Category Archives: Income

THERE’S MORE TO DO TO IMPROVE AISH, ISN’T THERE?

I was at the gathering where Premier Notley and Minister Sabir announced legislation that would improve benefits to recipients of AISH. I support these improvements (read more). My math indicates a 6% increase to the AISH benefit. Some critics say it should have been higher, given the length of time since the last increase. Some say the government could have brought in these changes earlier.

Of course there are others who would choose to reduce AISH benefits while increasing the coffers of the wealthy through tax breaks.

Everybody’s got their opinion on how things should be if they were in charge. If only Premier Notley and her colleagues could accommodate all of us!

I see the changes as a positive development, an additional program reform that will help vulnerable Albertans. I wish the bump had been bigger, but the government has a budget to contend with. The indexing to the cost of living is an appropriate way to ensure that adjustments are made each year. That’s a big change for the better.

Most of us who work in the community change sector, in particular those who work to end poverty, homelessness, and the poor treatment of the marginalized are expressing support for the government’s actions. Some are celebrating it.  Sure, I will clink a glass or two to celebrate the changes, but let’s make sure we see this change as a strong beginning to a path forward toward further reform. We are not done yet, right?

I saw one suggestion via Twitter that folks on AISH should receive the equivalent to the minimum wage that the government requires employers to provide. At 35 hours a week that would amount to $27,300 per year. The increased AISH benefit translates to an annual income of $20,220. There is merit in this idea. If  one believes that an Albertan worker should be entitled to a minimum wage of $15 per hour, why are people on AISH deserving of less? On the other hand, $20,220 is above the poverty line (as of 2015) of $18,213.

The problem with poverty lines is that they are about subsistence in the present. They do not factor in the future of recipients of AISH as they grow older. They do not allow for emergencies in the many forms they manifest in people’s lives. They do not allow saving any money or having the means to do much more than survive.

Survival is not living. Survival is surviving.

AISH should promote more than survival.

What concerns me is that AISH is not really a disability pension that the recipient can count on. Let me provide an example. It’s a real one, not made up. Names have been changed.

John and Mary are married. Mary has a teenage son from a previous marriage and together they have a three year old. Mary is on AISH. Well, actually she is and she isn’t. John has been a low income earner until recently. Each month Mary’s benefit was adjusted (i.e. clawed back) based on John’s monthly income, which varied month to month.

Recently John got a better job that pays reasonably well. His income is still far below the Alberta average, but he is making enough to trigger AISH reducing Mary’s AISH benefit to zero. If one does the math for this family, it is in effect no farther ahead than then when John earned lower wages. I am not suggesting AISH should never be adjusted downward based on family income, but I do wonder if it is appropriate to wipe  it out.

Wiping out the benefit says to Mary, you no longer deserve your own income. You no longer have status with AISH decision-makers and should be happy now being totally dependent on your spouse. And for John who is trying to make a better life for his family, the message is your wife is now your burden. Your extra wages should not benefit your family; they should reduce the cost of Mary on the government.

I have a problem with that.

Doesn’t the claw back marginalize Mary? And John? And their children?

If Mary earned the minimum wage, an employer would not reduce it because John is making more money than he once was.

To be honest, I am not sure how this should work, but how it works now seems wrong to me. AISH recipients are people, not just recipients. Having their income reduced to zero impacts the dignity of people like Mary who want to feel like they are able to contribute to their family’s economic life and future.

Perhaps there are further reforms to consider. Perhaps there is a “middle way” to adjust AISH benefits downward as family income increases. Perhaps there should be a core benefit that never can be eliminated or that should only be eliminated if the family’s income is on par with the average wage of Albertans. Or something like that.

What do you think?

Collective Impact as Uprising

I have written in the past about what I call the pendulum swing or the bandwagon effect. I think this is what has happened with respect to collective impact over the past 10 years. I suggest it also occurred  in the late 1980s when outcome measurement rode into town on its stallion named Logic Model. And it is also happening with the word, “movement.” Today, just about everything is a movement. Also see Collective Impact: Watch out for the Pendulum Swing (click image below for the paper), a piece I wrote for Tamarack in 2015 while I was the CEO of Bissell Centre.

Click Image for Paper

I am simultaneously a proponent and opponent of collective impact. I do not think large-scale change efforts have to embrace the CI framework but also think CI can help create large-scale change. It all depends on how committed folks are to truly changing themselves and their organizations and how well they design and execute their collective efforts. Continue reading Collective Impact as Uprising

LIVING POOR: KAREN’S STORY

Note:  In addition to writing about community change and penning commentary, I am a story teller. I write fiction and spoken word. This piece is a mix of fact and fiction, often called “faction.”

One of my small luxuries in life is having someone come to my house weekly and clean it. I tell myself I need this service because I am so busy, but truth is it’s a luxury for me. I can afford it and to be honest I have the time to take care of my own mess; I just hate doing it.

Karen is the one who takes care of this for me. She is 24 and nearly always cheerful. She does an excellent job and in good time as well.  She is a friend of a friend and when I heard she was interested in providing this service, I decided to give her a go. Continue reading LIVING POOR: KAREN’S STORY

Mandatory Winter Tires and Poverty

Yes, perhaps an odd title for a posting, but bear with me. I was on my way back home from meeting downtown with Alberta Government colleagues who also work in the poverty reduction arena and I heard this call-in show about winter tires and more to the point about whether or not winter tires should be mandatory.

They are in Quebec now but even in some provinces without a mandatory requirement more than 80% of drivers have winter tires. Not so in Alberta where the percentage is just over 50%. Not sure about other low percentage provinces, but here is what went through my mind. Continue reading Mandatory Winter Tires and Poverty

Income Trends and Canadian Consumer Debt

Over the past 15 years Canadian consumer debt has risen dramatically.  Since 2000, the percentage of Canadian debt in relationship to disposable income has risen from 110% of income to about 165%. The change in debt to income ratio represents a 12 year increase of 50%.

Income to Debt

The old adage about “people should live within their means” has validity no doubt in many cases, but such maxims simplify the complexity of economic influences and impacts and in this case categorically blame individuals for their debt problems. It’s akin to telling people living in poverty to just buck up and get a job. Stop being lazy and all of that.

Does rising debt have a correlation to slow if any growth in income for Canadian workers? The chart that follows tells a disconcerting story about after tax income in Canada by three cohorts: the top 20% of earners, the middle 60%, and the bottom 20%.  The chart goes back much further in time than the chart above and ends in 2011, but the trends are very clear.

incometrends2

From 1976 the trend in after tax income growth was about the same for all cohorts. In the latter 1990s, however, things changed. Income for the top 20% has escalated quite markedly since then, whereas income growth for the 60% middle earners and the bottom 20% have been small at best.

As the majority of Canadians have experienced flat to very small growth income over the years, they have also experienced far more growth in the expenditures required to house themselves, feed and clothe their families, and so on.

In Edmonton, where I live, the cost of rental accommodations increased on average by 75% between 2000 and 2010. Incomes for the large majority of city residents did not experience such gains. Add rising costs of food over that same period of about 5% per year on average, and the income to expense challenges are obvious.

pullquote1The more one spends to survive, the less likely it is that they will save for a rainy day, much less for retirement or even a short vacation. This contraction on disposable income creates vulnerability for people. When faced with a family emergency or job loss, even job loss for a short period of time, the options are few. Using one’s credit cards are among the few options available.

The Canadian Payroll Association has done annual surveys for a number of years and each year the results indicate that between 45 to 50% of Canadian workers are living pay cheque to pay cheque. The loss of a job to them would, according to the Association, result in serious threats to maintaining their housing. This suggests that half of Canadian workers, while not necessarily qualifying as living below the poverty line while employed, are economically vulnerable to disaster should their pay cheques be lost or interrupted, even for a short period of time.

There are other life experiences that lead to unmanageable levels of consumer debt. Divorce plays a role for many, in particular women who leave the relationship with children to care for, and all too often insufficient, if any, child support. Add to this that the majority of women earn less income than men and we end up with single parents financing their transition from marriage to single parenthood with debt.

Health problems can exacerbate debt as well. Temporary absences from work for surgery, for example, plus recovery time add to the fray. Even those with health and short term disability benefits experience reductions in income during those periods of time. And those without any such benefits are left without any supports from their employer. In Ontario, for example, one-third of workers do not have extended health and dental benefits, according to the Wesley Institute.

Of course debt problems are also caused or at least magnified by a lack in money management skills and other aspects of financial illiteracy. Increasing knowledge and skill about money should be attended to, but to think financial illiteracy is a panacea answer would be both impractical and irresponsible.

Rising consumer debt is not just an economic problem in and of itself. It is part of an overall pattern of systems and values that work to keep worker costs as low as possible to order to drive up margins and that fosters and sustains discriminatory practices that stymie participation in the economy by women,  visible minorities, Indigenous people, the disabled, as well as older and younger workers.

As a general rule unemployment rates and levels of income are higher in the former and lower in the latter for these populations. How come? Do we really believe that such populations do not measure up to the mainstream of the workforce in terms of skills, experience, and work ethic?

There is an irony in all of this. While there is a tendency to blame individuals for accumulating unmanageable debt, our economy is based on growing profits and to do so products and services are pervasively and unrelentingly marketed to grow sales. Persuasive advertising is fundamental to such growth in profits and it tends to work, resulting in too many people purchasing what they want more so than limiting themselves to what they need. In other words, one could argue that we are happy when a sale is made but then critical of those who grow their debt because the advertising worked.

We are seeing progress in addressing some of the factors mentioned above. There is a growing and welcome trend across the nation around employers paying a living wage. For many workers, especially those that have employer-based health and dental benefits, this will make a difference. Paying a living wage is connected to paying a fair wage, but on its own the living wage movement is a partial answer. For example, the cost of living for a single mother with two young children will more times than not be far greater than an increase in income brought about by a living wage.

If we want to turn the tide on economic vulnerability and poverty in Canada, we need to act on the income problem systemically. Child Tax Credit payments are helping and do lift many out of poverty, but for too many the transfers are insufficient.

Canada’s universal health care system is not really universal. For example, unlike many if not most countries with universal health care, we lack a national pharma benefit. Without employer-based benefits, the cost of medications can mean that Canadians are not able to buy them, which eventually leads to higher public expenditures on hospitalization for acute and chronic care. Add to this mix the dramatic trends in length of life, one has to wonder how a rapidly growing number of senior citizens living into their 80’s will be able to manage their health care costs without a pharma plan.

pullquote2Tax reform has a place in the changes we need to make, but on its own is not the answer either. While it seems reasonable for the super-rich to pay more taxes and have less access to opportunities to avoid taxation, the bigger challenge has to do with how governments see priorities, how they decide to spend our money. Systems change that doesn’t address this will be hard pressed to effect substantive change.

Attitudes and values need to be assessed as well. There is an emerging movement to consider human rights in our economic and social decision making. If in a democracy we believe people should be treated equally and have at least equitable opportunities to participate in the economy and in social living, what are the human rights that should guide decision-making?

Our systems appear to place more value on those who are working and doing well than on others who are struggling or who for a variety of reasons cannot work at all (e.g. the mentally ill). While there is a general acceptance that governments should provide income security programs for those who are between jobs or who can’t work at all, there is little, if any, justification for the inadequate financial benefits these income security programs provide. Across the country, at least from what my own research has uncovered, income security benefits do not come close to what it costs to be alive in Canada.

There is encouragement to be found in governments that are exploring a Guaranteed Minimum Annual Income as well as adopting living wage policies and practices in their own shops, but if we carry the same sentiments that keep current benefits far lower than what is reasonable, then I fear a GMAI, for example, will fall far short of the mark. Program changes unaccompanied by a shift in values will at best produce inadequate progress.

While there is a growing understanding that poverty is not just about money, let’s be careful that we don’t step away from the undeniable impact that a lack of income has on people’s lives. The millions of Canadians living on low and unstable incomes may benefit from more social inclusion or subsidized public transit or free passes to recreational facilities, but such programs, although welcome, will not turn the tide of the biggest most pervasive aspect of living in poverty, which is a lack of sufficient income to survive, much less thrive.

Across the country, local communities are taking charge of poverty reduction and this is exactly where such leadership should come from. Local economic reforms are possible in local communities but without addressing national and provincial systems that work to marginalize people of low income and keep them poor, we won’t win the battle. Which is another way of saying, despite our progress, we have so much left to do and we need to foster ways to improve our systems together, across all sectors.

RESOURCES
Vibrant Communities Canada

Time to reframe poverty reduction as matter of rights (Maytree)

Living Wage Canada

Canadian household debt soars to yet another record

Canadians living paycheque to paycheque, especially in B.C. and Ontario, survey warns

Canada needs a national pharmacare plan: Editorial