Recession creates poverty for P.E.I.

Chandra Pasma
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In 2007, Prince Edward Island had the lowest poverty and child poverty rates in the country. Unfortunately, the recession has hit the Island's most vulnerable citizens very hard, increasing poverty and economic insecurity.

While unemployment increased only slightly, many other economic indicators show the devastating impact of the recession, including a significant increase in social assistance cases, a sharp rise in the cost of living, and a big jump in the number of bankruptcies.

Commentary - In 2007, Prince Edward Island had the lowest poverty and child poverty rates in the country. Unfortunately, the recession has hit the Island's most vulnerable citizens very hard, increasing poverty and economic insecurity.

While unemployment increased only slightly, many other economic indicators show the devastating impact of the recession, including a significant increase in social assistance cases, a sharp rise in the cost of living, and a big jump in the number of bankruptcies.

Standard measures of poverty are published with a two-year lag time. But while we need to wait until 2011 to see the recession's effect on those measures, new research by Citizens for Public Justice, with funding from World Vision Canada, already reveals the impact of the recession on key economic indicators and poverty trends.

Bearing the Brunt: How the Recession Created Poverty for Canadian Families details the growing economic insecurity in Canada and the rise in the national poverty and child poverty rates. Prince Edward Island also experienced an increase in poverty and economic insecurity due to the recession.

P.E.I. had one of the smallest increases in unemployment during the recession, as the Atlantic provinces combined account for only 8,800 lost jobs between October 2008 and October 2009. P.E.I.'s unemployment rate climbed slightly from 11.6 per cent in October 2008 to 12 per cent in October 2009. However, P.E.I.'s unemployment rate was and remains the second highest in the country.

P.E.I. benefited from the second highest Employment Insurance coverage in the country, with 97.3 per cent of unemployed workers receiving E.I. benefits in October 2009. But this high E.I. coverage was not enough to prevent a significant increase in social assistance cases. P.E.I.'s Social Assistance caseload jumped six per cent between October 2008 and October 2009.

In January 2010, the caseload rose even higher, reaching 3,660. This suggests that the recession's full impact on welfare cases may not yet have been felt, as more people are applying as EI benefits run out.

P.E.I. also experienced a steep increase in cost of living in 2009. Food prices increased 5.5 per cent, compared to core inflation of -0.2 per cent. Prices for dairy (5.3 per cent), fruit (7.4 per cent) and vegetables (11.9 per cent) all rose more than five per cent.

Average rent for a two-bedroom apartment grew 4.7 per cent between October 2008 and October 2009. This was much higher than the national average of 2.3 per cent.

Because of this increase in prices, low-income families faced a greater challenge in stretching their incomes to pay for rent, food, utilities and other necessities.

As a result of lost incomes and higher costs, more families were pushed to the edge in 2009. Bankruptcies increased 32.4 per cent between the third quarter of 2008 and the third quarter of 2009.

P.E.I. was the only province to experience a decline in food bank users in March of 2009, when Food Banks Canada makes its annual count. However, 50 per cent of food banks still reported increased demand in March. P.E.I. food banks also noted rising demand following March, which they attributed partly to the need to assist families returning home from Western Canada.

Some 2,706 people used a food bank in P.E.I. in March 2009. Thirty-six per cent of food bank clients are children. P.E.I. has an unusually high number of working poor who rely on food banks: 20 per cent of food bank users report employment income, much higher than the national average of 13.6 per cent. P.E.I. also has the highest proportion of EI recipients, at 19 per cent of clients.

These trends of increased poverty and economic insecurity for P.E.I.'s families are significant cause for concern. While media and governments focus on stories of economic recovery, recovery is still far from the reality on the ground for too many families.

It is important not to ignore these families. After the last recession, it took almost eight years for the unemployment rate in Canada to return to its pre-recession rate. It took 14 years for the poverty rate to decline to its pre-recession rate. So far, despite the increase in economic production, Canada's unemployment scenario has barely budged.

The Canadian government and the P.E.I. government must remember the many families struggling with poverty and unemployment. If the recession's impact is ignored, many families could suffer from the recession's effect for many years to come.

Chandra Pasma is a policy analyst with Citizens for Public Justice, a national organization of members inspired by faith to act for justice in Canada by shaping key public policy debates through research and analysis, publishing and public dialogue.

Organizations: Employment Insurance, Recession Created Poverty for Canadian Families, Food Banks Canada

Geographic location: P.E.I., Prince Edward Island, Western Canada

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