Social Policy in Ontario

Finishing the Fight on Poverty

Posted on August 27, 2012 in Social Security Debates

Source: The Tyee — Authors: Katie Hyslop

TheTyee.ca – A record decline in single-parent poverty may be stalled. How to rescue the remaining poor?
27 August, 2012.   By Katie Hyslop

Minna Kim started life over at 27, when she took her infant son and fled Ontario for Vancouver, leaving behind her abusive partner.

But back in her hometown life got off to a rocky start. She was forced to move back into her parents’ house and, with no childcare, meager and irregular child-support payments, and no job, she had to apply for income assistance.

“Obviously I didn’t want to live on welfare. I don’t want that for my son, and how horrible would it be if he [was on welfare] in the second generation?” says Kim, who spent six months on income assistance before returning to school on student loans.

“I thought, ‘How can I stop this cycle?’ I’ve always had in me the desire to help people, and I decided to go into social work because having lived that experience of being in an abusive relationship and having to go on welfare, I thought I want to help someone who’s going through the same thing.”

Even though she spent less than a year on social assistance, employment didn’t provide enough money to keep her family out of poverty. It was through a combination of government childcare subsidies and student loans, a diploma in social work, a job, and subsidized housing from a non-profit, that Kim was finally able to push her family above the poverty line.

Now, almost 12 years after they left Ontario, she and her now 13-year-old son Martin enjoy a few of the finer things in life: “Actually having a bathtub instead of just a standup shower; ventilation in the kitchen; [and] a big enough bedroom to sleep in. My son is so good-natured: there were some places we stayed at that the bedroom for him was as small as a closet.”

Living on just over $25,000 a year after taxes, the Kims aren’t rich. But they are part of a promising trend: the percentage of single parent families living below Statistics Canada’s Low-Income Cut-Off (LICO) after taxes has plummeted in the last 15 years, falling by more than half.

Canada’s welfare rolls have dropped, too, from 3 million people in 1995 to just over 1.6 million in 2005, the last year the now-defunct National Council of Welfare provided a national estimate. One of the biggest drops was in the single parents who were able to work category.

It hasn’t been a steady decline, but the numbers have moved from almost one in two single-parent households living in poverty, to fewer than one in five. Where 15 years ago almost half of all single parent families were destined to live below the country’s poverty line, now 80 per cent live above it. No matter how you slice it, it’s a significant victory for poverty reduction in Canada.

What’s behind the shift?

Several ideas are raised to explain the success, and not all researchers agree on what’s to thank. One I spoke to said it’s a combination of “tough love” welfare-to-work policies that forced single parents off income assistance, matched with other, “soft-love” measures such as the introduction of a National Child Benefit Supplement in 1998.

But others credit demographics. Single mothers head up the great majority of single parent families. And whereas single mothers of the ’80s and early ’90s were usually young, undereducated, and underemployed, single moms of the late ’90s and beyond tend to be older, more educated and better established in their careers, making it easier to stay out of poverty.

Whatever the reason, everyone we spoke to agrees the success so far has been the easy part. The remaining 20 per cent of single parents aren’t getting out of poverty on their own.

No one is saying single parent poverty can’t go any lower. But we do need to make changes or do more to bring these remaining families out of poverty. However there is no consensus on exactly how we do that.

John Richards, the Roger Phillips chair in Social Policy at the C.D. Howe Institute and a professor in the Public Policy Program at Simon Fraser University, thinks the status quo is insufficient. But he doesn’t think a major shakeup of the tax benefit system is the way to go.

“In many ways I think getting [poverty rates] down even lower is not just a question of short-term back-to-work policy or more generous income assistance or childcare subsidy,” says Richards.

“There are always tweaks. Like better education for early childhood for families at risk like low-income, single parent families. We’re hoping that the next generation will have a better position in the labour force.”

Others say it’s going to take more than a few tweaks here and there to bring down lone parent poverty: “Poverty reduction measures are often not about income, they’re about supports and things that let people continue to get back to work,” says Armine Yalnizyan, a senior economist with the Canadian Centre for Policy Alternatives.

For Yalnizyan that means more than just early childhood education: it’s access to good schools, safe housing, neighbourhoods with green spaces and public assets like libraries and community centres, and public transit without having to skip meals or miss bill payments.

To push single-parent poverty to single digits or lower, we first need to understand why some parents have managed to climb out of poverty while others can’t seem to keep their heads above water.

Tough love, soft love

In 1996, the fraction of single-parent families living under the LICO after tax was 49.3 per cent, the highest it had been in almost two decades. In comparison, poverty among two-parent families was barely a quarter as severe, at just 10.7 per cent. (See Sidebar.)

The country had just recovered from a late-1980s recession, followed by massive cuts in the government sector in an effort to reduce a national deficit that had reached $42 billion, nine per cent of Canada’s GDP.

With the increase in poverty came an expansion of welfare rolls. In 1994 when the national welfare numbers peaked, there were 200,000 single parents on welfare, not counting their children who lived with them on social assistance. The following year in British Columbia, single parent families accounted for 151,000 out of 341,000 social assistance clients.

But by 2008, the number of single parent families on welfare in B.C. fell to 28,000.

< lone-parent-low-income-levels.jpg >

“By my own conclusion, two things happened that worked together,” says Richards. “One was more generous benefits to low-income families with children, and the other is that most provincial welfare systems became more strict in allowing low-income parents to have social assistance if there was no other presenting problems [preventing them from working].”

Keeping parents with no barriers to working off the provincial welfare roles is what Richards refers to as a “tough love” policy. The federal government toughened its “love” as well, making it harder for repeat applicants and seasonal workers to get what was then known as federal unemployment insurance.

But with those sticks also came carrots: “soft love” measures to help families off welfare rolls and keep them in the labour market, like the National Child Benefit Supplement (NCBS).

The NCBS is made up of two parts. Ottawa’s contribution is an extra payment to low-income families added to their Canada Child Tax Benefit (CCTB), received monthly by all middle and low-income families with children under 18.

British Columbia’s contribution was more selective. Low-income working parents were allowed to keep Ottawa’s NCBS money. Parents on public assistance however, had the supplement clawed back from welfare or child benefits. Victoria promised to re-invest the money it took in, services to benefit children of low-income families.

The point was to create more incentive to get off welfare. Previously, parents often saw little change in income when they moved from welfare to working. Some even saw their situation worsen when they lost welfare benefits like dental and drug coverage for their children.

In his paper Richards credits the NCBS with enabling families to leave welfare on lower earned incomes than previously, because the federal supplement topping up working parents’ income was enough to make a job more profitable than being on welfare.

Single moms work it out

But it wasn’t just a change in government policies that brought single parents off the welfare rolls. Unlike the recession of the early 1980s, single mothers — by far the majority of single parents in Canada — were different this time around.

An increase in the divorce rate and a decrease in teen pregnancy meant single moms were typically older and more educated than a decade earlier. They had labour market experience already, so even if they lost their job it was easier to find another one.

It also didn’t hurt that Canada experienced one of the biggest job booms in the post-’80s world.

“The mid-1990s, that’s your high water mark of poverty,” says Yalnizyan. “Then we create more jobs than any other nation in the [then] G-7 and we’ve got a fraction of the population, and you’ve got a sense of how poverty is likely to drop.”

While most single mothers from the mid-to-late 1990s have raised all their kids by now, the cohort of single mothers from 2000s is having a similar experience.

“What we do see over the last decade is changes in the labour market experiences of lone mothers,” says Sylvia Fuller, an associate professor of sociology at the University of British Columbia. “More lone mothers are engaged in paid employment and in paid employment at higher rates, [and] are more likely to work full-time than before.”

Post-recession employment is unstable: Yalnizyan

All these experts agree however that the good news on single parents is over for now — the decline in their numbers has leveled off. Fuller, who has done extensive research in B.C. and Ontario, believes the number of single parents in poverty has been stalled since about 2009 because many would need help beyond the NCBS to get off welfare.

“Almost half of lone mothers in this province on social assistance now are in some kind of medicalized category,” says Fuller. “So they’re either classified as disabled or they’re classified as someone with persistent multiple barriers to employment.

“For the most part, lone mothers who do not have massive barriers to employment because of health problems or addictions problems, they’re off the [welfare] caseload. Or if they’re on the caseload, they’re on for a very short period of time and then they’re moving back into the labour force.”

Yalnizyan has a different theory about why single parents’ poverty rates stalled. She’s been tracking Canada’s job growth since the 2008 recession and says that while employment has increased, it’s not the secure, well-paid jobs with benefits that single parents need.

“Compared to May, 2008, four out of five of the jobs created [since then] are temporary,” she said.

“The first people that go in a downturn are term and contract. The employer has the least loyalty to [them]. And we saw it: the biggest loss of jobs came before Oct. 2008, and they were temporary workers. That category of workers lost jobs before the full time ones, but [temporary and part-timers] were the first workers that got jobs back.”

Temporary or part-time jobs offer none of the advantages of full-time employment: supplemental health and dental insurance, time off to take a kid to the doctor or attend their school play, chance of advancement or a raise.

Economist Yalnizyan believes it is federal policy to see lower wages, for less secure jobs, dominate the Canadian employment landscape. She cites Ottawa’s inaction when U.S.-based Caterpillar closed its London, Ont. plant after workers refused to take a 50 per cent pay cut, its support for hiring more temporary foreign workers, and measures to make it more difficult for Canadians to receive Employment Insurance.

“If the only answer is work, and the amount of money you get for work is dropping, costs are rising and your security at work is falling, that’s bad for any household with children, because it makes that person more focused on maintaining their job,” said Yalnizyan.

“Which certainly makes it more challenging to be devoted to your family when you have that kind of pressure for anybody to have time to raise their kids.”

Softer approach to easing poverty

Among households with children, those with single parents are still twice as likely to live in poverty as kids with two. And living with parents in poverty puts children at increased risk of growing up to continue to live in poverty.

So if the status quo won’t bring the numbers any lower, what could we do to bring single-parent poverty at least to par with other families in Canada, if not even lower?

C.D. Howe/SFU policy expert Richards thinks more “soft love” — policies like raising welfare rates and reducing benefit claw-backs — would help families make and sustain the transition to the other side of the poverty line.

Currently families with one earner and two children who make between $20,000 and $40,000 see as much as 40 per cent of their benefits “clawed back.” These claw-backs, combined with income taxes, are known as the “marginal tax rate.”

“One way to help the ‘near poor’, [people] earning over 20k, is to lower the claw back rate, which results in a lower marginal effective tax rate over the [$20,000 to $40,000] range,” Richards wrote in an email.

But he cautions that reducing claw backs risks giving money to some people who don’t need it, too.

Sociologist Fuller believes we need to re-examine how we treat single parents on income assistance who have very young children. Back in the 1990s, single parents in B.C. with children under the age of seven were not expected to look for work. Welfare reforms under the current Liberal government lowered that age to three.

The change accommodated changing social norms: not all parents want to stay at home with their children for years. But a shortage of childcare spaces have meant that many single parents who would like to get a job can’t, because they have no one to look after their children.

“I wouldn’t go so far as to argue it’s a bad thing to be suggesting that lone mothers be engaged in paid employment where possible, but we have to also make that possible,” Fuller told The Tyee Solutions Society.

For Fuller that means government invest in an adequate number of low-cost, good quality childcare spaces in British Columbia.

It’s where you live

Think-tank economist Yalnizyan has a more out-of-the-box idea — almost literally. She believes that helping families raise their children in a good neighbourhood can break the cycle of poverty.

“If you don’t have a lot of income to spare, it’s extremely difficult to live in a neighbourhood which is supportive of childhood development, that has plenty of opportunities in the mix: green space, good schools, easy transportation, lots of recreational things to do,” she said.

“The opportunities that a child has, it’s not just [that] their parents have got low income, it’s [that] the communities in which they live are not very supportive.”

A lone parent salary could stretch much further if governments provided affordable housing, childcare, transportation in low-income neighbourhoods, as well as tuition for lone parent families. Although it would be quite an expensive cost for taxpayers to cover, Yalnizyan says it would be repaid at least partially by an increase in lone parents’ purchasing power.

It was proper housing that finally brought the Kim family out of poverty. Even basement apartments in Coquitlam were expensive for a single mom and her son, so Kim considers it “a miracle” that her application to live in a new YWCA apartment building for single moms was accepted earlier this year.

“Having affordable and safe subsidized housing, it’s like an actual godsend for a single mom. We used to balance everything to the penny,” says Kim, who has been living in her new apartment since April and pays just $670 per month in rent.

That cost will be cut further, by more than half, if her son Martin later attends post-secondary school full-time and lives at home. This extra incentive to reach for the academic stars also increases Martin’s prospects of escaping poverty for good when he enters the working world.

“Housing is one of the biggest areas that can be a success for single parents to move forward and be able to do better for your child and yourself, by having that housing,” says Kim. “Without that, it’s just a cycle: poverty begetting poverty.”

In a place where accommodation is as expensive as the Lower Mainland, families like the Kims work hard, but still can’t make it without help from non-profits and government subsidies.

Society’s payoff for that help may only come later, when the next generation achieves economic lift-off.

Effective public benefits have brought the number of single parents living in poverty in Canada down by half over 20 years. Winning the rest of the battle may take another generation — and Canadians willing to invest in parents. 

Tags: child care, economy, housing, ideology, poverty, tax, women

This entry was posted on Monday, August 27th, 2012 at 11:36 pm and is filed under Social Security Debates. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.