By Andrew Chernoff

Over 1 in 7 British Columbians Living In Poverty

Tying Minimum Wage To The CPI Essentially Is Indexing Poverty

In September, when B.C.’s minimum wages saw a few pennies raise, Irene Lanzinger, president of the B.C. Federation of Labour told the Georgia Straight, in a interview with  Travis Lupick that the increase in the minimum wage would do little to get British Columbians out of poverty in the province.

Lanzinger said an insufficient increase to the minimum wage is half the problem. The other half, she continued, is that B.C. simultaneously pegged the province’s minimum wage to the Consumer Price Index (CPI), a statistical estimate similar to a measure of inflation.

By itself, Lanzinger said, that would be a good thing that provides predictability to both employees and employers. However, she asserted, tying the minimum wage to the CPI coupled with that modest bump of 20 cents means the bottom of the country is where B.C.’s new minimum wage will remain.

“We are essentially indexing poverty,” she said. “We’ve got people earning poverty wages at our current minimum wage, and they will never get out of poverty. If you are going to peg it to something, you need to raise it above the poverty line first.”

In British Columbia the lack of a provincial poverty reduction strategy, income inequality, a fair tax system, and a minimum wage above the poverty line, in the last 10-years, has resulted in, “the average household income of the top 1% in B.C. has increased by 36% while, for the rest of us, real median incomes have stagnated, even though we’re working harder.”, according to the BC Poverty Reduction Coalition:

This isn’t just about market forces. Government policies keep incomes at the bottom low and give tax breaks to those at the top. Our welfare rates are completely inadequate at $610 a month for a single person. And the final minimum wage rate of $10.25 an hour will not put a worker above the poverty line in Vancouver and other large cities in B.C. But the view from the top is pretty rosy, with the top 1% of B.C. households paying a lower overall tax rate than others. In fact, provincial income tax cuts introduced since 2001 have delivered, on average, $41,000 to the top 1%.

Poverty is concentrated in specific populations, such as Aboriginal people, people with disabilities, recent immigrants, lone-mother households and single senior women, so the negative effects of inequality are more likely to be experienced by these groups.

Let’s get to the heart of the problem. Economic growth doesn’t make societies more equal; in fact, it may do the opposite. A poverty reduction strategy and a fair tax system would make our society more equal and our communities healthier, both physically and socially.

In December, 2014 when the last poverty stats from StatsCan were released, the BC Poverty Reduction Coalition reacted in its article titled, Latest poverty stats show BC still has one of the highest poverty rates in Canada. Trish Garner, the Community Organizer with the BC Poverty Reduction Coalition, a broad-based network of over 400 organizations throughout BC calling on the government to implement a poverty reduction plan,wrote:

The latest poverty statistics were released by Statistics Canada last Wednesday, and the data once again shows that BC has one of the highest poverty rates in Canada.

Using the Low Income Cut-Off – After Tax (LICO-AT) as the poverty line, 1 in 10 British Columbians are living in poverty. That’s 469,000 people struggling to make ends meet. In relation to the rest of the country, BC is tied third with Quebec after Ontario and Manitoba.

As always, there’s a two-year delay in the data from Statistics Canada so these numbers describe the situation from 2012. However, this year there’s also another challenge with the data – it’s produced from a new survey so we cannot compare to previous years. The silver lining perhaps is that it may stop the government from saying that we’ve seen a dramatic reduction in poverty by choosing their reference year from the past as that which had the highest poverty rate, (neglecting to mention that it spiked due to government cuts at the time).

So, we can’t say whether we’re improving or slipping backwards but, whichever way the trend might be going, 1 in 10 people living in poverty should be a concern for government and should drive serious action.

While the LICO-AT is a useful measure, in part because it gives us one of the most conservative estimates of poverty and because the government themselves have begun to use it, it has some big problems. For one, the base year from which the relative family expenditure underlying the data is drawn is 1992 and family spending on food, shelter and clothing in relation to their income has changed significantly since then. It also does not capture any geographical changes in the cost of living, which are especially significant in Metro Vancouver.

So let’s look at the Market Basket Measure (MBM), which is based on up-to-date costs of an adequate standard of living and reflects regional differences in living costs. As Statistics Canada describes, it “attempts to measure a standard of living that is a compromise between subsistence and social inclusion…The MBM represents the cost of a basket that includes: a nutritious diet, clothing and footwear, shelter, transportation, and other necessary goods and services (such as personal care items or household supplies).”

Using the MBM as a poverty line, we find over 1 in 7 British Columbians living in poverty. That’s a shocking 670,000 people. BC now has the second highest poverty rate in Canada after Nova Scotia.

Breaking the data down by age reveals a very interesting feature of the landscape of poverty in BC. While BC is in the middle of the pack in relation to other provinces in terms of child and senior poverty rates, we have the very highest poverty rate in Canada for working age people (18-64 years) across all poverty measures provided. This highlights that there is much more support needed for this age group, many of which are the working poor.

However, this new survey, as with most others, does not count “persons living on reserves and other Aboriginal settlements in the provinces,” and while these exclusions are said to be less than 3% of the total population, it is worth noting that the age demographics of the Aboriginal population might make this more important in counting poverty among the younger ages.

If we add this to the mounting evidence I documented here, including the recently published BC 2014 Child Poverty Report Card based on a different (taxfiler) data source that found 1 in 5 BC children are poor, there clearly continues to be an urgent need for a comprehensive poverty reduction plan for BC with legislated targets and timelines.

Despite the numbers and the heart-rending stories behind them, BC is now the very last province without a poverty reduction plan. It’s time for the government to listen up!