Give the poor a floor to stand on

You've got to hand it to Jayden Soroka for putting his money where his mouth is. He has a hunch that if you give poor families more money, they make smarter life choices, and he's willing to sell many of his worldly possessions to prove the point.

You’ve got to hand it to Jayden Soroka for putting his money where his mouth is. He has a hunch that if you give poor families more money, they make smarter life choices, and he’s willing to sell many of his worldly possessions to prove the point.

The Yukon filmmaker plans to use the raised money to help boost several struggling families above the poverty line, and then create a documentary about the results.

The underlying idea is a counterintuitive one. Conventional wisdom tells us that the poor owe their lot, in large part, to bad life decisions. It’s impossible to deny there isn’t something to this. Yet there’s good reason to suspect that the inverse is also true: poverty encourages people to make bad life decisions. Give families a reasonable amount of money to meet their needs, this line of thinking goes, and they will invest in their futures in productive ways not otherwise possible, saving society money in the long run.

That’s the idea behind a guaranteed annual income. And there’s some compelling evidence that it works.

The small farming town of Dauphin, Manitoba, became a test-case in the mid-1970s. For a few years residents received a top-up of their incomes, with few strings attached. The provincial government soon lost interest in the program, and many bankers’ boxes worth of data compiled sat gathering dust for many years. When they were finally analyzed recently, the results showed a considerable improvement in health outcomes and high school graduation rates. Adults remained just as likely to work full time, save for women who stayed at home to care for young children, the elderly and disabled relatives – again, offering savings to the state.

Boosters of such a guaranteed income are often anti-poverty advocates who couch their arguments in moral reasoning. They say that everyone in our society deserves enough money to live with dignity, whether they have a job or not. But some of the more interesting arguments for a guaranteed income come from conservatives, who make a more pragmatic case.

No less a conservative thinker than the economist Milton Friedman supported the same idea, which he called a negative income tax. He reckoned that poor people are in most cases the best judges of how to spend money on themselves, and he held a dim enough view of government to suspect bureaucrats are not usually up to this job anyhow.

Hugh Segal, a Progressive Conservative politician who until recently sat as a Canadian senator, has been a passionate advocate of a guaranteed income, and wrote the definitive case for such a plan a few years ago for the Literary Review of Canada.

“Only a small portion of Canadians need expensive health care at any time,” he writes. “But we are there to help as members of a competitive, free market and coherent society – not by embarrassing them with governments asking why they are sick, but by letting their universal health coverage, financed from general revenue, see them through. Since poverty is the most reliable predictor of bad health outcomes, not acting to eradicate it is senseless.”

As Segal envisions it, a guaranteed annual income would be best rolled out as an extension of the federal tax system. Those who fail to earn beyond a certain threshold would receive a top-up. This would cost a big bundle of money, but it would also produce big savings, as the thousands of government workers who run welfare programs for the provinces and territories would suddenly serve no purpose, as, with a guaranteed income program, nobody would qualify for these programs. Further savings would be yielded by reduced cases of mental illness, domestic violence and other ills that thrive in poverty.

A well-designed program could also help eliminate the “welfare wall” created when social assistance recipients see their benefits clawed back when they work, creating a perverse incentive to remain dependent on government hand-outs.

A federally managed guaranteed annual income has been touted by Don Drummond, the former chief economist for TD Bank, and wonks at the Conference Board of Canada. These are serious, sober-minded people, not easily given to flights of idealistic fancy.

Of course, there are massive practical obstacles that stand in the way. You’d need a federal government actually interested in taking on a big, new social commitment, and it would need to persuade the provinces and territories to play along – no sure thing, given that many governments jealously protect their bureaucratic turf.

Given public desire, of course, the Yukon could always go its own way with such an experiment one day. The NDP’s Todd Hardy used to champion the idea. But such a program would obviously be a non-starter for the Yukon Party currently in power.

Meanwhile, nobody even knows how many poor people there are in the Yukon. This is admittedly a tricky question, as there’s no agreed upon method of measuring poverty.

One rough estimate was conducted when the territory prepared its 2010 social inclusion report. It cobbled together Yukoners’ after-tax incomes from the 2006 census and applied these figures to the low income cut-off that Statistics Canada uses nationally for communities of less than 30,000 people. (StatCan’s poverty surveys exclude the territories.)

The results: 360 Yukon households fell beneath the poverty line, or 4.3 per cent. That’s actually less than half of the national average of 8.8 per cent. Unfortunately, this figure doesn’t take into account Yukon’s higher cost of living. Other indicators – such as food bank use and social housing demand – suggest that number should probably be doubled, putting us back on par with national figures.

Perhaps the upshot of all this is that the number of Yukoners under the poverty line is not insignificant, nor insurmountable. In other words, poverty may be a solvable problem in the territory. Whether this is a project that interests our leaders is another matter. If it interests you, tell them.