Forget, speaking at a pre-budget meeting in Ottawa in February 2016, advocated a guaranteed annual income of as much as $18,000 a year for every Canadian. Such an income, she argued, could “replace the existing, often complicated patchwork of social assistance programs.” But the federal government has not been spurred to action, and has said that such a program would require further study.

This is disappointing, especially given that a politician as unlikely as US President Richard Nixon (!)  was discussing a “Family Assistance Plan” to establish a “basic floor so that children in any state have at least the minimum essentials of life” back in 1969.  Economist and “free-market” champion Milton Friedman touted a “negative income tax” ( which means people earning below a certain amount would receive supplemental pay from government instead of paying taxes) so that poor people would be treated “the same as rich people were treated.” Robert Taft, a union-busting conservative U.S. Senator, was advocating “a minimum standard of decent living” in the 1940s. Here in Canada, Conservative leader Robert Stanfield, had he become Prime Minister in 1968, had a “mincome” plan to “ensure a decent life and equal opportunity for all Canadians.” And former US President Bill Clinton once referred to the “common human purpose as the quiet miracle of a normal life,” which obviously would have to include, one assumes, the financial means to create such a life.

That a guaranteed annual income is being discussed so often and so openly and, in fact, being tested in our own country, should give rise to more provinces considering such a program as something desirable, especially when one hears that many Nova Scotians relying on our welfare system to survive consider it “insufficient,” “degrading,” “punitive,” “a quagmire of bureaucracy,” “challenging” and, as one lady (inelegantly but aptly) put it “completely friggin’ broken.” Is any of the political parties in Nova Scotia suggesting a GAI?


Plutocrats for GAI

Neil Hanauer. (Source: TED

Neil Hanauer. (Source: TED )

Where Dan Pallotta uses his Ted Talks to advocate for six-figure salaries for charity executives, multimillionaire Neil Hanauer uses his (and his interviews) to advocate for raising the minimum wage and providing a guaranteed annual income, something he has been pushing since at least 2012.

Hanauer declares himself quite willing to pay more taxes and speaks with derision of such oft-quoted economic strategies as “trickle-down economics” which he insists are “sold to people as a reason to cut corporate taxes so they can invest in new jobs” but which actually create a scenario where “eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity.”

He has only contempt for CEOs and politicians who continue to spew what he considers the lie that if wages rise, unemployment also rises. This, he says, is their attempt to convince workers that any increase in the minimum wage could very well cost them their jobs. What Hanauer preaches makes perfect sense: giving the middle class  tax cuts and low-wage earners a higher wage, or giving all a guaranteed annual income, would allow them to buy more goods causing manufacturers to hire more workers to make more product, thus creating what Hanauer refers to as an economic “circle of life.”

Hanauer says telling workers that an increase in the minimum wage will cost them their jobs is an intimidation tactic intended to “bully people without power, saying in so many words, ‘We matter, you don’t.'” Walmart and McDonald’s come in for special criticism from Hanauer. Walmart, the largest employer in the United States (and no slouch in Canada), makes $6.5 billion a year, yet many of their employees, often older workers, depend on medicaid and food stamps. McDonald’s recently threatened its workers with automated servers, but Hanauer insists that if they were capable of automation, it would have happened long ago.

Hanauer, who refers to himself as a “plutocrat,” tells his fellow plutocrats that rising inequality, if allowed to continue, could very well result in revolution. Was Justin Trudeau watching these videos when he came up with policies that benefit the middle class? Very possibly, since Hanauer considers the middle class the group that creates jobs in our societies, as do the poor when they are given a minimum raise that allows them to buy the products they otherwise can’t afford. It goes back to Henry Ford, according to Hanauer, who introduced the $5 a day wage so that his workers could buy his cars which up to then they couldn’t afford. Seattle, which adopted Hanauer’s suggestion of raising the minimum raise to $15 an hour has one of the fastest growing economies in the United States.

All this is to suggest that here in Cape Breton, those attempting to come up with a “strategy to reduce poverty” should consider fighting for a guaranteed annual income for every Nova Scotian, thereby reducing the number of social programs they require now just to subsist, and giving them, above all, buying power, thereby completing the “economic circle of life.”


Featured image via Basic Income Earth Network (BIEN).


Dolores Campbell


Dolores Campbell, a lifelong resident of Sydney, is a freelance writer whose work has appeared in The Cape Breton Highlander, the Nova Scotian, Cape Breton Magazine, Catholic New Times and The Cape Breton Post.



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