The Ontario government recently announced its intent to launch a Basic Income Pilot following the completion of the Honourable Hugh Segal’s discussion paper on the design and implementation of the pilot. The notion of a basic income replacing most income support programs with a single transfer is increasingly popular among governments, both in Canada and abroad. Some proponents have asserted that by combining the myriad of social support programs and offering an unconditional transfer to citizens, a government can reduce administration costs and poverty, while freeing citizens to spend their time and income as they wish.
The notion is enticing, such that not only is Ontario studying it, but the governments of Canada, and Quebec, and many in Europe are committed to studying the introduction of a basic income. The private sector is interested in this prospect as well, Y Combinator, a distinguished accelerator in the U.S., is running a long-term study on how a basic income affects people’s “happiness, well-being, and financial health”.
Y Combinator’s logic for studying basic income is that its introduction is especially likely given the changing nature of work – due to the introduction of the sharing economy and the increasing risk of automation – will end up eliminating traditional jobs. A more robust welfare state would guard against the much larger economic challenge of a significantly diminished demand for human labour. We at the Brookfield Institute for Innovation + Entrepreneurship are convinced that as people’s relationship with the labour market changes, they become more likely to create their own jobs and pursue entrepreneurship. A basic income would not only alleviate the potential reduced demand for human labour, but could also have a meaningful impact on a person’s decision to become an entrepreneur.
Regardless of the design, a basic income should reduce the amount of risk an individual incurs when they decide to quit their job and start a business. Presumably, a basic income would be enough to fulfil one’s basic needs so they can focus on starting a business. Even if a basic income doesn’t increase the likelihood of someone becoming an entrepreneur, it could increase the likelihood of a new venture’s success by increasing the business’ “runway” because a basic income is meant to be permanent unlike other income support programs like employment insurance.