poverty at the crossroads john stapleton january 18, 2011 london, ontario
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Poverty at the Crossroads
John StapletonJanuary 18, 2011London, Ontario
Poverty at the crossroads 2
Contents
• Living in the age of Alpha Paradigm “smackdown”• The Changing nature of work• The Big Picture: social assistance in the context of Income
Security in Canada & Ontario• Social assistance – the ‘great megatrend’• The last three big recessions • Profound change in who receives welfare• Social assistance and Minimum wages• The Welfare Diet, food inflation and food deserts• Some tentative conclusions
Poverty at the crossroads 3
Poverty at the crossroads
• Government share: about 37%• Non-Profit Sector: about 2-3%• Private Sector: 60%• Highest government shares include France
and Iraq (60+%)• Lowest include Haiti and Singapore (10% or
lower)
GDP in Canada is $1.3 Trillion
4
Poverty at the crossroads 5
‘Smackdown’ Battle of the Alpha Paradigms The Alpha Paradigms and their elements
Element The Stimulus Paradigm: Borrow, Tax, Spend, Invest
Market as King, personal freedom Paradigm: Reduce and restrain
Taxes Maintain or increase for services, infrastructure. investments, community
Reduce taxes at any point, at any level relentlessly or taxes will; creep up on you and pay for things not in your interest
Legitimacy of Taxes
Fundamentally legitimate:- how we live and survive
Fundamentally Illegitimate and suspect: - how we weaken our citizenry
Government A reflection of the public good as a nation, provinces, cities and communities
Only in place for our protection against crime, natural disaster, and to protect our borders against bad people, bad events and bad nations
Families Strengthen the family through infrastructure, social security and civil protections
Leave families to grow through less taxation and regulation. Allow them to flourish with the minimum level of outside intervention.
Individuals Support individuals through civil protections
Individual freedom through fewer regulations, less red tape, lower taxes, greater competition
Inequality An ongoing and pervasive concern - the worry that those at the top have too much, much more than they need
The natural state of the world - a positive because those who do well are in a position to help those who do not thrive - not a fundamental concern
The Economy Prosperity through investment, taxation and responsible government through investment
Prosperity only through lower taxation, measured deregulation, private sector spending and investment
Poverty at the crossroads 6
Environment Green energy and alternatives. carbon restraint
Drill baby drill - state to protect against spills and harm
Poverty An important concern, a need to resolve through investment, income and social security, strategic interventions
An individual deficit that it is important that the individual overcome on their own with as little help as possible. Also a place for charity for the helpless.
Crime Important to do what is effective - deterrence and rehab important
If you do the crime, you do the time ...Protection and punishment most important
Future Positive on investment Positive only if less taxes, private sector growth
Youth An investment - the world could be ok
Only good future is with less tax, less government, otherwise negative
Growth Necessary but judicious Only if achieved through less government and private sector growth
Smackdown Verdict
Wins on fear of recession , loses in normal life
Loses on fear of recession ,Wins in everyday life
7Poverty at the crossroads 7
THE LABOUR MARKET – DIFFERENT WORK CATEGORIES
Change in Share of Employment, Canada(Richard Florida)
8Poverty at the crossroads 8
RECESSION
‘000s employed
CDN $STARTS RISING
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090
200
400
600
800
1000
1200
Working Entry Middle Work-ing
Service Entry
Middle Service
Knowledge Worker
Employment trends by broad sector and skill categories,Toronto Census Metropolitan Area, 1997-2009
Poverty at the crossroads 9
The Big Picture
• Show me the money!– By Program– By Target Group – Federal– Provincial
Poverty at the crossroads 10
OAS/GIS/Allowance25%
CPP30%
CCTB7%
UCCB2%
GST3%
EI10%
Veterans1%
Social Assistance12%
Workers Compensation6%
Property/Sales Tax Credits, Rental Assis-tance2%
Provincial Child Benefits1%
ONTARIO: INCOME SECURITY SPENDING BY PROGRAM 2008-09
($48.9 B est)
GAINS-A expenditure too small to be shown
Poverty at the crossroads 11
OAS27%
CPP/QPP30%CCTB
8%UCCB2%
EI 10%
Quebec Parental Insurance
1%
Workers Compensa-tion5%
Veterans Benefits2%
Social Assistance Benefits
6%
GST3%
Other6%
CANADA: INCOME SECURITY EXPENDITURES BY PROGRAM2008-09
($131 B est)
Estimates based on Statistics Canada's "Gov't Transfer Payments to Persons"."Other" includes CSA, other SA and local govern-ment spending.
Poverty at the crossroads 12
Seniors47%
Children11%
Disabled19%
EI recipients10%
SA - Ontario Works4%
Other9%
ONTARIO: INCOME SECURITY SPENDING BY TARGET RECIPIENT2008-09
($48.9 B est)
Poverty at the crossroads 13
Seniors29%
Children8%
Disabled5%
EI & Quebec Parental Insurance
11%
CPP & QPP29%
Social Assistance 11%
GST Credit3%
Other 4%
CANADA: Estimated Income Transfers by Target Group or Program2009
($131 Billion)
Estimates based on Statistics Canada's "Gov't Transfer Payments to Persons"
Poverty at the crossroads 14
Seniors
Children
Disabled
EI & Q
uebec
Parental
I...
CPP & Q
PP
Socia
l Assi
stance
bene..
.
Socia
l Assi
stance
other
GST Cred
it
Other To
tal0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
CANADA: Estimated Transfers to Individuals by Program Area2000, 2005, 2007 AND 2009
($ millions)
2000200520072009 est
Based on Statistics Canada's "Gov't Transfers Payments to Persons"
Poverty at the crossroads 15
Federal government revenue sources (taxes)
39%
Federal payroll taxes(EI, CPP)-employer and
employee40%
Provincial taxes13%
Provincial Employer contributions(Workers' Comp.)
6%
Municipal sources2%
ONTARIO: INCOME SECURITY EXPENDITURES BY LEVEL OF GOVERNMENT AND SOURCE
2008-09 ($48.9 B est)
Poverty at the crossroads 16
Social Assistance: the Megatrends
Poverty at the crossroads 17
The three last big recessions
• The post recession shift:• Recession of 1980-82 – welfare peaks in
March 1983• Recession of 1990-91 – welfare peaks in
March 1994• Great Recession of 2008-09 – welfare peaks in
March 2011 or........
Poverty at the crossroads 18
The three last big recessions
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2
4
6
8
10
12
14
ONTARIO Unemployment Rates and Percentage of Population on SA
1981 to 2009
Unemployment Rate % of Population on SA
PERCENTAGE
Poverty at the crossroads 19
A closer look
19811983
19851987
19891991
19931995
19971999
20012003
20052007
Jan. 2
009
March 2009
May 2009
July 2009
Sept. 2
009
Nov. 2009
Jan. 2
010
March 2010
May 2010
July 2010
Sept. 2
010
Nov. 2010
2
4
6
8
10
12
14
ONTARIO Unemployment Rates and Percentage of Population on SA
1981 to 2008, Monthly from January 2009 to Nov. 2010
Unemployment Rate % of Population on SA
PERCENTAGE
Poverty at the crossroads 20
June 2
007
July
2007
Aug. 2007
Sept. 2
007
Oct. 2007
Nov. 2007
Dec. 2
007
Jan. 2
008
Feb. 2
008
March 2008
April 2008
May 2008
June 2
008
July
2008
Aug. 2008
Sept. 2
008
Oct. 2008
Nov. 2008
Dec. 2
008
Jan. 2
009
Feb. 2
009
March 2009
April 2009
May 2009
June 2
009
July
2009
Aug. 2009
Sept. 2
009
Oct. 2009
Nov. 2009
Dec. 2
009
Jan. 2
010
Feb. 2
010
March 2010
April 2010
May 2010
June 2
010
July
2010
Aug. 2010
Sept. 2
010
Oct. 2010
Nov. 2010
4
5
6
7
8
9
10
ONTARIO Unemployment Rates and Percentage of Population on SA
June 2007 to November 2010
Unemployment Rate % of Population on SA
PERCENTAGE
Poverty at the crossroads 21
Poverty at the crossroads 22
Canada ‘in the middle’ with support for single parents - OECD
Poverty at the crossroads 23
Canada ‘at the bottom’ in support for single (non-aged) persons - OECD
Poverty at the crossroads 26
Profound Caseload Change
• In 1988 in Ontario, persons with disabilities comprised 32% of social assistance
• In 2010, persons with disabilities comprise 60+ % of social assistance and growing
• Lone parents in 1995 -2000 equalled singles– Since 2000:
• singles have increased by 57%• Lone parent decreased by 21%
Poverty at the crossroads 27
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%
10%
20%
30%
40%
50%
60%
70%
80%
ESTIMATED PROPORTION OF SINGLES AND SINGLE PARENTS ON SOCIAL ASSISTANCE IN CANADA
2000 TO 2010
Est. proportion of singlesEst. % of single parents
Poverty at the crossroads 282000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Estimated Proportion of Singles and Single Parents on Assistance in Quebec, Ontario and BC
2000 to 2010
Quebec singlesQuebec single parentsOntario singlesOntario single parentsBC singlesBC single parents
Poverty at the crossroads 29
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
ESTIMATED PROPORTION OF SINGLES AND SINGLE PARENTS ON ASSISTANCE IN NEWFOUNDLAND & LABRADOR, NEW BRUNSWICK & QUEBEC
2000 TO 2010
Nfld. & Labrador singles Nfld. & Labrador single parents New Brunswick singlesNew Brunswick single parents Quebec singles Quebec single parents
Poverty at the crossroads 30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%
10%
20%
30%
40%
50%
60%
70%
80%
90%
ESTIMATED PROPORTION OF SINGLES AND SINGLE PARENTS ON ASSISTANCE IN ONTARIO, ALBERTA AND BRITISH COLUMBIA
2000 to 2010
Ontario singles Ontario single parents Alberta singles Alberta single parents BC singles
BC single parents
Poverty at the crossroads 31
Single People dominate welfare applications
Poverty at the crossroads 32
Younger Singles dominate welfare applications
Poverty at the crossroads 33
25,000
30,000
35,000
40,000
45,000
2003 2004 2005 2006 2007 2008 2009 2010
Average Monthly Caseloads by Gender of Head of Household2003 - 2010
Source: City of Toronto Employment and Social Services.
Male
Female
Poverty at the crossroads 34
Poverty at the crossroads 35
Poverty at the crossroads 36
Poverty at the crossroads 37
Minimum Wages and Social Assistance
• In Ontario:– Minimum wages set at $12.50 a week in 1937– Relief set at maximum of $19. a month – 36% Ratio– Rose to 70% in 1990-91– Relentlessly fell for the next 20 years– Now back to 36%– Forced choice between $7,000 or $20,000
Poverty at the crossroads 38
19671969
19711973
19751977
19791981
19831985
19871989
19911993
19951997
19992001
20032005
20072009
0
5,000
10,000
15,000
20,000
25,000
ONTARIO: SINGLE EMPLOYABLE PERSONAnnual Income from SA versus Full-Time Employment at Minimum Wage
1967 to 2010
Annual SA Gross Annual Income at Minimum Wage (37.5 hour week)
DOLLARS
Poverty at the crossroads 39
19671968
19691970
19711972
19731974
19751976
19771978
19791980
19811982
19831984
19851986
19871988
19891990
19911992
19931994
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20%
30%
40%
50%
60%
70%
80%
ONTARIOAnnual SA Income as Percentage of
Annual Income from Minimum Wage Employment Single Employable Person
1967 to 2010
SA as % of Minimum Wage (37.5 hour week)
Poverty at the crossroads 40
The Welfare Diet: Then and Now
• Authored by Hon. Dave Tsubouchi in 1995
• Re-shopped at Supercentre in February 2010 and January 2011
– Food inflation much higher than CPI
– Bad food rising faster than good food
Poverty at the crossroads 41
Poverty at the crossroads 42
Gold: last 12 months
Poverty at the crossroads 43
Sugar: last 6 months
Poverty at the crossroads 44
Corn: last 6 months
Poverty at the crossroads 45
Cotton: last 6 months
Poverty at the crossroads 46
Soybeans: last 12 months
Poverty at the crossroads 47
Copper: last 12 months
Poverty at the crossroads 48
Coffee: Last 12 months
Poverty at the crossroads 49
Cattle: last 12 months
Poverty at the crossroads 50
Orange Juice: last 12 months
Poverty at the crossroads 51
Pork: Last 12 months
Poverty at the crossroads 52
Wheat: last 6 months
Poverty at the crossroads 53
• Food inflation has already outstripped general price inflation over the years
• This trend likely to accelerate in future• High calorie foods accelerating the most –
available to the poor• Low calorie food accelerating the least – less
available to poor –”Food deserts”• New concern about affordability of food in 3rd
World
What does commodity price inflation mean for food?
Poverty at the crossroads 541995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
80
90
100
110
120
130
140
150
PERCENTAGE CHANGE IN OW SINGLE RATE AND COST OF WELFARE DIET COMPARED TO INFLATION, ONTARIO 1995 TO 2010
OW Single Person 100 = $520InflationIncrease in Cost of Welfare Diet
Perc
enta
ge
Poverty at the crossroads 55
Poverty at the crossroads 56
Not just the welfare diet....True for all foods
50
75
100
125
150
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Jan
2010 Feb
2010 Mar
2010 Apr
2010 May
Inflation of food versus social assistance in Ontario(2000 = 100)
Note: Social assistance rates are based on the total monthly allowance for a single person on Ontario Works.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada, and John Stapleton, Open Policy Ontario.
2000 = 100
Social Assistance
Consumer Price Index
Food Inflation
Poverty at the crossroads 57
Grain dairy and meat responsible for high food inflation
50
75
100
125
150
175
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Jan
2010 Feb
2010 Mar
2010 Apr
2010 May
Note: Social assistance rates are based on the total monthly allowance for a single person on Ontario Works.Source: Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada, and John Stapleton, Open Policy Ontario.
Social assistance
FishFruits & Veg
MeatFood inflation
Dairy
Grain
CPI
Food inflation versus social assistance in Ontario, by food groups(2000 = 100)
Poverty at the crossroads 58
‘Food Group’ Consumption is the same between poor and non poor
20.3% 20.7% 20.8% 20.8% 20.7%
2.8% 3.3% 3.5% 3.0% 3.7%
15.1% 15.2% 15.4% 15.0% 15.1%
15.0% 15.0% 14.9% 15.3% 14.7%
22.0% 22.0% 21.8% 21.4% 22.5%
24.8% 23.7% 23.7% 24.6% 23.4%
Less than $20,000 $20,000 - $39,999 $40,000 - $59,999 $60,000 - $79,999 More than $80,000
Note: Calculated based on average weekly expenditure per household, purchased from stores locally and on day trips; "Other" food includes condiments, spices, vinegar, sugar and sugar preparation, fats and oils, non alcoholic beverages and other foods, materials and food preparations.Source: Institute for Competitiveness & Prosperity analysis based on the Food Expenditure Survey (2001) .
Average weekly expenditure of food purchased from stores, by food type
Meat
Fish
Dairy & eggs
Grain
Fruits & Veg
Other
Poverty at the crossroads 59
But Quality and type of food much worse for the poor
Lowest Income Group Highest Income Group
(Earning less than $20,000) (Earning more than $80,000)
Meat Bologna Beef Loin and Rib Cuts
Ground Beef Turkey
Dairy Products Butter Yogurt
Fluid milk (2% and whole) Cheese
Condensed or evaporated milk Fluid milk (1% and skim)
Grain Products Flour Cereal-based snack foods
Bread Crackers and crisp breads
Dessert pies, cakes and other pastries Unsweetened rolls and buns
Fruits & Vegetables Jam, jelly and other preserves Strawberries
Pineapples Melons
Concentrated fruit juice Fruit juices (not concentrated)
Canned green or wax beans Peppers
Cabbage Spinach
Poverty at the crossroads 60
Food Deserts – the big irony - cheap good food unavailable to the poor
Poverty at the crossroads 61
Food Consumption patterns and income
• The Poor eat calories• The middle class eats nutrition• The rich eat presentation
Poverty at the crossroads 62
Food Deserts are poorest with high disease rates, poorest transit
Poverty at the crossroads 63
The Welfare Diet: Then and Now
– Rates do not keep up:– Welfare single rate now $592 a month; – if indexed would be close to $904 – down $312; – ODSP down $233– Special Diet of up to $250 re-application in 2011
Poverty at the crossroads 64
Tentative Conclusions
• Mythology of social assistance – the most ‘containable cost’
• Indexation federal rule, provincial exception• Social assistance is small expenditure and will
get smaller• Rates in serial decline – will continue• Caseloads heading towards the single person
with disability rising
Poverty at the crossroads 65
Tentative Conclusions
• Minimum wages and welfare out of whack in early 1990’s
• Now out of kilter in the opposite direction • Food a growing issue • Bad food the main threat • Phil Gramm(?) clarion call for more rate cuts
Poverty at the crossroads 66
Tentative Conclusions
• The Good News?– Lone parents at historic lows – child benefits, child
support, possibly can leave welfare behind – Everyone in the big tent labour force ?
• More bad news?– Singles the story of the recession of 2008-10– Senior disability programs leaving social assistance
as last payer
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