Income security is a critical part of our social safety net. It directly affects the living standards and labour market prospects of a great many of our citizens. Our income security system for working age adults faces several important problems:
- Minimum wage no longer pays enough to live and work at a level above the poverty line, especially in urban Canada.
- Existing programs make it difficult to escape the poverty trap especially when the penalties for earning other income are such that it is often better to choose welfare over working.
- There is little public or political pressure to change the situation. Since the early to mid- 1990s, minimum wages, employment insurance, and social assistance benefits have declined precipitously while eligibility for benefits has been tightened.
Most of Canada’s income security programs date back to the 1960s, putting them out-of-step with current realities. Lack of co-ordination between programs and levels of government has resulted in a web of rules, eligibility restrictions and disincentives that can actually punish adults as entry-level employment takes them off of social assistance.
For example, a sole support parent on social assistance and living in public housing who extends her work hours until she makes $1,300 a month could experience a dollar-for-dollar reduction in her assistance; a rent increase; reduced child care subsidies; loss of basic dental coverage for her child; loss of prescription drug coverage; loss of back to school benefits and winter clothing allowance. In addition, federal tax kicks-in at the $1,000 a month net income level and her Ontario tax credits will be reduced slightly.
There is both a social and an economic urgency to tackling these issues. Our current income security system is contributing to broader concerns such as the creation of a permanent underclass of people without the opportunity for economic self-sufficiency and growing, visible adult poverty on our urban streets. Yet, our economy needs the participation of all working age adults and this need will grow significantly with an aging population.
Addressing the issues is particularly important for cities as changes in the last decade in income security funding levels and delivery responsibilities mean that municipal governments are hugely at risk when we have the next economic recession. It is imperative that we address these income security issues now while the economy is still healthy. It is also important that the linkages between income security programs and Canada’s urban agenda be made clear. If we do not fix our income security programs, it will be our large cities that most suffer the consequences.