New study of Ontario’s canceled basic income experiment show it never should have been canceled

Three-quarters of people who were employed before joining Ontario’s ill-fated basic income pilot project continued to work while receiving the no-strings-attached monthly stipend, according to a new study.

And more than one-third of those low-wage workers were able to move to higher paying and more secure jobs, according to the study by McMaster University researchers being released Wednesday.

The findings shatter the belief among skeptics that basic income discourages people from working. It also appears to contradict the Ford government’s charge that the experiment was “failing” before it was cancelled in July 2018, the report argues.

Based on a survey of 217 former participants in the Hamilton-Brantford area and 40 in-depth interviews, the report also found those receiving basic income had better mental and physical health, fewer hospital emergency visits, more stable housing and an improved sense of well-being.

“These findings show that despite its premature cancellation by an incoming government that reneged on its electoral promise to see the pilot through to its end, basic income recipients in the Hamilton-Brantford pilot site benefited in a range of ways,” the report says. “In this sense, the pilot was nothing short of successful.”

The findings are “particularly surprising” since most respondents received basic income for less than 17 months, including nearly one-third who got it for less than 13 months, it adds. The $150 million provincial experiment was expected to last three years.

The report, funded by the Hamilton Community Foundation, McMaster University and the federal Social Sciences and Humanities Research Council, acknowledges it can’t fill the research gap created when the project was cancelled.

“The results do, however, dispel some of the fears of the opponents of basic income including that it will lead to a wholesale abandonment of paid employment,” it says.

For those who were working before the pilot project, the basic income meant they could take chances on a new job or career, according to the researchers, who conducted a 70-question online survey from January to August last year.

Several respondents became self-employed. Others were able to leave a bad job and search for something better or upgrade their skills. And some used their basic income benefits to spend more time with family members or children who may have special needs, the report says.

Respondent James Collura says his $900 monthly basic income benefit gave him the courage to ditch a “dead-end,” part-time job as a bank teller in Hamilton for more “fulfilling” employment at a float-therapy business.

“With basic income, taking a leap from a secure job suddenly became something I was more comfortable with,” he says.

Although Collura, 29, took a slight pay cut and lost his benefit package when he left the bank, he says his new job has enriched him in other ways.

“It has given me the space and the freedom to explore who I am and what I would like to contribute to the world,” he says.

In addition to sparking a new “entrepreneurial spirit,” Collura says the change has also spurred an interest in volunteering.

“I was more willing to give to my community because I felt that my community was giving to me,” he says.

Wayne Lewchuk
Wayne Lewchuk, a McMaster University labour and economics professor, was the lead researcher on a study of former basic income recipients in Hamilton. | GLENN LOWSON/FOR THE TORONTO STAR

McMaster economics professor Wayne Lewchuk, who led the research, says respondents’ motivation to find better jobs seemed to come from improved self-confidence as well as their better state of physical and mental health.

“It would be interesting to know if in the long-term, these people actually ended up better,” Lewchuk says. “Unfortunately, since the pilot was cancelled, we don’t have any data to speak to that.”

Several examples cited in the report include a 24-year-old man with mental health issues who worked several part-time jobs before basic income, but often experienced discrimination because of his condition. Basic income made him feel “much more motivated” to get a university education so he could find a job with better wages and working conditions, the study says.

For many participants, basic income proved to be “transformational, fundamentally reshaping their living standards as well as their sense of self-worth and hope for a better future,” it adds.

Concern that basic income would give people more money to feed bad habits was also dispelled by the research. For example, over half of respondents who smoked tobacco and just under half of those who drank alcohol said they either cut down or quit. Only a few individuals said they smoked or drank more.

One woman said she entered a treatment program for alcoholism and has been attending Alcoholics Anonymous meetings ever since, the report says.

Basic income also had a “noticeable impact” on the use of health services, with many survey respondents reporting fewer visits to health practitioners and hospital emergency rooms, according to the report.

“The results strongly suggest that basic income has the potential to improve the physical and mental health of participants and reduce their demands on public health resources,” the report says. They also show “the stability basic income provides can help recipients move to better paying employment and to play a fuller role as citizens in society.”

Hugh Segal
Hugh Segal designed Ontario’s ill-fated basic income pilot project and says new findings show the extra cash helps stabilize individuals and reduces social costs. | SUPPLIED PHOTO

Former conservative senator Hugh Segal who helped Ontario’s former Liberal government design the basic income pilot project, says the study confirms findings from a mid-1970s experiment with basic income in Dauphin, Man.

“The way basic income stabilizes individuals and reduces costs to social services like health and psychiatric care is the same in a big city (like Hamilton) as it was in rural Dauphin,” he says. “That is very encouraging and important.”

“The employment findings also mirror what happened in Dauphin where labour force participation remained the same except for young single men who were able to quit their jobs to complete high school and for mothers who were able to look after young children,” he adds.

The McMaster study results will be helpful for legislators in P.E.I. and British Columbia who are considering basic income projects in those provinces, Segal says. The Ford government should also heed the study findings, he adds.

“Hopefully the government will give some thought before its budget, and before it puts together its next set of (welfare) programs … and do something that is much more constructive and that is actually progressive conservative as opposed to just small-minded conservative,” Segal says.

Under Ontario’s pilot, launched by the Wynne government in April 2017, single people received annual payments of up to $17,000 — about twice as much as someone on welfare. Couples got up to $24,000 and those with disabilities received a $6,000 top-up. People who worked saw their basic income reduced by 50 cents for every dollar earned until their income reached $34,000 for singles and about $48,000 for couples.

The project’s goal was to determine whether regular, unconditional payments improved housing, health, education, employment and social outcomes for people living on social assistance or low-wage jobs in an efficient and non-stigmatizing way.

About 4,000 people in three test sites — Hamilton-Brantford, Thunder Bay and Lindsay — received the basic income as part of the experiment while about 2,000 people were to be studied as a control group.

Before it was prematurely scrapped, it was the largest, longest-running pilot of basic income in North America. It was cancelled before any government research could be conducted.

An online survey of 424 basic income recipients conducted from mid-December 2018 to mid-January 2019, by the grassroots Basic Income Canada Network, found similar improvements in participants’ health and well-being, but did not focus as deeply on employment outcomes as the McMaster research.

Former participants launched a class-action lawsuit in March 2019 against the Ford government for breach of contract.

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