Margaret Wente is full of toxic sludge

Yay, we’re winning the war on  poverty, says Margaret Wente. Her recent column is based around the fact that the poverty rate has fallen in recent years. Wente uses this to go on a latte-fuelled SUV romp over the bodies of people who work with (and give a shit about) the poorest in our society.

The sum total of statistics presented in the column is this:

From 1994 to 2003, the number of people on welfare across Canada fell by half. It’s now under 6 per cent – the same rate as in the 1970s. In the decade between 1996 and 2005, the poverty rate (as defined by Statistics Canada) fell from 16 per cent to 11 per cent. The war is far from over, but the progress is impressive.

The most dramatic changes were to single-mother families. Their poverty rate fell from 56 per cent to 33 per cent. In 1996, single mothers made a median income from work of only $8,600 (after tax). By 2005, that figure had nearly tripled, to $22,200 (all rates in 2005 dollars). In other words, more single mothers were employed, and their earnings had gone up.

Given the strength of the economy in 2005 compared to the much weaker 1994 model, arguably the statistics, in fact, paint a grim picture. After strong economic growth for a prolonged period since 1997 (slight dip around 2001), one in three single moms live in poverty.  This is a “drying up” of “sympathetic victims” to be exploited by a “poverty industry”, according to Wente’s road rage.

Even the overall rate of one in ten, given the state of the economy we should expect much better. Perhaps this is as good as it gets without public intervention to provide income and services (and more than that, life chances and opportunities) to those who need them, because the unemployment is not likely to go down much further.

But insisting on a good diatribe aginst “the poverty industry” Wente gets the narrative wrong, following CD Howe author (and SFU prof) John Richards in arguing that the marginally impressive decrease in poverty is due to smart policy changes in how we treat people on welfare. What we have done, as the CCPA has documented amply in the BC context, is make it much harder to get on social assistance. These policies have made life much more difficult for the very poorest, and arguably are behind a trend not mentioned in the column: the massive increase in homeless populations in urban centres.

More than that, Richards (and new apprentice Wente) dismiss the role of the economy is reducing both welfare rolls and poverty rates. My colleague David Green estimated econometrically that about half of the decrease in BC welfare rolls in recent years was due to the economy. Think about it: in 1994, Canada was still recovering from a rather large recession brought on by the anti-inflationary zeal of Bank of Canada governor John Crow, mixed with a period of structural adjustment to the Canada-US free trade deal. It was a time of “jobless growth” with double-digit unemployment, a rather different economic context than 2005, the comparator year. This is a basic error by Richards in not comparing years at comparable points in the busines cycle.