The cost of poverty: Those who suffer most are those who have no choice

by  Meaghan Baxter, Vue Weekly

January 24, 2013

Alberta is one of the country’s wealthiest provinces, with an abundance of resources and opportunities at our fingertips. However, below the surface is an issue that continues to grow, and one that prevents a staggering number of Albertans from accessing those opportunities, attaining an adequate quality of life, or even simply making ends meet every month.

Poverty reaches far beyond the traditional stereotypes of those too lazy and unwilling to work to make a better life for themselves and their families. The truth is, many of Alberta’s poor are working full-time jobs year-round and are still falling short. According to Public Interest Alberta (PIA), poverty affects one in 10 Albertans.

“Poverty has risen quite dramatically with the downturn of the economy, and so there are a lot of people who are really just a paycheque away from living in poverty if they lose their job or if they get injured,” says Bill Moore-Kilgannon, executive director of PIA, which is continuing to work towards a comprehensive poverty strategy and supports Action to End Poverty in Alberta.

Contributing to Alberta’s poverty rate is the fact that Alberta has the second-lowest minimum wage in Canada at $9.75 per hour, just ahead of Saskatchewan, which comes in at $9.50 per hour. Moore-Kilgannon points out that this can be troublesome, particularly because Alberta also has the lowest post-secondary participation rate in Canada. While people are able to enter high-paying jobs in industries such as oil and gas without post-secondary certification, he says if they become injured and aren’t able to continue that line of work, they have nothing to fall back on and have to resort to low-paying service jobs. This, coupled with the expensive cost of living in Alberta, can make it incredibly difficult to get out of poverty if a person falls below that line.

“We need, in Alberta, to do a better job of rewarding work and making work pay,” notes John Kolkman, research coordinator for the Edmonton Social Planning Council. “That includes looking at how we can increase wages for low-income workers: things like minimum wage, things like earned income tax credits that basically provide a supplement to low-wage workers. There’s a number of things that can be done without expending huge dollars that will nonetheless, if we do them properly, will make a significant difference to reduce poverty in the province.”

On November 20, 2012—also known as National Child Day—PIA, along with the Alberta College of Social Workers and the Edmonton Social Planning Council, published Achieving the Promise: Ending Poverty in Alberta, one of many reports being released across Canada by the national coalition Campaign 2000. For the first time, the report presented data using the Low Income After-Tax (LIM AT) rather than the Low Income Cut-off (LICO), which has only been updated for inflation rather than other changes in expenditures for Canadian families. LIM AT is updated yearly, and by these standards, a family of four in Alberta earning $38 000 after taxes would be considered poor. For a single person, this cut off would be a yearly salary of $19 000.

The report highlights that of all age groups in Alberta, one of the most widely affected by poverty is children under the age of 18. The most recent figures relating to child poverty were recorded in 2010, and the data revealed that at that time 91 000 children (11.3 percent) were living below the low-income measure. The number of younger children—meaning under the age of six—was slightly higher: over one in six children (17.2 percent) under the age of six are living in low income families—or 48 200 children. However, in 2010, 51.6 percent of children in poverty lived in households where one or more persons worked full-time year round.

Children living in poverty have no choice in the matter, and Moore-Kilgannon says while each situation is different and poverty is a complex issue, it limits children in terms of their vision of self-image and their potential.

“That’s unfortunate because what we need to be doing is developing the full potential of all children and yet, so much of our society is basically this user-pay model and it excludes children so much, so children living in poverty cannot get involved in things like hockey; it’s just too expensive,” he continues. “Children living in poverty feel that they are clearly not going to be getting the latest stuff and then they get ostracized at school, and young girls in particular can be quite cruel to each other on these things … and that creates self-esteem issues, so there are many, many things that happen growing up in these situations and that has lasting, life-long implications.”

Kolkman acknowledges child poverty is a prevalent problem in the province, but does not want to paint too gloomy a picture, as most people do not stay in poverty their entire lives. He points out past data, which shows there has been a 12-percent decrease in the number of children in poverty from 2009 to 2010, and the number of children lifted out of poverty by all government income transfers—including child tax benefits, social assistance and employment insurance—has increased to 47.2 percent. He says some families also manage to lift themselves out of poverty through career improvements or by going back to school, although this can be difficult given the cost of childcare in the province, which can be as high as $700 per month, per child, and often more expensive for infants and children under the age of six.

“But there are some who stay trapped, and I think we need to do a better job of helping them exit poverty as well. Some of it has to do with the design of some of the programs that we have,” Moore-Kilgannon says, noting that reducing poverty will require some additional public investment, but there is evidence to suggest that it saves both the government and society money in the long run. “Children growing up in poverty tend to earn lower income as adults. They tend to drop out of school more, so they have lower education attainment, they tend to have greater involvement with the criminal justice system, they tend to get sick more and have greater costs in the health-care system. If we can make some strategic investments and reduce poverty, particularly among children, there are going to be some long-term benefits.”

Joe Ceci, coordinator of Action to End Poverty in Alberta, says that research conducted by the organization, in terms of publishing poverty costs in 2012, indicated that 20 to 25 percent of children living in poverty remain in poverty throughout their lives. This means that while those individuals lose out economically due to being unable to attain better employment, so does the government due to less taxes being paid from those individuals who may also be receiving benefits rather than contributing to the domestic product of the province and the economy.

“That’s what our work is, to try and produce some government policies, a report that will have government policies that will save Alberta money in the long run and have a better outcome for people living in poverty,” Ceci says, adding that there is often not a great deal of transitional support into employment for those working to get out of poverty, and the thought of losing some of that assistance can be a deterrent for families.

Premier Alison Redford pledged to end child poverty in Alberta within five years during the last provincial election, with further measures to be taken to end poverty in Alberta within 10 years, and is being challenged to make good on her word. Redford stated at that time that the plan wasn’t about giving handouts, but rather focusing on creating equal opportunity and ensuring all Albertans had the opportunity to benefit from the province’s economy. Implemented under the Alberta government’s newly formed Human Services, the first step was to review all government programs through result-based budgeting and determine if they are meeting the needs of Albertans. Currently, Human Services Manager Dave Hancock is developing the social policy framework, which Moore-Kilgannon says is a new policy for the whole ministry of Human Services that will include a poverty reductions strategy, but he says while the services provided by the ministry are critical, other areas, such as access to education, need to be addressed.

“I’m worried that the social policy framework is going to be more rhetoric than reality and it’s not going to be backed up with any substantial investments,” Moore-Kilgannon adds. “I’ll be the first to congratulate them if they do, but I’m not holding my breath.”

“The social policy framework is a really good first step in taking steps towards creating a provincial poverty reduction strategy, and their leadership in that regard will really help all sectors identify how they can play a role in preventing and ultimately eliminating poverty in Alberta,” Ceci says of the plan, which has not yet been released.

In the meantime, Action to End Poverty in Alberta will be addressing policies to reduce poverty in Alberta with its report, Poverty Costs 2.0: Creating Policies That Save, in March.

Alberta is one of the country’s wealthiest provinces, with an abundance of resources and opportunities at our fingertips. However, below the surface is an issue that continues to grow, and one that prevents a staggering number of Albertans from accessing those opportunities, attaining an adequate quality of life, or even simply making ends meet every month.

Poverty reaches far beyond the traditional stereotypes of those too lazy and unwilling to work to make a better life for themselves and their families. The truth is, many of Alberta’s poor are working full-time jobs year-round and are still falling short. According to Public Interest Alberta (PIA), poverty affects one in 10 Albertans.

“Poverty has risen quite dramatically with the downturn of the economy, and so there are a lot of people who are really just a paycheque away from living in poverty if they lose their job or if they get injured,” says Bill Moore-Kilgannon, executive director of PIA, which is continuing to work towards a comprehensive poverty strategy and supports Action to End Poverty in Alberta.

Contributing to Alberta’s poverty rate is the fact that Alberta has the second-lowest minimum wage in Canada at $9.75 per hour, just ahead of Saskatchewan, which comes in at $9.50 per hour. Moore-Kilgannon points out that this can be troublesome, particularly because Alberta also has the lowest post-secondary participation rate in Canada. While people are able to enter high-paying jobs in industries such as oil and gas without post-secondary certification, he says if they become injured and aren’t able to continue that line of work, they have nothing to fall back on and have to resort to low-paying service jobs. This, coupled with the expensive cost of living in Alberta, can make it incredibly difficult to get out of poverty if a person falls below that line.

“We need, in Alberta, to do a better job of rewarding work and making work pay,” notes John Kolkman, research coordinator for the Edmonton Social Planning Council. “That includes looking at how we can increase wages for low-income workers: things like minimum wage, things like earned income tax credits that basically provide a supplement to low-wage workers. There’s a number of things that can be done without expending huge dollars that will nonetheless, if we do them properly, will make a significant difference to reduce poverty in the province.”

On November 20, 2012—also known as National Child Day—PIA, along with the Alberta College of Social Workers and the Edmonton Social Planning Council, published Achieving the Promise: Ending Poverty in Alberta, one of many reports being released across Canada by the national coalition Campaign 2000. For the first time, the report presented data using the Low Income After-Tax (LIM AT) rather than the Low Income Cut-off (LICO), which has only been updated for inflation rather than other changes in expenditures for Canadian families. LIM AT is updated yearly, and by these standards, a family of four in Alberta earning $38 000 after taxes would be considered poor. For a single person, this cut off would be a yearly salary of $19 000.

The report highlights that of all age groups in Alberta, one of the most widely affected by poverty is children under the age of 18. The most recent figures relating to child poverty were recorded in 2010, and the data revealed that at that time 91 000 children (11.3 percent) were living below the low-income measure. The number of younger children—meaning under the age of six—was slightly higher: over one in six children (17.2 percent) under the age of six are living in low income families—or 48 200 children. However, in 2010, 51.6 percent of children in poverty lived in households where one or more persons worked full-time year round.

Children living in poverty have no choice in the matter, and Moore-Kilgannon says while each situation is different and poverty is a complex issue, it limits children in terms of their vision of self-image and their potential.

“That’s unfortunate because what we need to be doing is developing the full potential of all children and yet, so much of our society is basically this user-pay model and it excludes children so much, so children living in poverty cannot get involved in things like hockey; it’s just too expensive,” he continues. “Children living in poverty feel that they are clearly not going to be getting the latest stuff and then they get ostracized at school, and young girls in particular can be quite cruel to each other on these things … and that creates self-esteem issues, so there are many, many things that happen growing up in these situations and that has lasting, life-long implications.”

Kolkman acknowledges child poverty is a prevalent problem in the province, but does not want to paint too gloomy a picture, as most people do not stay in poverty their entire lives. He points out past data, which shows there has been a 12-percent decrease in the number of children in poverty from 2009 to 2010, and the number of children lifted out of poverty by all government income transfers—including child tax benefits, social assistance and employment insurance—has increased to 47.2 percent. He says some families also manage to lift themselves out of poverty through career improvements or by going back to school, although this can be difficult given the cost of childcare in the province, which can be as high as $700 per month, per child, and often more expensive for infants and children under the age of six.

“But there are some who stay trapped, and I think we need to do a better job of helping them exit poverty as well. Some of it has to do with the design of some of the programs that we have,” Moore-Kilgannon says, noting that reducing poverty will require some additional public investment, but there is evidence to suggest that it saves both the government and society money in the long run. “Children growing up in poverty tend to earn lower income as adults. They tend to drop out of school more, so they have lower education attainment, they tend to have greater involvement with the criminal justice system, they tend to get sick more and have greater costs in the health-care system. If we can make some strategic investments and reduce poverty, particularly among children, there are going to be some long-term benefits.”

Joe Ceci, coordinator of Action to End Poverty in Alberta, says that research conducted by the organization, in terms of publishing poverty costs in 2012, indicated that 20 to 25 percent of children living in poverty remain in poverty throughout their lives. This means that while those individuals lose out economically due to being unable to attain better employment, so does the government due to less taxes being paid from those individuals who may also be receiving benefits rather than contributing to the domestic product of the province and the economy.

“That’s what our work is, to try and produce some government policies, a report that will have government policies that will save Alberta money in the long run and have a better outcome for people living in poverty,” Ceci says, adding that there is often not a great deal of transitional support into employment for those working to get out of poverty, and the thought of losing some of that assistance can be a deterrent for families.

Premier Alison Redford pledged to end child poverty in Alberta within five years during the last provincial election, with further measures to be taken to end poverty in Alberta within 10 years, and is being challenged to make good on her word. Redford stated at that time that the plan wasn’t about giving handouts, but rather focusing on creating equal opportunity and ensuring all Albertans had the opportunity to benefit from the province’s economy. Implemented under the Alberta government’s newly formed Human Services, the first step was to review all government programs through result-based budgeting and determine if they are meeting the needs of Albertans. Currently, Human Services Manager Dave Hancock is developing the social policy framework, which Moore-Kilgannon says is a new policy for the whole ministry of Human Services that will include a poverty reductions strategy, but he says while the services provided by the ministry are critical, other areas, such as access to education, need to be addressed.

“I’m worried that the social policy framework is going to be more rhetoric than reality and it’s not going to be backed up with any substantial investments,” Moore-Kilgannon adds. “I’ll be the first to congratulate them if they do, but I’m not holding my breath.”

“The social policy framework is a really good first step in taking steps towards creating a provincial poverty reduction strategy, and their leadership in that regard will really help all sectors identify how they can play a role in preventing and ultimately eliminating poverty in Alberta,” Ceci says of the plan, which has not yet been released.

In the meantime, Action to End Poverty in Alberta will be addressing policies to reduce poverty in Alberta with its report, Poverty Costs 2.0: Creating Policies That Save, in March.