Jul 16, 2013

Why does BC have the highest poverty rate in Canada?


Statistics Canada recently released new data on the incomes of Canadians and it shows two worrisome trends continuing through the economic recovery:

  1. BC has the highest poverty rate in Canada and the highest child poverty rate (tied with Manitoba); and
  2. Ordinary families in BC haven’t had a raise since 2008 – family incomes in the middle continue to stagnate (more on this tomorrow).

Both of these tell us that we’re doing a lousy job at sharing prosperity in this province, leaving too many people behind and undermining our future economic health in the process.

So far, only the poverty statistics have generated much media coverage, with some good articles focusing on BC’s worst-in-country performance here and here, partly thanks to First Call who quickly put together a report on child poverty with the new data.

The response from the Minister of Children and Family Development, Stephanie Cadieux here has been disappointing. Instead of taking responsibility for the problem, the Minister practically declared success on the child poverty file, choosing to focus on the fact that “BC’s child poverty rates has dropped by 41%” since a peak in 2003 and completely ignoring the reality that other provinces improved much faster than us, leaving us with the worst poverty rates in the country.

Instead of looking for statistics that allow us to pat ourselves on the back for doing better than 10 years ago, we need to be asking what can we be doing differently to catch up with the rest of Canada.

It’s unfortunate that our government doesn’t seem interested in objectively looking at best practices from other jurisdictions. Minister Cadieux prefers to rely on ideology in her letter to the editor:

We know the only real way to lift people out of poverty is to ensure they have a job and the skills they need to succeed.

and later

Going forward, we will continue to target economic growth as the best method to reduce poverty, simply because it works.

This has been the BC government’s mantra from the days when Gordon Campbell first became Premier in 2001. The last 12 years show that it has not worked.

Don’t get me wrong, jobs are certainly important, but the relationship between jobs and reducing poverty is not nearly as direct as the government seems to believe. For one, most poor people have a job (at least part of the year) and 43% of poor children live in a family where at least one parent works full-year, full-time. My earlier post on why Job creation alone will not solve BC’s poverty problem has the details.

The indisputable fact is that all other Canadian provinces are doing better than us on poverty, even though many of them have slower economies and higher rates of unemployment. Similarly, many developed countries have lower poverty rates than Canada even though they were hit harder by the global financial crisis.

When we look at the jurisdictions that have been most successful at reducing poverty, what they have in common is they have invested in programs that support families, such as affordable, high quality childcare and education programs for all children, affordable housing, adequate social supports for families in need and high quality, accessible education.

As the Conference Board acknowledges in a recent report on child poverty:

The relationship between social spending and poverty rates has become more obvious over time, so it is no surprise that the leading countries boast strong traditions of wealth redistribution.

and later

The Nordic countries have long been upheld as leaders in maintaining low rates of poverty. Their success lies in universal welfare policy that has been effectively combined with job creation strategies that support gender equality and accessibility.

The reason why BC has the worst poverty rates in Canada is not poor economic performance but lack of social spending, a large low wage sector, and big gender pay gaps, especially at the low end.

The government needs to step up with a comprehensive poverty reduction plan to boost social supports to a level that covers basic costs of living. Other immediate priorities include providing affordable, universal childcare for families (for example, the $10/day plan) and investing in affordable housing for families.

Training and education also jumps out as an area of government responsibility that hasn’t received enough attention over the last decade. That’s why many of the newly created resource sector jobs aren’t going to unemployed British Columbians but to temporary foreign workers and/or migrants from other provinces because we don’t have the skills needed. And since resource expansion is essentially the basis of our government’s Jobs Plan, such job growth is unlikely to make much of a dent in poverty rates.

But while the government must play a leadership role here, poverty is not just the government’s problem. All citizens have a responsibility to tackle poverty, including those who own and run businesses. Business managers are understandably focused on their bottom line, but as members of the community they need to consider the kind of jobs they create, and the kind of life their employees can afford on the wages they pay. Is there job security? Are the wages so low or the shifts/hours so few that they keep the employees in poverty?

35 Vancouver employers have committed to pay a living wage to all their workers and more large companies should follow their example.

But not all jobs created in BC are well-paying, family-supporting jobs that offer benefits and a reasonable level of economic security. Despite recent minimum wage increases, a person working full-year full-time on minimum wage earns less than the poverty line for a single person in Vancouver. There has been an explosion of unpaid internships, with the most recent scandal exposed by CBC here.

The bottom line is that we need a combination of good quality jobs and social supports for families who have fallen on hard times. This is particularly important now when we’re seeing a worrisome and rather steep increase in poverty in what’s arguably the best measure of poverty, Statistics Canada’s Market Basket Measure (see here).

Poverty is not an intractable problem, other provinces and countries have taken action and are seeing results. BC should too.

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