May 29, 2010

Child poverty: How does BC stack up against those provinces with a plan?


A week ago, I appeared before the BC Legislature’s Standing Committee on Children and Youth. The committee, to its credit, had decided to spend a day hearing witnesses on the subject of child poverty, and what BC could do to make a difference.

Among the points I raised with the committee: too often this issue gets lost in a fruitless debate about how to measure poverty. The simple truth is that no measure is perfect. But by whatever measure one uses ­­–– the LICO (low-income cut-off) before-tax, the LICO after-tax, or the Market Basket Measure –– BC has the highest overall poverty rate and the highest child poverty rate in Canada. So we need a plan to change this reality.

The point is to pick a consistent measure (or a set of measures), which allows us to monitor progress over time and relative to other jurisdictions.

And when one compares BC’s performance (using either the LICO or the MBM) in this way – relative to the historic norm and relative to others – what emerges is not good.

The poverty and child poverty rates have come down in recent years (at least up to 2007, the last year for which we have data). That is to be expected. Generally, the poverty rate tracks the economic business cycle. For this reason, people are rightly worried that the poverty rate in 2008 and surely in 2009 will go back up (already we know from the annual Hunger Count report that food bank use was back up 15% in 2009 – an early warning).

But even within the data leading up to 2007, there are worrying elements:

  • For example, after a near unprecedented period of economic growth, spanning from the end of the recession in the early 1990s to 2007, one would have expected to see much more of a decline in the poverty rate. But that didn’t happen. Instead, by 2007, the overall BC poverty rate (at 11%, using the after-tax LICO) had still not managed to attain the 1989 trough of about 10% reached before the 1990 recession.
  • With respect to child poverty, the performance is even less impressive. 1989 was also the year in which the House of Commons resolved to end child poverty by 2000. As we all know, that didn’t happen, and indeed, the national child poverty rate by 2007 saw no progress – we were right back to where we started in 1989. But this masks provincial differences. In fact, most provinces have seen a modest improvement. The national picture is weakened by the fact that only two province saw negative progress in that time – Ontario and BC.  Indeed BC realized the least progress since the House of Commons’ ill-fated resolution, with child poverty increasing by 30 per cent between 1989 and 2007.
  • Also, while the national child poverty rate has consistently gone down since the mid 1990s, BC alone saw a disturbing upward spike in the years 2002, 2003 and 2004 (again, you see this using either the LICO or MBM). This is likely a result on welfare policy changes instituted in 2002.

It is instructive to look at how BC does relative to some other provinces, and in particular, relative to Quebec and Newfoundland, as they are the provinces with the longest standing poverty reduction plans.

Child Poverty Rate (using LICO after-tax)
1998 2007 % change
Canada 15.7% 9.5% – 39%
Newfoundland 19% 6.5% (3rd lowest in Canada) – 66%
Quebec 18.7% 9.5% – 49%
BC 13.9% 13% (highest in country) – 6%
Source: Statistics Canada, Incomes In Canada

In many respects, the MBM is a better measure, as it is more reflective of the actual costs of basic goods in each place (such as differences in the cost of housing). However, data only goes back to 2000, and for the first few years, HRSDC was not reliably producing annual updates. But that appears to now be changing.

Child Poverty Rate (using the Market Basket Measure)
2000 2007 % change
Canada 18.1% 11.9% – 34%
Newfoundland 33% 14.8% – 55%
Quebec 15.8% 7.3% (lowest in country) – 54%
BC 26.1% 18.4% (highest in country) – 30%
Source: HRSDC, Low-income in Canada 2000-2007 Using the Market Basket Measure

Importantly, the success in Quebec and Newfoundland isn’t just about an improved economy and job creation. Notably, if one were to look at market income alone, the child poverty rate in both of these places in 2007 was higher than in BC. It is after incorporating government transfers that their poverty rates fall below us. The lesson: government policy makes a difference.

Conversely, when we rely only on the market, economic growth and job creation, the results with respect to poverty reduction are weak. That is what we see in the BC case, where we have recorded very low unemployment in recent years (up to the onset of the recession), but poor progress on child poverty. In BC, the story of child poverty is primarily as low-wage story; 56% of poor children in BC live in households with at least one parent working full-year full-time in the paid labour force.  That’s why a plan needs to address issues such as the minimum wage, employment standards, and a living wage. And that’s why, when we call for a poverty plan, and the response from the Premier is that the government’s goal is to have the lowest unemployment rate that we can – that goal, while laudable, is insufficient.

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