How to tackle the economic paradox

We have persistent poverty within a booming economy; here’s what B.C. can ­ and should ­ do — Seth Klein — Vancouver Sun (p A11), December 12, 2006

It’s the time of year when we find ourselves particularly conscious of poverty and homelessness, but especially this year.

British Columbians seem acutely aware of a paradox that marks our economy: We are simultaneously experiencing solid economic growth and decades-low unemployment on the one hand, and record homelessness, persistent poverty, and a stubborn sense of economic insecurity on the other.

We all tend to be more generous during the holiday season, but these problems cannot be fixed through charity alone ­ they require public policy action.

So what can ­ and should ­ the provincial government do to improve the lot of low-income people, both those who rely on social assistance and those who struggle in the low-wage workforce? A lot.

1) Increase welfare rates. Premier Gordon Campbell’s October announcement that he will increase the shelter allowance for people receiving social assistance was welcome news. But this long overdue change shouldn’t wait until February’s budget. And overall rates must be increased, not just the shelter allowance.A single person without a recognized disability currently gets $510 a month for everything ­ housing, food, clothing, transportation, heat and electricity, toiletries, etc. A single parent with one child receives $968, and a person with a disability gets $856. People without a disability receive less today, in real (inflation adjusted) dollars, than they did 12 years ago. After inflation, rates are 20–26 per cent lower (and 12 per cent lower for people with disabilities.

2) Depoliticize the process of setting welfare rates. Rates should be grounded in a transparent and objective rationale, and tied to a realistic estimate of the basic cost of living. The Dieticians of B.C. report that people cannot eat a nutritious diet on welfare. Calculations by both the Social Planning and Research Council of B.C. and Human Resources and Social Development Canada show that welfare rates need to double if they are to meet minimum living costs.A good starting point would be to immediately increase welfare rates by 50 per cent, a measure that would cost about $500 million.

3) Let all welfare recipients keep some earned income. Currently, only those recipients with a recognized disability or barrier to employment are allowed to earn and keep some extra money. B.C. is the only province in Canada that penalizes other welfare recipients by one dollar for every dollar that they earn. Everyone should be able to earn and keep at least $500 per month tax-free.

4) Raise the minimum wage. As with welfare rates, the minimum wage should be depoliticized, and grounded in a clear rationale. An individual working full-time, yearround should not have an income below the poverty line. For this to be so, the minimum wage would need to be $10 per hour.

5) Index both welfare rates and the minimum wage to inflation, and adjust them annually. The Conservative government of Newfoundland recently indexed welfare to inflation, the first government in Canada to do so. B.C. should follow its lead.

6) Make welfare more accessible to those in need. The process of seeking social assistance has become so complicated to navigate, and the eligibility rules so restrictive, that many of those in need are systematically discouraged and denied, and some of these people end up on the streets. The entire application process should be the subject of an independent review, and redesigned so it is appropriate for the majority of people who seek assistance.

7) Increase the stock of affordable housing. The province’s recent move to expand rental subsidies is of some value, particularly for those living in communities with high vacancy rates. But truly addressing the housing crisis and escalating rents requires a significant boost in the quantity of lowincome housing. The province should aim to create 2,000 new units of social housing per year.

8) Enhance access to post-secondary education and training. Meaningful training and education is key to accessing stable, well-paying jobs. The province should rescind the rule that prevents people on welfare from being post-secondary students, and re-introduce tuition-free adult basic education and other upgrading programs at the post-secondary level.

9) Bring in a universal, publicly funded child care program. High quality child care brings important benefits to children in terms of brain development and school readiness, and is essential to women’s equal access to the paid labour market. Quebec has shown that, if the will exists, a province can act alone.

10) Enforce and enhance employment standards. People working in the low-wage workforce rely on provincial employment standards for their basic workplace rights: Minimum wages, statutory holidays, minimum and maximum shift times, overtime pay, etc.

But these standards aren’t being pro-actively enforced, and have been significantly weakened. Vulnerable workers need to know that their workplace rights will be honoured. And if the laws made unionization less challenging, such workers would likely see significant improvements in their income and security.

Combined, these measures would cost the provincial treasury just over $2 billion next year. That may sound like a lot, but consider that last year’s budget surplus was $3 billion, the current year’s surplus is on track to be a similar size, and next year’s surplus will be larger still.The money is there to make a dramatic difference, and the public wants to see action. The cost of inaction is high.

Seth Klein is the B.C. director of the Canadian Centre for Policy Alternatives.

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