Ontario: Bearing the brunt

In many ways, Ontario bore the brunt of the recession. Over half of all jobs lost in Canada during the recession were lost in Ontario. Nonetheless, Ontario had the lowest Employment Insurance coverage in the country. Not surprisingly then, Ontario Works caseloads skyrocketed. Rising cost of living contributed to the rise in poverty, as low income families had to stretch their dollars farther in 2009. The result was an increase in bankruptcies and food bank use.

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 Ontario during the recession.

The Canadian economy lost 400,000 jobs between October 2008 and October 2009. 205,900 of these jobs were in Ontario, which lost 3.1% of its jobs. As a result, the unemployment rate rose from 6.7% in October 2008 to 9.3% in October 2009.

Despite bearing the brunt in unemployment, Ontario had the lowest EI coverage in the country. The Beneficiaries to Unemployed rate rose from 32.3% in October 2008 to 41.4% in October 2009. This means that nearly 3 out of 5 unemployed workers in Ontario were not receiving benefits!

People without employment need another source of income to live. Since EI was completely inadequate, this meant that Ontario Works needed to fill in the gaps. As a result, the OW caseload rose 23.1% between October 2008 and December 2009, the second highest increase in social assistance cases in the country.

In January 2010, the OW caseload increased even more, reaching 246,748 cases. This suggests that the peak of the recession’s effect on welfare cases in Ontario has not yet been felt. It also seems likely that many of the new applicants in 2010 are EI recipients who have exhausted their benefits without finding new work.

While incomes were suffering, families also faced a steep increase in the cost of living. Food prices rose 4.7% in 2009, compared to inflation of 0.4%. The price of vegetables actually increased 10.4%.

Average rent for a two-bedroom apartment grew 2% between October 2008 and October 2009. Toronto had the third highest rent in the country for a two-bedroom apartment, behind Vancouver and Calgary, with an average monthly cost of $1,096. As a result of the rise in rent, four Ontario cities witnessed a decline in affordability: Hamilton, Oshawa, Ottawa and Thunder Bay.

Five Ontario cities now have an average rent above Canada Mortgage and Housing Corporation’s threshold of affordability: Oshawa, Sudbury, Thunder Bay, Toronto and Windsor.

The effect of this growing economic insecurity on Ontario families is already visible. Between the third quarter of 2008 and the third quarter of 2009, bankruptcies increased by 37.4%.

Ontario also witnessed a significant increase in food bank use at 19%. In March 2009, 374,230 Ontarians needed to use a food bank. As a result of this increased demand, 38% of food banks did not have enough food to meet the needs of their clients.

Food bank use also reveals a problem of working poverty. 13% of food bank clients report employment as their main source of income. And unsurprisingly, given the increase in unemployment, 5% of food bank users are EI recipients.

These trends of increased poverty and economic insecurity are significant cause for concern. While there have been many reports of economic recovery in Canada, these stories don’t capture the lingering challenges on the ground for Ontario’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 Ontario’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.