Define "poverty." Seriously, do it.

By selley - Monday, October 27, 2008 at 6:14 PM - 92 Comments

Yesterday’s Toronto Star editorial notes a wonktastic OECD report, released last week, which shows both poverty and income inequality on the rise across most of the OECD, including Canada, from the mid-1980s to the mid-2000s. Inequality fell in Ireland and Turkey; poverty fell in Belgium, Denmark, Mexico, Portugal and the United States; and both fell in France, Greece and Spain. But other than that, it’s bad news, not least for Canada.

It’s confusing news, too. The Star, as per usual, pegs the number of Ontarians living in poverty at 1.3 million, which is roughly the number that fall below Statistics Canada’s after-tax low-income cut-off (LICO), a measurement of what percentage of a household’s earnings go to essentials like food, shelter and clothing. But while they tip hat to the OECD’s analysis, the Star‘s editorialists don’t use any of its stats. Cynical readers might assume that was because it low-balled the poverty numbers, but in fact it’s the opposite. The OECD defines poverty as living with less than 50 per cent of the median income, and by that measure establishes Canada’s poverty rate at 12 per cent. That’s actually slightly higher than the LICO, which is 11.4 per cent for Canada and 11.1 per cent in Ontario.

Two totally different measurements of poverty; two nearly identical results. But neither LICO nor less-than-half-the-median is an absolute measurement of poverty. They’re both relative. Give every Canadian a cheque worth 20 per cent of his annual income and the OECD poverty rate would stay exactly the same. Continue…

Raising pay to cut poverty

By Peter Shawn Taylor - Friday, October 24, 2008 at 12:00 AM - 0 Comments

In the early 1990s, Baltimore, Md., was among the most blighted of America’s blighted downtowns. Its poverty rate was twice the national average. Drugs, crime and decay abounded. Its own local paper, the Baltimore Sun, called it a “Third-World city.” In response, the city embarked on a massive experiment in urban rehabilitation and anti-poverty policies. This included something called the “living wage.”

Baltimore’s living wage policy required all city employees, as well as anyone working for a contractor doing business with the city, to earn an hourly wage of at least $6.10 per hour—substantially above the then-minimum wage of $4.75. The goal was to lift full-time local workers out of poverty by ensuring their wages were sufficient to support a family. The efficacy of a living wage in fighting poverty has been the subject of much debate, but it has also been widely copied. Since 1994, 140 other American cities, including New York City, Detroit, Chicago and San Francisco, have adopted similar policies.

Now, after more than a decade in the spotlight, the living wage is making its way to Canada. This time around, however, it’s not poor cities leading the charge. It’s the richest.

Calgary is on track to become the first Canadian city to adopt a living wage policy early next year. The Regional Municipality of Waterloo, in southwestern Ontario, is close behind. And the small rural municipality of Pelham, Ont., near Niagara Falls, is also considering the concept. All three areas are notable for above-average incomes.

According to Derek Cook, research social planner with Calgary, his city’s living wage proposal is “recognition that having a job in Calgary doesn’t necessarily mean you are not in poverty.” Despite one of the tightest labour markets in the country, Cook argues significant numbers of working Calgarians find themselves at food banks or in homeless shelters because a full-time minimum wage income fails to provide the necessities of life. The Calgary proposal, if adopted by council, would see all city employees and contract staff (such as cleaners) guaranteed a municipal minimum hourly wage of $13.25, well above the $8.75 provincial minimum. “We will be raising people out of poverty,” argues Cook. Of course taxpayers may ask: at what cost?

Cook claims bringing city employees up to a living wage will cost taxpayers only $400,000 per year. Most staff already make more than $13.25. As for contracted labour, he figures the extra expense will be insignificant. U.S. research suggests most cities experience very small increases in contract costs—typically one per cent or less of total city expenses. This is because city contractors tend to swallow higher labour costs as lost profit rather than raise their bids. There are exceptions, however. In Baltimore, janitorial contracts rose 16 per cent.

But while the direct costs appear small, it’s unclear if the living wage is really an effective way to help the working poor. In Calgary the employees most likely to see their wages rise are casual staff in the recreation department: concession attendants, youth leaders and babysitters. These jobs are typically held by summer students unlikely to be their families’ sole breadwinner.

And after a decade of evidence in the U.S., the broader picture is equally unconvincing. While the lucky few receiving a living wage obviously see their incomes rise, this seems to create little in the way of positive knock-on effects. Some studies do show small increases in local wages. Others show small increases in local unemployment. One study found that three-quarters of all recipients of the living wage were not in poverty to begin with. And the poverty rate in Baltimore actually rose between 1990 and 2000.

The living wage appears to be a symbolic, rather than practical, effort at poverty reduction. This may explain why it’s now attracting the attention of rich cities in Canada. They want to appear to be doing something. In Detroit and Baltimore, business communities fought living wage proposals because they were worried it would increase already high unemployment rates and burden business. In booming Calgary, Heather Douglas, president of the Calgary Chamber of Commerce, says she backs a living wage because “it’s the right thing to do.”

It has also been suggested by some American critics that living wage policies are driven by municipal unions eager to make contracting out more expensive. Regardless of its impetus, the prospect of government interference in the labour market via the living wage could create some other unforeseen problems.

Jon Kesselman, professor in the public policy program at Simon Fraser University in Vancouver, notes that a living wage may trap workers in low-skill jobs by discouraging further training or education. It could also lead to favouritism in the awarding of attractive city jobs. And having bureaucrats set wages could lead to a variety of bizarre outcomes. Advocates in Pelham, for instance, propose that the living wage vary with family circumstance. Single mothers would thus earn more than married workers or single individuals doing the same job. “As an economist,” says Kesselman, “I like to see the market setting prices, rather than government.” He argues it’s better to address working poverty through tax credits, wage supplements and other after-market measures. Of course, giving babysitters huge raises probably sounds like a good idea to babysitters.

Get me to the church on time – Liveblogging an all-party debate on poverty and inequality

By kadyomalley - Monday, October 6, 2008 at 6:15 PM - 34 Comments

Unlike certain political parties, ITQ will be heading to the Dominion Chalmers United Church tonight for a five-four-party forum on poverty and inequality, organized by a coalition of social justice groups, including the National Anti-Poverty Organization, KAIROS, and the Canadian Labour Congress.  Check the link above for a full list of participating organizations.

Scheduled speakers include Martha Hall Findlay (Liberal), Francoise Boivin (NDP), Real Menard (Bloc Quebecois), Jen Hunter (Green Party) and Nobody (Conservatives). Continue…

Between the Pundits: Hungry for the truth

By selley - Wednesday, June 25, 2008 at 3:18 PM - 0 Comments

I waded into the whole poverty statistics rigmarole a few months back, after a Toronto Star editorial posited that “more than 905,000 across the Greater Toronto Area depended on food banks.” The claim was so outrageous that I hear Joe Atkinson clawed himself out of his own grave, dusted himself off and hopped the first trolley to One Yonge Street to inform his editorialists of the error. And in subsequent efforts, they did treat the figure—which represents the total number of visits to food banks across the GTA, not visitors—with slightly more respect. A “total of 905,000 people visited food banks across the Greater Toronto Area in the past year,” they wrote at Thanksgiving, which is… well, slightly closer to the truth, anyway.

But today, reacting to the Daily Bread Food Bank‘s latest annual report, the Star finally got it right. “Food bank use has risen by 5 per cent in the GTA in the past year to 952,883 visits,” they wrote. Perfect. Alas, the whole thing goes pear-shaped again in the very next sentence, which claims “more than 79,000 people now resort to a food bank every month.” The precise number is 79,407, for the record. I know because I went ahead and divided 952,883 by 12. They’ve more or less repeated the original error, in other words, but they’ve converted it from yearly to monthly form.

(Incidentally, for for future Star editorial use, the DBFB says “this year’s increase is attributed primarily to the opening of two new food banks and reflects Daily Bread’s increased capacity to meet the existing need as opposed to an increase in need.”)

Wake us up when we get to the Third World

By selley - Friday, May 2, 2008 at 1:09 PM - 0 Comments

Must-reads: Dan Gardner on gas prices and climate change; Terence Corcoran on the income gap; Daphne Bramham on women in Iraq; Colby Cosh on Albert Hofmann.

Death of the Canadian dream
Statistics Canada’s latest figures on income equality send Canada’s op-ed pages into a highly predictable tizzy. Our kingdom for a universally agreed-upon definition of poverty!

Terence Corcoran, writing in the National Post, accuses StatsCan of fomenting “class warfare” with its news release, which he says focused too heavily on the changes in earnings of individual low-, middle- and high-income Canadians since 1980. “Media Web sites flamed with indignation over the growing rich-poor earnings gap,” he notes, but family income provides, in the words of StatsCan’s media guy, “a better picture” of the real situation. (The report itself has plenty of information about family incomes, for the record.) “In 1980,” Corcoran notes, “the lowest 20% of families had income of $21,134. By 2005, the lowest group earned $24,379, for a gain of $3,245 or 15%.” As such, he suggests cancelling the Les Misérables revival.

Alas, the Toronto Star‘s David Olive already has tickets. Continue…