A Looming Social Crisis

Canadian governments should prepare for rising homelessness
September 1, 2011

You can step over homeless people, but you can’t ignore them. The Great Recession is fading, but we haven’t seen all of the after-effects, especially when we’re talking about homelessness. And if our political leaders don’t come to terms with this looming crisis soon, we’ll see a steep rise in homelessness in the near future.

The homeless population of a given jurisdiction is typically the last group to see a change after a recession, making homelessness the opposite of the proverbial canary in a mineshaft.

After the recession of the early 1990s, Toronto, for example, experienced a very significant rise in homelessness. But the increase in homelessness following that recession did not become visible until the 1993-1995 period, several years later.

This is because there is a lag effect after a recession. And there is no good reason to believe that the 2008-2010 recession will be any different than the last one in terms of its impact on homelessness.

The good news is that this most recent recession did not result in as big an increase in unemployment as the recession of the early 1990s. And most low-income Canadians with children now benefit from both the Canada Child Tax Benefit program and the Universal Child Care Benefit, neither of which existed in the early 1990s. Those in Ontario also benefit from the Ontario Child Benefit program.

In addition, the City of Toronto’s services to the homeless are considerably more comprehensive now than in the 1990s.

But the bad news is that this recession is lasting longer than the previous one, and household debt at the start of this recession was much greater than it was when we entered the recession of the early 1990s.

It’s also no secret that Employment Insurance (EI) coverage is nowhere near as generous now as it was in the early 1990s, while welfare benefits in Ontario (not including child benefits) are barely half what they were during the last recession.

The most recent statistics available for welfare in Ontario tell us that caseload numbers have yet to stop rising. As of May, there were more than 458,000 people on welfare in Ontario, roughly 24% more than when the recession started.

Finally, even with government stimulus money for social housing¸ we are only building about one-third the number of units on an annual basis than we were after the recession of the early 1990s.

It is commonly understood that people resort to homelessness as a very last resort. When people lose their jobs, they apply for EI benefits. When these benefits are exhausted, they often apply for welfare.

Soon they fall behind in rent, as welfare benefit levels are simply not sufficient for a household to rent housing in most cities. The landlord can be forgiving for awhile, but not forever. Eventually, an eviction notice gets served.

Family and friends can be counted on for short amounts of time, but eventually something gives. One can only tolerate a person couch-surfing in their home for so long. Some people are fortunate enough to regain employment as the economy picks up, but others are not.

In other words, recessions involve chain reactions, and homelessness is one of the last links in the chain.

The good news this time is that we have history to learn from and time to prepare. The bad news is that some so-called experts are currently in a state of denial. Many economists have gone out of their way to claim that this recession has been “mild” in comparison with the last one. This — combined with fears about budget deficits — hardly encourages politicians to spend more money on social programs.

Canada’s political leaders now have two options. The first is to hope that this will be the first recession that doesn’t create more homelessness; so far, they’re on course to test this theory.

The second option is to deal with what will likely be an increase in the homeless population.

If municipal politicians want to be responsible, they should make homelessness a priority in this fall’s elections. They should, for example, fund more rent supplements, which help bridge the gap between what a low-income household can afford and what a private landlord charges in rent.

Though rent supplements by themselves are insufficient as an affordable housing strategy, they are effective as an emergency response, because they start to work right away (unlike the building of non-profit housing, which takes years). Rent supplements have also become increasingly popular in the affordable housing world since being used in the successful relocation of Tent City squatters during Mel Lastman’s reign as Mayor of Toronto.

All levels of government are responsible when it comes to both preventing and responding to homelessness. And actions to curb homelessness speak louder than denials that history will repeat itself.


(Nick Falvo is a Ph.D candidate at Carleton University’s School of Public Policy and Administration.)