The 2008-2009 recession hit Alberta very hard, creating poverty and economic insecurity for Alberta’s families. Proportionally, Alberta lost the more jobs than any other province as unemployment shot up. Employment Insurance coverage was very low, forcing many Albertans to turn to social assistance. Low income Albertans had to stretch their dollars further as food costs increased far more than core inflation. The effects of the recession on Alberta can be seen in the skyrocketing number of bankruptcies and the largest increase in food bank use of all Canadian provinces.
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. It also reveals the disproportionate impact suffered by Alberta during the recession.
Before the recession, Alberta had one of the hottest economies in Canada. It also had one of the lowest poverty and child poverty rates. In 2007, the poverty rate was 6.1%, 3 percentage points lower than the national average. The child poverty rate was 6.3%. Unfortunately, the recession has increased both the poverty and child poverty rate for Alberta.
Alberta lost the greatest proportion of jobs in the country, at 3.3%. 68,000 jobs were lost, as unemployment increased from 3.7% in October 2008 to 7.5% in October 2009.
While the number of EI recipients rose sharply (all of Alberta’s urban communities saw a 115% increase or more in the number of EI beneficiaries), Alberta’s EI coverage remained low. Prior to the recession, Alberta had the lowest EI coverage of any province, with less than 1 in 4 unemployed workers receiving benefits. In October 2009, despite the fact that Alberta’s economy was one of the most devastated by the recession, Alberta had the third lowest EI coverage in Canada at 46.5%. More than half of the unemployed were still not receiving EI.
As a result of EI’s inadequacy, social assistance needed to fill in the gap. While Income Support Assistance provides a last financial safety net to Albertans, it is a poverty income. EI, despite its inadequacies, is far less stigmatizing and controlling of people’s lives.
Income Support Assistance caseloads increased 42.7% between October 2008 and December 2009. The caseload rose even higher in January 2010, reaching 39,315 cases, a 13-year high for Alberta. 39% of social assistance recipients are families with children.
Inflation was negative for Alberta in 2009, but low income families had to stretch their dollars further as food prices increased 4.8%. The prices of dietary staples such as meat, dairy, fruits and vegetables increased by more than 5%.
The only good news was that Alberta was the only province to see a decline in average rent at -1.9%. The Canada Mortgage and Housing Corporation attributes this decrease to the high vacancy rate in Alberta, which more than doubled between 2008 and 2009. Still, Calgary had the second highest rent for a two-bedroom apartment in the country, second only to Vancouver.
The effect of this growing economic insecurity on Alberta families is already visible. Between the third quarter of 2008 and the third quarter of 2009, bankruptcies increased by a whopping 82.2%. This was the largest increase in bankruptcies in the country.
Alberta also witnessed the largest increase in food bank use in Canada at 61%. In March 2009, 53,976 Albertans needed to use a food bank. This included a higher than average number of first-time clients at 16%. Alberta is also unique among Canadian provinces in having a very high proportion of food bank users who report employment income at 27%. And unsurprisingly, given the increase in unemployment, the number of food bank clients receiving EI increased from 2.7% to 4.9%.
While there have been many reports of economic recovery in Canada, these stories don’t capture the lingering challenges on the ground for Alberta’s families. After the last recession, unemployment in Canada took almost 8 years to return to its pre-recession rate. The poverty rate took 14 years to return to its pre-recession rate.
Both Alberta’s government and the federal government need to remember those still reeling from the recession’s impact, or they could suffer from its effects for many years to come.