COST OF POVERTY. High healthcare costs, high justice system costs, lost opportunity costs etc. ($7.1 $9.5 billion annually)

Transcription

1 2012 COST OF POVERTY FUTURE COST OF POVERTY High healthcare costs, high justice system costs, lost opportunity costs etc. ($7.1 $9.5 billion annually) 3 6 A L B E R TA V I E W S D E C E M B E R following investment in poverty reduction strategies.

2 Breaking the Cycle Why investing in poverty reduction would benefit all Albertans By Joe Ceci To echo the poet Audre Lorde: this has all been said before, many times and in many ways. A sense of inevitability has settled around the idea of poverty, a sense of inevitability also at the heart of many social narratives. We live in a long tradition of belief that the poor will always be with us, a tradition sometimes couched in religion or politics or sociology, sometimes justified by hard economic facts. Yet if the mountains of reports, discussion papers and policy statements generated by governments and nongovernmental organizations across many decades are anything to go by, the question of what to do about poverty still compels us. This mass of information also suggests our society cares a great deal about resolving the issue, however complex and difficult it seems. Society s persistence suggests that no explanation adequately justifies poverty among plenty, and shows we don t really buy the notion that poor people can simply show some initiative and pull themselves up by their bootstraps. To paraphrase Alexa Briggs of Vibrant Communities Calgary, though poverty is experienced by individuals, it is a consequence of our particular system and so requires us to engage in system-changing strategies. Fortunately the sense of inevitability around poverty, its persistence and even social intransigence, is being challenged by a recent strategic shift in how we frame the problem. This shift adds an economic case to the social justice case, arguing that poverty-reduction efforts including actions to prevent poverty should be implemented alongside the provision of income and other supports, because merely managing poverty in perpetuity costs all of us far more. Caron Vigh is in her fifties and has probably always struggled to get by. I met her at the Women s Centre in Calgary, which is her lifeline because it gives her a place to go and people to talk to away from the home she shares with three other women. A sense of exclusion and isolation is common among people in poverty, not to mention the boredom that can come with a lack of resources ( there s only so much cleaning up you can do, Caron tells me). Caron has received income support from the government of Alberta for almost three years. She s a high-school graduate and has worked a variety of jobs. Her favourite was with a banquet and wedding caterer, though hefting 6-foot cheesecakes and 100-pound roasts didn t do her back any favours. Though Caron has suffered from chronic back pain for 10 years, only when she left a very violent long-term relationship with nothing did she turn to the government for support. Because her back condition is now disabling, Caron is ALBERTA VIEWS DECEMBER

3 Feature Breaking the cycle unable to work, and receives income support through a program called Barriers to Full Employment. She receives $849 each month, giving her an annual income of just over $10,000. After renting a room in a house with a shared kitchen for $575, paying bills and buying groceries, she has little left over; she receives her cheque near the end of every month, and by the first day of the next the money is spent which, she says, makes for a very long month. She longs for what she calls a simple life; going for a coffee at Timmies, just having money in my pocket. Her dream is to just get away for a weekend, to get on a bus and go to Banff. Even this feels out of reach; Caron doesn t think she ll ever be able to work again, and worries she ll be in a wheelchair by age 60. Caron is one face of poverty in Alberta, her situation the outcome of a complex interweaving of limited education, challenging work conditions, an abusive relationship and poor health. As David Shipler, author of The Working Poor: Invisible in America, famously illustrated, problems compound in the poverty trap, intensifying and magnifying their effects. As an example, he describes the plight of a single mother holding down several low-paying jobs: Every problem magnifies the impact of the others, and all are so tightly interlocked that one reversal can produce a chain reaction. A rundown apartment can exacerbate a child s asthma, which leads to a call for an ambulance, which generates a medical bill that cannot be paid, which ruins a credit rating, which hikes the interest rate on an auto loan, which forces the purchase of an unreliable used car, which jeopardizes a mother s punctuality at work, which limits her promotions and earning capacity, which confines her to poor housing. For society the costs of Caron s poverty can be expressed in her history of un- and under-employment, the cumulative health costs of the physically demanding jobs she s done, and the limited likelihood of her returning to the workforce. Improvement for Caron means more income, but also concrete benefits such as more-affordable housing and transportation. Without these, she faces the challenges of uncertain housing, decreased social engagement and support, and increasingly complex health concerns, potentially including stress and depression. We actually know quite a lot about poverty in Alberta, its intertwined causes and the effects that complicate its eradication. But we all of us, not just advocates and analysts have become very good at talking around it: debating definitions, supporting one measure over another as more accurate or useful, collecting information about who and how many and informing each other of our findings. The Low-Income Cut-Off is the most common way to count people with low incomes, though other methods, including Low-Income Measures and Market Basket Measures, have their champions and detractors. The debates are important because the measure chosen affects the number of people seen to be living in poverty, and so can increase or decrease our sense of social urgency. In Alberta, for instance, we know that 148,000 non-elderly families, including 73,000 children, ALBERTA POVERTY BY THE NUMBERS Poverty has a cost. Our choice is whether to address poverty s root causes or manage its symptoms. New research shows that the former approach costs less. 148,000 Alberta families living in poverty 73,000 Alberta children living in poverty $22,637 A living wage in Alberta 1/8 Proportion of Alberta workers who earn less than a living wage 703 Average hospital visits per year by lowest-earning 20 per cent of Albertans (per 1,000 people) 376 Average hospital visits per year by wealthiest 20 per cent of Albertans (per 1,000 people) $1.2-billion Annual cost of poverty to Alberta healthcare $7.1 $9.5-billion Total cost of managing the symptoms of poverty (including higher healthcare costs, higher justice system costs, lost opportunity costs and more) Read more in Poverty Costs, Vibrant Communities Calgary and Action to End Poverty in Alberta, intimately know the meaning of living below the Low- Income Cut-Off of $23,298/year (a threshold where 63 per cent or more of after-tax income is spent on the necessities of life). We know that a large number of Albertans more than 420,000 are considered working poor. Even in this prosperous province, one in four workers is a low-wage earner, with one in eight earning less than a living wage and 68 per cent of them in their prime earning years. This in turn tells us two things: first, that low wages are not just paid to teenagers working for pin money, and second, it takes more than a strong economy to raise the incomes of the poorest Albertans. A rising economic tide only lifts some boats. While we still debate the poverty line in Canada, reflecting ideological as well as practical concerns, we also disagree about whether we should be concerned with absolute poverty access to basic necessities or relative poverty, which includes the ability to participate fully in society and civic life. Many social welfare advocates use the Low-Income Cut-Off as a proxy for the degree of hardship relative to others in society. Both measures are relevant in Alberta, however, as the province has among the lowest income-support rates in Canada for all categories of clients, many of whom fall well below the Low-Income Cut-Off. To qualify for income support in Alberta, applicants are first assessed on their ability to work, and are assigned one of three classifications: Expected To Work or Working, Barriers to Full Employment (unable to work because of a permanent disability or several chronic conditions) or Non-EI Full-time Learner (temporarily not engaged in work). The applicant s 38 ALBERTA VIEWS DECEMBER 2012

4 current income (if any) is reviewed and assets assessed, with some possessions, such as a house, not counting toward eligibility. Possessions that can be converted into cash including furniture, tools or a car must be sold. Expected To Work clients are permitted to retain cash and assets totalling no more than one month s worth of their core benefits, while Barriers to Full Employment clients may retain two months worth. A single employable adult living in private housing, for example, can retain approximately $627, while an employable single parent with one child living in social housing can hold on to $599 in addition to a limited number of supplementary benefits from the federal or provincial government. If the process seems complicated, that s because it is, with multiple government departments and offices handling assessment and disbursement of support. In Alberta, at least, efforts are afoot to consolidate services within the new superministry of Human Services. Our society s current approach of responding after the fact to the effects of poverty is wasteful and unsustainable, as it leads to poorer health outcomes, more use of the justice system, and intergenerational persistence of poverty, among other problems. Social activists have been saying this for years, and recent data bolsters their position. The first Cost of Poverty report, commissioned by the Ontario Food Banks Association in 2008, pegged the external costs of poverty at $2,299 $2,895 per Ontario household every year, a cumulative expenditure of $32 $38-billion annually in the healthcare and justice systems as well as through lost opportunities. The external costs of poverty were calculated by dividing the population (excluding elderly families) into income quintiles and calculating the costs incurred by different income groups for the healthcare and justice systems, as well as by considering the intergenerational and opportunity costs of poverty. Intergenerational losses are complex, related to less education and consequent lost income over one s lifetime. Opportunity costs also have private and public dimensions. On the private side is lost potential income when a person is un- or under-employed, while the public element includes a loss of tax revenue. The cost of poverty was estimated by comparing the cumulative costs incurred in each of these areas by the lowest income group to those of the next highest income group. The overall cost is the difference in the costs incurred by each group. Ontario s Cost of Poverty report argued that it makes more sense to raise the incomes of the lowest groups to the next level than to continue spending to merely manage the predictable outcomes of economic hardship. Similar studies of the costs of poverty have now been undertaken across Canada, most recently in Alberta, where Vibrant Communities Calgary and Action to End Poverty in Alberta joined forces to analyze the Alberta numbers, producing 2012 s Poverty Costs: An Economic Case for a Preventative Poverty Reduction Strategy in Alberta. Using the Ontario methodology, the report arrives at a similar conclusion spending to alleviate the consequences of poverty actually costs more than investing in strategies that prevent and reduce poverty. (Note that the costs of poverty included in calculations are external costs and thus do not include the direct costs of programs such as income support.) In Alberta the external costs associated with poverty include $1.2-billion in healthcare expenditures, $560-million in costs attributable to crime, $473 $591-million in intergenerational costs and $4.8 $7.2-billion in opportunity costs. The total annual external cost of poverty in Alberta? About $7.1 $9.5-billion. BC s Poverty Costs report calculated the cost of poverty in that province at $8.1 $9.2-billion, while a comprehensive poverty reduction plan would cost a mere $3 $4-billion. Quebec and Newfoundland have already begun the shift from spending to investing by increasing support for daycare, employment retraining and increasing income support, and have already seen reduced rates of poverty. In 2011 the National Council of Welfare report The Dollars and Sense of Solving Poverty collated this information on a national level. The NCW estimated that Canada s external costs of poverty in 2007 were double what it would have taken approximately $12.3-billion to bring every lowincome person in Canada to just above the poverty line. (Unfortunately, the NCW was defunded by the federal government earlier this year and so won t be around to provide this kind of big-picture analysis in the future. Our current approach of managing the effects of poverty is wasteful and unsustainable costing us all more. Similarly, the end of the mandatory long-form census, which provided the data underpinning such analyses, will leave many advocates and policy analysts flying blind.) By tracking the external costs of poverty, highlighting how after the fact spending fails to address root causes of poverty, and noting the poor results of that spending, the main effect of these arguments is to challenge the notion that poverty only affects the poor. Poverty has always affected more than the poor, of course, but it seems we ve needed this notion translated into economic terms in order to take it seriously. At the same time, the economic argument in no way diminishes the idea that society should work to eradicate poverty simply because this is equitable, fair and socially just. The current reframing of the problem of poverty may be significant, but it s also important to continue to attend to what could get lost in the analysis that is, to continue to strive for what is good as well as what is economically sensible. Once we recognize that investing in poverty prevention and reduction is better in the long run than perpetually spending to manage the negative effects of poverty, what strategies should we use? Sherri Torjman, ALBERTA VIEWS DECEMBER

5 Feature Breaking the cycle one of Canada s foremost social policy experts, advocates for comprehensive approaches that combine core public policies around issues such as affordable housing, early childhood development, education, literacy and training, enhanced social infrastructure and income supplementation. Torjman argues that these linked strategies must begin with a safe, decent place to call home. Frontline social workers, government administrators and social policy advocates in Alberta agree. Furthermore, social workers frequently identify the same top three strategies for poverty intervention: more affordable housing, more affordable and accessible childcare, and more affordable transportation. Such policies would improve life and reduce costs not only for people receiving income support, but also the working poor those 400,000 Albertans working for low wages. For the latter group, policy solutions may be about finding ways to make work pay. Alberta s minimum wage is perpetually at or near the bottom among the provinces and territories. Some people argue that rather than looking at wage minimums, Alberta should implement a living wage. Though the amount varies by region, a living wage is defined as an hourly income that keeps a person above the poverty line. Vibrant Communities Calgary puts a living wage for a single person working full time at $12.50 per hour with benefits or $13.75 per hour without. This works out to a yearly salary of $22,637 with benefits not really an exorbitant amount when you think about it. Such an income is needed to meet basic needs, maintain a dignified standard of living, save for future needs and participate in family and social life, including contributing to community life. It makes more sense to raise incomes than continue spending to merely manage the outcomes of hardship. It s probably no surprise that poverty prevention and eradication has a lot to do with ensuring access to adequate income. The best solution may be to implement a guaranteed annual income. Some might call this a bit of a pipe dream in this province, but we already do this for older people the Guaranteed Income Supplement and it works. Many other policy initiatives could be part of a comprehensive poverty reduction plan. We could increase core benefits for essentials, shelter and supplementary supports for the 34,551 households in Alberta on income support. The benefit levels for single parents with children and employable individuals, for example, are among the lowest in Canada, and can be, as we see in Caron s case, dramatically below the poverty line (her annual income is some $13,000 below the $23,298 Low-Income Cut-Off). We could extend the Alberta Working Income Tax Benefit (AWITB) to working singles and couples, to create equity among low-income earners. Currently the AWITB is only available to working families. An Alberta Child Benefit would similarly lift low-income families above the poverty line. We currently don t have a provincial child benefit, because the government prefers to directly fund programs and services for children and families. Like the AWITB, receiving this benefit would be automatic on filing a tax return. We could ensure affordable public transportation. Subsidized transit programs exist in many urban centres for people with disabilities, but people living in poverty don t receive such support (Calgary s low-income transit pass being the exception). Affordable public transportation helps low-income people get to work more easily and participate as equal citizens. With the election of Alison Redford, we have a premier who seems committed to addressing the so-called inevitable problem of poverty. Her government has promised to end child poverty in this province within five years and reduce overall poverty in 10. The province s Social Policy Framework discussions have generated optimism. Two strategic directions have been proposed: a poverty reduction strategy and an early childhood development strategy. If Alberta s approach turns out anything like other provinces, it will integrate municipal poverty reduction plans as well as identify ways the non-profit and private sectors can be involved. The new Social Policy Framework is scheduled for approval this month, after which the task of executing a poverty reduction strategy will begin. Several Alberta cities have been developing poverty reduction strategies at the local level. Mid-sized centres such as Lethbridge, the Regional Municipality of Wood Buffalo, Red Deer and Medicine Hat were first off the mark. Calgary s poverty reduction initiative launched in January 2012 with shared funding from the City and United Way. Recently, Edmonton and Canmore began to reach out to community organizations with a view to crafting a similar strategy by next year. This is gratifying for the many advocacy groups in Alberta who ve worked hard to the promote the idea that comprehensive, sustainable programs and services are necessary to counter the systemic barriers that prevent some Albertans from fully participating in social and civic life. When I talked with Caron, I asked her what she thought her next 10 years would look like. In retrospect, this wasn t a particularly thoughtful question poverty is about getting through life one day at a time. Planning for the future is a luxury not afforded to people whose paltry incomes run out by the end of the first day of the month. We could create a better future for the many thousands of Albertans in Caron s position by investing more in poverty prevention and reduction. This approach should be widely embraced now that we know the even higher cost of maintaining the status quo. # Joe Ceci practised social work for over 30 years. A former Calgary alderman, he now coordinates Action to End Poverty in Alberta. 40 ALBERTA VIEWS DECEMBER 2012