Did ‘tough love’ cut poverty rate?
Published On Wed Jun 30 2010. By Carol Goar, Editorial Board
While world leaders were discussing bank taxes, deficit reduction and global economic stability, a handful of Canadian economists was debating a matter that hits much closer to home.
On one side was John Richards, professor of public policy at Simon Fraser University. He wrote a paper entitled Reducing Lone-Parent Poverty: a Canadian Success Story. It was released by the C.D. Howe Institute last Thursday.
On the other side was Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives. Her response, Lone Parent Success Story Not Because of Tough Love, popped up hours later on the Progressive Economics Forum.
Richards claimed the dramatic drop in the poverty rate among single-parent families over the past decade proves that the “tough love” policies imposed on welfare recipients by the governments of Ontario, Alberta and British Columbia in the mid-1990s worked. “Much of the credit lies with reform to social assistance programs,” he wrote.
Yalnizyan countered that the three principal causes of the drop in the lone-parent poverty rate were strong economic growth, the introduction of the National Child Benefit and a buoyant labour market. “When there are jobs, people take them.”
Here are the agreed-on facts:
• In 1996, 56 per cent of families headed by single women lived in poverty. By 2007, the proportion had dropped to 23 per cent.
• In 1996, single mothers depended on government benefits for 37 per cent of their income. By 2007, the number had dropped to 22 per cent.
• In 1996, 10 per cent of the Canadian population received welfare. By 2006, the rate had fallen to 5 per cent.
Here is the context:
The poverty rate peaked at 15.2 per cent in 1996, as the economy struggled to create jobs after the 1990-1991 recession. Welfare spending hit an all-time high.
The economy was in much better shape in 2006. The poverty rate reached a 30-year low of 9.2 per cent. All the provinces had balanced budgets and shrunken welfare rolls.
Yet the primary cause of the sharp drop in lone-parent poverty, according to Richards, was that Mike Harris, Ralph Klein and Gordon Campbell reduced access to welfare and required recipients (except those with disabilities) to work. These measures pushed thousands of employable women into the marketplace, raising their market incomes and reducing welfare dependency.
Other factors played a role, he acknowledged, citing favourable economic conditions and the National Child Benefit. “However, large reductions in lone-parent poverty demonstrate that the generous social assistance regimes pre-1995 were a bad investment from the perspective of both the poor and taxpayers.”
According to Yalnizyan, it would have been surprising if single mothers hadn’t increased their market incomes during a decade of remarkable economic expansion, when Canada’s rate of job creation was unmatched among the world’s rich nations.
A second reason the incomes of single mothers rose during this period, she contends, is that “more affluent women were either breaking up with their partners or having kids on their own.” (According to Statistics Canada, the divorce rate has declined steadily since 1987. But it is possible that most single mothers weren’t formally married.)
Her final point is that a minimum wage job doesn’t pull a single mother and her children out of poverty. Many are juggling two or three part-time jobs.
Yalnizyan’s conclusion: “While there is much to be said for the virtues of work, it does not replace sensible and supportive social policy.”
This clash of interpretations of the past will probably never be resolved.
What matters now is whether Richards’ “success story” melts away in the aftermath of the 2008-2009 recession and whether Yalnizyan’s plea for more humane poverty reduction policies elicits any response.
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