Message from the Chairperson
Dear Readers,
This edition of Welfare Incomes provides insights into the state of social assistance across Canada. As you consider the statistics in this report, we want you always to keep in your mind’s eye the human faces of the women, men and children who find themselves needing the social program of last resort. We have met so many Canadians recently who acknowledge that they are only a paycheque or two away from poverty if they lose their jobs.
For increasing numbers of women, men and their children impacted by the recession, 2009 was a year in which they discovered the state of welfare the hard way. They may never have imagined needing welfare until they exhausted unemployment benefits or failed to qualify. Then they learned they could not get welfare until they further depleted almost all the savings and other assets they had worked so hard to build. If they started to work again, they learned it often did not put them financially farther ahead.
As the National Council of Welfare has done since 1986, we look at the situation of four family types: a lone parent with a 2-year-old child, a couple with two children aged 10 and 15, a single person considered employable and a single person with a disability. Chapters 2 to 5 focus on each family type, comparing their welfare incomes over time and gauging their adequacy using two low-income measures—Low income cut-offs and the Market Basket Measure—as well as average and median incomes. Chapter 6 looks at liquid asset provisions. Earnings exemption provisions are the subject of chapter 7, where we also look at the potential impact of the federal Working Income Tax Benefit (WITB) on welfare households with earnings. The appendices contain updates of the main statistical tables that appeared in earlier editions of Welfare Incomes.
The report highlights some improvements between 2008 and 2009 but the longer term picture is still pretty dismal. Most welfare incomes remain far below any socially accepted measure of adequacy. In 2009, most individuals and families applying for welfare had to be nearly destitute before they could receive welfare. When we looked at how asset levels have changed over the past twenty years, we found that many have not changed at all and some have actually gone down, either through policy decision or erosion from inflation. In a few cases, however, there have been significant increases and this, we think, is a more forward-looking and cost effective approach. Asset stripping not only impoverishes people before they qualify for welfare, but it also limits their ability to climb the welfare wall to get out of the welfare trap. Allowing people to retain some financial cushion can prevent major upheaval and enable the search for employment or the upgrading of skills necessary to move forward in their lives.
The treatment of earnings of social assistance households is also mixed. In some cases, welfare recipients who are able to earn income are financially no better off, or even have a net loss once the costs of getting to work are taken into account. We find this to be counterproductive. Where households with earnings are able to see a reasonable improvement in their financial situation, there is both a greater incentive to find and keep employment and an improvement in well-being. The WITB, by providing income that does not get clawed back, adds a few dollars to the meagre incomes of welfare households. In this, it shows potential, but its real impact is as yet unknown. We hope the federal government will do more to clearly meet the WITB’s objective of helping people avoid or escape welfare. We hope it will eventually do more to prevent poverty as well.
Finally, we urge more of the kind of recent developments under government poverty reduction strategies that are getting results. These include making services, such as child care or medical and dental benefits, available to anyone with low income, no matter the source. These initiatives help shrink the welfare wall and support Canadians’ own efforts to overcome it.
Sincerely,
John Rook
Chairperson