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Poverty Amidst Plenty

We can brighten the dark side to BC's economy.

Marc Lee 14 Aug

Marc Lee is a senior economist at the Canadian Centre for Policy Alternatives’ B.C. office who researches and writes on a variety of economic and social policy issues.

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Disabled man in Vancouver mall. Photo Christopher Grabowski.

Without any fanfare a report popped up on the web site of Human Resources and Social Development Canada this past month. No press release, no communications strategy at all. Just another statistical report on poverty in a society that thinks of itself as middle class.

But this is not just another statistical report on poverty (or "low income" as the government politely calls it). It is a whopper, especially for folks living in B.C.

The average poverty rate in B.C. was 22.5 per cent in 2002. But the rate is much higher for certain family types. Over 30 per cent of children were living in poverty, as were 58 per cent of single moms. For almost every group, B.C. poverty rates are higher than previous estimates, higher than the national average, and higher than every other province except Newfoundland.

What is particularly interesting is the report's approach, which calculates a "market basket" to estimate what households minimally need to spend not to live in penury. This includes provisions for food, shelter, clothing, transportation and some other miscellaneous items.

For a family of four in Vancouver, this adds up to $28,944; a family with less disposable income would be considered poor. A few thousand dollars could be saved if this family were to live elsewhere in B.C., or in, say, Calgary. Only living in Toronto would be more costly than Vancouver.

Reading between the poverty lines

First, some context for these new numbers. For many years, forces on the right argued that poverty rates in Canada were overstated because they used "relative" measures, based on the idea that whether one is poor or not depends on how others are doing. The right has taken particular exception to Statistics Canada's Low Income Cut-Off, or LICO.

These complaints pushed the federal government to develop a "market basket measure" of poverty, or MBM. The poverty line based on the MBM is actually quite similar to the LICO ($30,433). In truth, almost all measures of poverty lines are relatively close to one another, with the exception of the Fraser Institute's "thin gruel" measure, which is about $10,000 less.

The point is that welfare incomes fall below the poverty threshold no matter how they are measured. Including both provincial and federal benefits, a family of four on welfare in B.C. receives $16,951, about $3,000 a year less than the Fraser Institute's minimum.

BC in 2006

Should we care? This is 2006 and the numbers presented were for 2002. The economy has indeed improved since then. The labour market is steaming, with unemployment in the 4 to 5 per cent range. There are cranes everywhere. Housing prices make jaws drop on a daily basis. The Olympics are coming.

What the new report does is reinforce the accumulating evidence of a dark side to B.C.'s economy. B.C. had the highest overall poverty and child poverty rates in Canada in 2004 (the last data year for the LICO). And while some are getting rich, median incomes have stagnated after accounting for a higher cost of living.

To my eyes it seems there have never been more street people in Vancouver than this year, and they appear to be living not just on the streets, but in public parks, under bridges, on the Flats and in almost every part of town, east side or west side, downtown or the suburbs.

We know that what is in public view is only the tip of the iceberg. A count of homeless in Greater Vancouver turned up 2,174 homeless people in March 2005, up double from 2002, a large share of whom are long-term homeless. For every homeless person there are many more who are in inadequate housing or who are but a paycheque away from the street. And to (badly) paraphrase Yogi Berra, the housing market is so hot no one can afford a home anymore.

According to the Canadian Association of Food Banks, about 30,000 B.C. households used food banks in March 2005. A survey a few years ago found that about eight per cent of households went hungry at some point in the year.

The conclusion is inescapable: there is deep poverty in Vancouver, accented by addiction and mental health problems, and linked to Canada's highest property crime rates. Even The Economist magazine, known for its advocacy of free markets, wagged its finger at us in a recent issue.

Lights, camera, apathy

There are solutions, but they require the political will to be bold. We need to double the supply of affordable housing. We need to raise the minimum wage to $10 an hour so that anyone working full-time and full-year is above the poverty line. We need to raise welfare rates by 50 per cent so that they are adequate to basic survival, and we should allow people to combine welfare and paid income in ways that are currently not permitted.

Mostly, we need to stop moralizing about the poorest and whether they are sufficiently deserving of help. The economics of doing the right thing are favourable: more money in the hands of the poorest goes right into children's bellies and benefits local merchants; we spend more on homeless people right now -- through health care, social services and the criminal justice systems -- than we would if we were to provide them with homes; and it makes more sense to pay for addiction services through our taxes than after the fact by replacing broken car windows.

As mentioned up front, Newfoundland has also registered among the highest poverty rates in Canada. But unlike the B.C. government, the Danny Williams government does not deny the problem. Instead, they have made poverty reduction one of their overarching goals. Their Action Plan has a long-term focus -- including measures aimed at the labour market, income support and education -- and is grounded in consultations at the community level.

B.C. would do well to engage in a similar approach. It is not like money is the real problem. B.C. just finished the last fiscal year with a record $3.1 billion surplus, even after Carole Taylor took out close to a billion for public sector negotiating carrots. This tops the 2004/05 surplus of $2.6 billion. These surpluses go towards paying down B.C.'s debt, but our debt is already quite low -- relative to GDP, B.C.'s debt is the lowest among the provinces (except for oil-rich Alberta).

This year's surplus will also be in the $2-3 billion range, though you will not get that from official estimates. Over the past four budgets, surpluses have been under-stated (or deficits over-stated) by a total of $8 billion. That is unhealthy for democratic debate in B.C., and should be a concern whether you are a right-wing tax cutter or someone like me who wants to use those available tax dollars to tackle some of these festering problems.

Tax cuts cannot solve our poverty problem. They will not build more affordable housing. They cannot help vulnerable children. Tax cuts only widen the gap between rich and poor.

Did I mention that the Olympics are coming? Think lots of visitors and lots of cameras. But what will the world see when the spotlight goes on?

Marc Lee is a Senior Economist with the Canadian Centre for Policy Alternatives, and is a regular contributor to The Tyee.  [Tyee]

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