Federal COVID-19 benefits briefly halved poverty rate among Toronto’s low-income workers: analysis

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Federal pandemic benefits briefly halved the poverty rate among low-income workers in the Toronto region, offering cues to improving financial aid to one of the country’s most vulnerable populations, according to a new analysis of census data.

The share of workers living below the poverty line in Canada’s largest city and its surrounding municipalities plunged to 3.3 per cent in 2020, according to a report by Open Policy Ontario, a social policy consultancy.

That represents a 53-per-cent drop from poverty rates in 2015, when Canada collected data for its previous census – a dramatic decrease primarily owing to COVID-19 supports such as the Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB), which temporarily lifted thousands of workers above the poverty line in 2020 and 2021, the authors found.

The findings are in line with national trends. Statistics Canada data shows Ottawa reached its 2030 goal of slashing poverty in half in 2020, a decade ahead of schedule.

But the government’s failure to quickly implement lessons from the pandemic means poverty rates have likely shot back up, said John Stapleton, the lead author of the Open Policy Ontario report and a retired social assistance benefits designer with the provincial government.

CERB, CRB and similar pandemic-era supports were meant to make it financially feasible for Canadians to respect public health restrictions that, in many cases, prevented them from working. The programs were also intended to prevent a major recession.

People with low-paying jobs in sectors such as hospitality and retail were disproportionately likely to lose work during the pandemic and be eligible for the benefits.

But what came as a surprise to Mr. Stapleton and other anti-poverty advocates was the exceptionally high uptake among the lowest-income workers, who often don’t claim financial aid for which they are eligible.

In the Toronto census metropolitan area, data crunched by Mr. Stapleton and his co-author, Richard Maaranen, a geographic data analyst, show drastic reductions in working poverty in some of the poorest areas of the city, where other income supports have traditionally had lower uptake.

“We always hear people don’t apply for benefits because they don’t understand them, they don’t file their tax returns,” Mr. Stapleton said.

The pandemic benefits defied the trend likely because they were exceptionally easy to enroll in, there was no stigma attached to receiving them and because Ottawa conducted a massive awareness campaign about them, he said.

But with the end of the pandemic programs, poverty rates are slated to shoot back up, the report warns.

While the winding up of the benefits programs coincided with a period of strong job gains, high inflation has hit low-income households the hardest. The government response to that has been piecemeal, said Jennifer Robson, a professor of political management at Carleton University.

Provincial governments have doled out cost-of-living relief measures ranging from cash transfers to Ontario’s elimination of licence plate renewal fees. Ottawa’s affordability aids, including several temporary boosts to the federal sales tax rebate and a one-off $500 payment for low-income renters, have been more narrowly targeted at Canadians in need but still “relatively limited,” Prof. Robson said.

More meaningful were changes to expand eligibility for the Canada Workers Benefit for low-wage earners and to deliver the income top-up more frequently, she added.

But promises to reform the country’s employment insurance program to extend coverage, in a limited capacity, to self-employed and contract workers have not materialized, Prof. Robson said.

And Canada is still far from being able to roll out automatic tax-filing for simple returns, a promise the Trudeau government made in the 2020 Speech from the Throne. Such a system, in which the Canada Revenue Agency would calculate tax liability for some Canadians and send them tax returns for review, could help ensure that more low-income people receive the benefits to which they are entitled, Prof. Robson said.

Tackling working poverty, which requires both labour market and income security policies, remains a challenge, the Open Policy Ontario report notes.

Although Ottawa and several provinces and territories have recently raised the minimum wage, rents have often far outpaced such increases. In Ontario, for example, the minimum wage has more than doubled since 2005, but rents in many communities have tripled or quadrupled, according to the report.

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