Basic Income Part III: The Future of Work
1. Introduction
This post is the third in our series exploring the concept of a basic income and its implications in BC. Our backgrounder provided an overview of the concept, the issues we are facing today in BC, and the potential implications of a basic income policy. Our second post investigated in more detail the current state of poverty, welfare rates and social assistance in BC. We are grateful for the high level of engagement that our series continues to receive on social media and this website, including the large number of thoughtful comments. Below we continue to engage with the common themes in the responses we’ve received. This dialogue is very important in exploring ideas and creating good policies.
Many of you have noted the current scarcity of jobs and the precarious nature of much work today. A second theme has been disagreement about the role of basic income in either disincentivizing people to join the workforce, or providing people the freedom and self-sufficiency required to achieve personal and professional goals. Finally, many of you spoke with optimism about the potential of basic income to exert a beneficial and potentially transformational effect on society as a whole. In responding to your comments and sketching what we believe are some of the key issues, here we explore the social impacts of precarious employment, the trend towards increasing automation of jobs, and the role that basic income could play in the changing world of work.
2. Precarious Work
The world of work is changing, most dramatically due to technological advance, especially automation, but also due to a trend away from long-term, secure, full-time work with benefits, toward short-term, part-time, and contract-based work.
Finance Minister Bill Morneau stated recently that Canadians need to get used to “job churn”, defined as making a number of career changes in one’s life through short-term contract-based employment. Since the 2008-09 recession, the majority of jobs created have been part-time or temporary. The October 2016 Canadian Labour Force Survey highlights this trend: 44,000 net jobs were created across Canada in the month of October, but this number reflects a gain of 67,000 new part-time positions and a loss of 23,000 full-time positions. Men aged 25-54 have been hit particularly hard: full-time employment for this demographic declined by 63,000 positions over the past year, while part-time employment increased by 36,000 positions. The trend is the same in BC: 55,000 new jobs have been created since October 2015, but the majority (41,000) of these have been part-time positions.
Contract-based employment, which is often short-term, with fewer hours and without benefits, is also on the rise. Many speak of the rise of the “precariat” – a workforce that moves from job to job, taking temporary positions with no benefits and little job security. While some individuals prefer the flexibility of part-time or contract-based work, for most, it is not a choice: many are forced to take the jobs available, and suffer from insecurity and low incomes due to lower wages and fewer hours.
Some sectors are hit much harder than others by these trends: the natural resource industries, manufacturing, and education sectors, for example, have seen some of the largest increases in temporary and contract-based work in recent years. There are indications this trend will continue, with the majority of new jobs being part-time, temporary, or contract-based. This would mean significant implications for the financial security and well-being of huge numbers of people across British Columbia and beyond.
3. Automation
Recent years have also seen unprecedented technological advance in speed and scale, and there has been much talk recently about the impending robot revolution – when robots could increasingly replace humans in a variety of jobs, and the rate of automation outstrips the rate of job creation. We are already seeing the impact of technology on work: automated voice recognition software is already replacing many call centre workers, car assembly plants use more robots than people, and driverless cars and trucks are already significantly impacting the taxi and trucking industries.
Looking forward, a number of forecasts suggest the potential for the rapid elimination of jobs across a range of sectors: a study at the University of Oxford, for example, found that 47% of jobs in the U.S. are at “high risk” of computerization over the next two decades. The World Economic Forum’s Future of Jobs report predicts that we are entering a fourth industrial revolution that will result in the net loss of 5 million jobs across 12 leading economies over just the next 5 years. Barack Obama’s 2016 economic report predicts that jobs paying less than $20/hour face an 83% likelihood of being automated, while jobs paying between $20 and $40/hour face a 33% chance.
Some argue that predictions about the effects of automation overstate the risk: that machine-caused unemployment has been predicted before and always been misguided; that automation lowers costs and creates new jobs; and that any transition would be gradual. Yet the rate of technological advance so far has exceeded most estimates. Furthermore, many of those speaking out most loudly about the disruptive potential of technology, and the need for a basic income policy to deal with the transition, come from within the tech industry itself, and thus have the most intimate knowledge of the technology and its future potential. Y Combinator, the Silicon Valley start-up incubator, is a major proponent of basic income as a way to smooth the disruption it expects to result from technological advance, and is currently running its own basic income pilot project in California.
We are already seeing the exacerbation of inequality as a result of technological advancement, as it further concentrates wealth in the hands of the few. Automation will further exacerbate inequality, as it disproportionately impacts low and moderate paying jobs and affects some sectors more than others: jobs in transportation, manufacturing, and office and administrative support are set to be hardest hit, and soonest. Bill Morneau recently specified that truck drivers and receptionists are most likely to see their jobs disappear in the coming years: these are the second most common occupations for men and women respectively across Canada, so it goes without saying that the social ramifications of large scale job loss in these occupations would be extremely significant.
4. The Role of Basic Income
If automation results in job loss at the rate many are predicting, the outcome could be an unprecedented level of structural unemployment. In this scenario, a basic income would make the transition more humane, as the alternative is a large percentage of people living on current social support systems like employment insurance and income assistance, which, as discussed in our last post, leaves many recipients below the poverty line. If inequality continues to rise, redistribution of the significant financial benefits of the robot revolution – especially for those adversely affected – is a moral imperative.
Basic income could also lessen the psychological strain on those affected by precarious work today, and on those whose work may be made redundant by machines in the future. Among the many comments we received, a number of you spoke to the emotional cost of dealing with uncertain work and an insecure future; in our last post we also touched on the psychological hardships of living on social assistance in BC. Some advocates of basic income even view it as a necessary means to prevent social breakdown resulting from the widespread unemployment and poverty that automation would cause. Basic income could also provide an essential way to keep the economy going by giving people the financial means to continue their participation in the market even if they are unable to find new jobs.
Basic income could also help mitigate against rising unemployment levels due to automation. To adapt to a changing world of work, people need the freedom and means to do so. Basic income could enable those affected by automation or the rise in precarious work to retrain for new professions, attend or return to university, college or trade school, or take entrepreneurial risks. Many basic income advocates view this flexibility as a promising way to spur further innovation and job creation, and create benefits for society as a whole. Basic income could also form part of a more visionary response to a changing world of work: by restoring a measure of financial security and freedom, it could help people create meaningful work (paid or unpaid) and foster social connections, as well as supporting volunteering work and community engagement.
5. Conclusion
At this juncture in our history, the dream of a stable, long-term career is disappearing for many, and the strong possibility exists that automation will fundamentally alter our economy and make many careers obsolete. We therefore have the obligation to create forward-thinking policies that enable us to cope with the magnitude of changes that may be coming our way. But we also have an opportunity to do more than just cope. We have the opportunity to harness these changes and create a more equitable and sustainable society that works better for all of us.
We want to know what you think about the future of work in British Columbia. Please share your thoughts on precarious work, the threat and opportunities of automation, what work means to you, and the role you think basic income could play in a shifting economy. Thank you in advance for your comments.
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14 Comments
Creative destruction actually has several phases, one of which is the reallocation of idle resources.
Yes, people will lose jobs. How will they re-engage? — Don’t know.
However, some smart individual will come up with an idea to use whatever resources are available at the right price. This could be people, real estate, old equipment, new technology. It may well be that the surplus of people drives their market value down. Conversely, the leverage provided by automation may drive that an individual’s productivity so high that his salary is beyond his wildest dreams.
Raising the minimum wage will do nothing but create a permanent under-class of unemployables, that are legally prohibited from engaging in evolving labor markets.
The purpose of a UBI is to shield all citizens from possible destitution, in a changing world.
It is wrong to attempt to stop or slow changes that are inevitable. It is also a mistake to remove personal options. If someone is willing to accept a lower salary while gaining important skills that should be allowed. If someone wants to drive for Uber or rent through Airbnb, why not.
The only solution to the loss of traditional jobs is innovative ideas.
Every individual who loses a job becomes an available resource, as long as the cost of that resource is appropriate for what the individual can produce and the cost of retraining.
Automation will produce several outcomes in addition to lost jobs. Prices will drop as production costs decline. Profits will rise. If those profits are redistributed through taxation, no new jobs will arise, but if those profits finance new opportunities, those unemployed resources will find new work.
Let’s be honest. Canada and especially BC have reached a crisis with no signs of improving in the foreseeable future. All the indicators of a rapidly declining society are before us. Significantly more part-time than full-time jobs with benefits can only serve to deepen and expand poverty. Unless it pays extremely well, a part-time job alone is not enough to live on. Attempting to manage on more than one is stressful to say the least.
All of this begs the question of whether it would be less of a financial burden to pass out the purple pills or provide a basic income above the poverty level. Depression, suicide, crime, disease, and drug addictions soon follow. I have yet to see a study where the incidence of cancer was not directly linked to poverty.
Obviously, there are too many people for the number of jobs available and the situation shows no hope of fixing itself. Expecting the market to repair the problem is a mere fantasy. If anything, the market will continue to erode the quality of life in Canada with automation and foreign workers from countries where governments are further ahead than ours in creating a living hell.
A basic income? Yes, but only if it exceeds the poverty level. Where will the money come from? For a start, we could demand that the Canadian banks return the billions given to them by former Prime Minister Harper following the crash of 2008. After all, they admitted they didn’t need a dime of it. Then there are all the people in Canada who are sufficiently well off that they don’t need their pensions. Caring or cold? Cutting off their pensions would be a sure way to find out. If they are too cold to care, they qualify as second-class citizens who care not for the well-being and security of their country, let alone that of their fellow Canadians.
We could also cut back on foreign aid. How much of that gets to the people instead of the coffers of dictators? Plenty. I’m sure there are many other areas for redistribution of the common wealth.
Deaths from antibiotic-resistant pathogens will soon outnumber deaths from cancer. When pharmaceutical companies have no financial incentive to even bother looking for new antibiotics, government-funded corporations could be set up to fill the need with all profits returned to the tax-payer.
A proportion of the proceeds from lotteries and gambling would be a further source of funding.
My father, who starved in the streets of Vancouver during the Great Depression, used to say that the government has no problem when it comes funding to wars, but has all manner of excuses to avoid taking care of the people. The real war is the war on poverty; not in some oil-rich country half-way across the globe.
If a basic income is to be introduced (and I truly think it should and the sooner the better), it will have to be universal – that is, every person over the age of 18 receives it, no questions asked, no requirements to meet other than simply being alive. It also has to be sufficient to meet basic needs.
To be clear though, basic income is not a panacea for poverty alleviation. It needs to be part of a suite of measures. For instance, there is still a serious lack of affordable housing in BC, both for purchase and to rent. Raising the minimum wage is also a necessity. Rethinking the CPP must also be on the agenda, and the lack of primary and mental health care in this province also needs attention. None of these measures is sufficient on their own – raising the minimum wage does nothing to help those who can’t find work, for instance, and changes to the CPP do nothing to help a young person living below the poverty line.
However, a basic income does solve a lot of problems, and it allows every citizen to participate in the community with dignity and agency. It will without question reduce mental illnesses such as anxiety and stress, as people know their basic needs will always be met (maybe that anxious knot in the pit of my stomach will finally ease up). It will increase entrepreneurship, and allow creative people the space in which to create (a new Renaissance? Perhaps!). It makes for safer homes (you can afford to leave an abusive partner or an unhappy marriage), safer workplaces (you won’t have to accept unsafe work), and safer communities (it has been shown to reduce crime).
Jobs are disappearing faster than the polar ice cap. If the economy is not to completely collapse, people need to be able to spend money. To be able to spend money, they have to have money. Anyone who thinks full employment can exist is deluded, as is anyone who thinks the current welfare system is working.
Basic income is a great way to start fixing these problems. Once people start to feel safe, we can address all the other issues.
At the very least we have to stop giving tax breaks for increased automation.
Why I fully support Basic income:
Let us look at the major social issues of today – minimum wage, tuition fees, daycare costs, senior’s income – and see how best to resolve each issue in a way that is fair to all British Columbians.
1) Minimum wage increases, as I see it, actually increase poverty. I have personally been affected by this effect in the 90s. Minimum wage since then has doubled from $5/hr to $10/hr, but bread, milk, and Subway sandwiches have also doubled. In the meantime, one making originally $8/hr, gets bumped up to $12/hr, only a 50% increase and thus loses purchasing power. The same effect happens on $20/hr jobs becoming a $25/hr job, and that, I believe is one reason why we se a shrinking middle class. It is getting absorbed into the low income category due to a short-sighted minimum wage approach that remains a perpetual talking point for politicians every election cycle. A basic income will end this debate, pull people out of poverty instead of add people to it, and be a long-term solution to the issue.
2) With regards to hiking tuition fees, in my experiences going to SFU and TRU it is not the tuition fees that cause me any significant debt, it is the living expenses incurred while studying. The only jobs available with flexible enough hours to allow time on campus and to study are minimum wage, part-time jobs. It can make a hard balance between earning enough money to eat, and spending enough time studying to get the full benefit out of the courses one is taking. It becomes especially hard for those later in life trying to make improvements in their life while carrying on a family and mortgage. A basic income will help students concentrate on their career path as well as help others transition into a new path, thus opening up their previous position to others looking for work.
Daycare costs and senior living are linked to our society’s choice of celebrating freedom from the family. We are encouraged to leave home as soon as we graduate, go get a career, make a family, and then put our aging parents in a home. We choose to make teenagers pay rent, parents pay a mortgage, and grandparents to pay for assisted living instead of all living under one roof. On top of that, we get kids to volunteer in the senior homes because their interaction is good for fighting dementia and other mental illness. That is a choice we as a culture have made, but as a consequence, instead of grandparents being available to watch the kids, we need to pay sometimes half of one’s income just to pay for daycare, and 80% of the grandparents’ income goes into assisted living. Instead of making a patchwork of several policies to deal with each and every symptom, a basic income can be used by each demographic as they see fit. People without kids don’t want to pay for others’ daycare, people with jobs don’t want to pay for others’ welfare and so on. A basic income provides a fairness and equality across the board.
Without a Basic Income the social issues we face today will not resolve themselves, they will only get further entrenched into our culture and be used to control us each and every time there is an election, as it has over the past several decades.
A basic income policy must include access for basic food and housing supply.
Finland is exploring the concept of a basic income. I have made comments that the robots or automated cashier machines should be taxed at a rate that corresponds to the workers they replace. Would this discourage or slow this trend, not sure. Would this money be directed to re-training? Or end up in general revenue? ( the lotteries used to advertise how much they’re supporting specific programs but you don’t see these ads anymore).
Does a full time job = 2 part time jobs in the calculations?
The Internet may offer some relief as more people will buy and sell online, expanding variety and selection. Big box stores are operating with less and less customer help staff while offering a large selection, so personal selling would alter these numbers : 50 staff selling 2000 items vs 200 people selling 2000 items.
Gotta go
Eric
I like the idea of the basic income , and believe it will be critical for the change .It should be income , not welfare , so a requirement to perform some societally useful tasks would be good .I don’t think people will be happy with the basic income so it will spur on retraining or entrepreneurship .it will also mean there are some jobs that no- one will want to do , because they don’t have to , Hopefully the robots have got that covered .
-It sounds really good in theory. However, would the government then not have complete control over what we spend our money on..or even be able to force us into allowing them to violate the charter of rights by making us do things we would normally never allow. Also.. could it not also be viewed as a stepping stone to the creation of 1 class of citizen, echoing past Marxist and Bolshevik socialist/communist regimes..? I think this is a very dangerous place to go- instead we should be re-instating the original social contract between the bank of Canada and the people which Pierre Elliot Trudeau threw away in 1974. If he hadnt done that it would be a very different country today..and very prosperous.
I dare say many jobs thought to be immune from redundancy due to technology may indeed become just that. For example, Imagine hypothetically all your medical data in a live data base, you present with symptoms and lab work to your GP who gets your dignosis correct 70% of the time and requires 3-6 months to do it, alternatively using a computerized diagnosis system which is 99% accurate and results are instant, in fact you are notified automatically of a problem before it is one…Who/or what system would you prefer?? This is just one example of technological advancement we can already touch.
I think quickest way to create basic income is to increase programs which already exist. So yes raise welfare rates. Increase old age pension by lowering claw back income. Educate people how to take advantage of BC Housing subsidy. Raising minimum wage not only helps our working poor now, it will also raise their CPP in retirement. Why not combine CPP with Unemployment insurance so that someone who works 40 years and never makes unemployment insurance could receive larger CPP? Finally lets encourage buying canadian. I recently read about city of Toronto replacing a fleet of 500 canadian made ford police cars (model no longer made) with fleet of made in Chicago Fords, when could have followed other police departments and purchased made in Ontario Canada Dodge Charger police cars. (Yes the Chargers use less fuel so lower carbon footprint.) Anyway thought I would mention a few ideas.
I make a point of visiting a bank teller rather than using an ATM. I really dislike those self checkouts. You, Mr Humungous store, can’t afford a $12/hr employee but are more than willing to spend thousands of $$ for software and hardware?
We are self-employed and deal with economic rise and falls continuously and have to set aside funds for those falls. When we hire an employee, we are also taking on their wife and kids. A huge responsibility that we take seriously and have done without in order to keep the employee.
A basic income supported by environmentally acceptable sale and development of resources would free people to pursue their passions, invent better ways, and escape the destructive path of consumer capitalism.