Download - Poverty at the Crossroads John Stapleton January 18, 2011 London, Ontario

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

• 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


‘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


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


The Big Picture

• Show me the money!– By Program– By Target Group – Federal– Provincial


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


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.


Seniors47%

Children11%

Disabled19%

EI recipients10%

SA - Ontario Works4%

Other9%

ONTARIO: INCOME SECURITY SPENDING BY TARGET RECIPIENT2008-09

($48.9 B est)


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"


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"


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)


Social Assistance: the Megatrends


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........


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


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


1981 to 2008, Monthly from January 2009 to Nov. 2010


PERCENTAGE


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


June 2007 to November 2010


PERCENTAGE


Canada ‘in the middle’ with support for single parents - OECD


Canada ‘at the bottom’ in support for single (non-aged) persons - OECD


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%


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


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


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


Single People dominate welfare applications


Younger Singles dominate welfare applications


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


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


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


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)


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


Gold: last 12 months


Sugar: last 6 months


Corn: last 6 months


Cotton: last 6 months


Soybeans: last 12 months


Copper: last 12 months


Coffee: Last 12 months


Cattle: last 12 months


Orange Juice: last 12 months


Pork: Last 12 months


Wheat: last 6 months


• 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


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


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)


‘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


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


Food Deserts – the big irony - cheap good food unavailable to the poor


Food Consumption patterns and income

• The Poor eat calories• The middle class eats nutrition• The rich eat presentation


Food Deserts are poorest with high disease rates, poorest transit


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


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



• 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



• 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

Download - Poverty at the Crossroads John Stapleton January 18, 2011 London, Ontario

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