BC’s welfare cuts and poverty among lone mothers

BC’s newspapers are full of banner headlines about record housing starts, construction booms and decades-low unemployment. “The numbers don’t lie” proclaim the boosters of the province’s policy record. Well, they can lie by omission. There is a dark side to BC’s economic recovery. The persistence of poverty among plenty is striking.

Even though the overall poverty rate in BC dipped slightly in 2004 (the last year for which Statistics Canada has produced data), it remains the highest in Canada, and higher than the national average for almost every demographic group.

In fact, last month, the United Nations Committee on Economic, Social and Cultural Rights singled out BC, expressing particular concern, among other things, about a recent increase in poverty among single mother-led households.

The gap between Canada and BC is most evident in the alarmingly high poverty rates for lone mothers, something that tells us a lot about changes to provincial social policy priorities.

The latest figures from Statistics Canada show an improvement in the lot of Canada’s poor, especially poor lone mothers and their kids, over the last decade. Today, just over one-third (36%) of Canada’s lone mothers are poor compared to more than one-half (53%) in 1996. One-third is still too many. But it certainly beats one-half.

BC used to be part of this “good news” story. Until 2001, the poverty rate in BC had dropped faster and further than the national rate. Unfortunately, things shifted in 2001 when the poverty rate for BC’s lone mothers began to climb back up. With one-half (49%) of lone mothers in poverty in BC today, BC’s poverty rate is higher than the national average by a wide margin. In BC, poverty among lone mothers rose an astounding 15.8 percentage points between 2000 and 2004; in Vancouver, it rose a staggering 24 percentage points.

So why did lone mothers’ poverty rates in BC rise? The simple reason is that their incomes dropped due to a combination of unstable market incomes and declining government transfers.

To begin with, in 2000 median market incomes in BC were well below their national comparator. But matters got worse because nationally, lone mothers’ median market incomes rose every year except one (2001), while in BC no such trend is apparent.

But market income is only part of the story.

The other — more important — part of the story has to do with the impact of government policies. Here too, we have a “made in BC” story. During the 2001-2004 period, average government transfers to lone mothers declined by a whopping $2,300, compared to a national drop of only $200. The bulk of the transfer cuts in BC occurred in two years — 2002 and 2003 — when the government introduced sweeping changes to an array of social programs, including welfare. The net result was to reduce its financial commitment to lone mothers in significant ways.

Declining transfers is the key to understanding lone mothers’ declining after-tax income and rising poverty rates in BC. For lone mothers with welfare income and no earnings, cuts to welfare rates caused part of the decline in transfers. These cuts meant that they were (and are) poorer than they used to be — the poverty “gap” (the difference between average incomes and the poverty line) among these lone mothers has grown. These changes, however, do not affect their overall poverty rate because their incomes already fell below the poverty line.

The poverty rate for lone mothers has risen because, prior to 2002, many single mothers could combine income assistance, paid employment and child support payments in such a way that, in the course of a year, their incomes could reach just above the poverty line. As of 2002, however, welfare benefit cuts and rule changes mean they can no longer do so.

Over the course of a year, a lone mother with one child saw her potential income decline by more than $3,900 because of these changes:

  • welfare benefit rates were cut by $43 a month;
  • people without a recognized disability are no longer eligible for earnings exemptions (BC is now the only province to not allow welfare recipients to keep any earned income), a rule change that costs many single mothers up to $200 per month; and
  • the child maintenance exemption of $100 per month was eliminated.

Together, these changes explain why lone mothers’ after tax incomes plummeted and why they were catapulted into poverty in staggering numbers. As far as the market goes, the current economic numbers may be as good as it gets, but the market is failing lone mothers, and so is our government because of its failure to provide adequate income supports.

-30-

Dr. Jane Pulkingham is Chair and Associate Professor in the Department of Sociology and Anthropology at Simon Fraser University. She is a member of two SSHRC-funded research teams: the Economic Security Project, a partnership between SFU and the Canadian Centre for Policy Alternatives; and the UBC-based Consortium for Health, Intervention, Learning and Development.