Bringing it all back home: Inflation, poverty lines and social assistance rates

 “Well, he hands you a nickel …He hands you a dime….He asks you with a grin…If you’re havin’ a good time… Then he fines you every time you slam the door”

Bob Dylan, Maggie’s Farm, Bringing it all back home, 1965

This is a short piece that won’t take too long to read.

I was just looking at the poverty line for 1993 in Canada for a single person. I chose 1993 because that was the last time social assistance in Ontario kept pace with inflation and it marked the year after the last time that Statistics Canada rebased (recalculated) the Low income Cut off (LICO).

The LICO in 1993 for a single person was $16,482. In 2013, the after-tax low income Measure – perhaps the best measure of poverty in Canada – stands at about $20,600.

The increase here is 21.9%

But inflation as measured by the Bank of Canada from 1993 to 2013 is 43.8%…..just about double that.

In 1993, the single social assistance maximum in Ontario was $663 a month. It will soon move up to $626 a month in October.

And to make matters more interesting, inflation calculations are a bad measure of the cost of living for poor people as the calculations do not include certain food and energy costs that have risen higher than inflation. People with low incomes consume the highest share of the high cost items not included in the calculation of inflation.

We don’t need a new poverty measure that grows more than half the rate of inflation.

We don’t need a new measure of inflation that counts the increases in real costs that the poor must pay.

We don’t need a new rate increase that provides a monthly benefit that is $37 below what Bob Rae increased it to when Kim Campbell was Prime Minister.

We need new thinking that refuses to justify erosion and fails to think that nickels and dimes make a difference.  Social assistance has no more money to give. But a completely transformed system of income security- that opens doors without penalty – just might.

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