Recession and recovery: Where are we now?

Now that we’ve passed the halfway point of the year, it’s a good time to check out some of the trends reported on in Bearing the Brunt, CPJ’s study of the recession and poverty. How is that recovery coming along?

Statistics reveal a mixed bag – some improving trends, and some discouraging ones. Overall, the picture is less robust than headlines about economic recovery would suggest. GDP may be growing steadily, but recovery has yet to trickle down to those who suffered most from the recession – the poor, economically vulnerable and unemployed.

Unemployment

Unemployment has improved slightly in 2010, declining from 8.5% in December 2009 to 7.9% in June 2010. This is nearly a full percentage point below the peak of 8.7% reached in August 2009. However, it is also still a full percentage point and a half above the unemployment rate of 6.3% in October 2008 when the recession began. 1,475,200 Canadians are still officially unemployed.

403,000 new jobs have been created since July 2009, which, according to Statistics Canada, basically replaces the 400,000 jobs lost during the recession. However, what the headlines don’t show is that we still have a deficit of full-time jobs. Between October 2008 and August 2009, 486,000 full-time jobs were lost while 99,000 part-time jobs were gained. Since then, 336,700 full-time jobs have been created, leaving us with a deficit of 149,300 full-time jobs. In contrast, 137,200 part-time jobs were gained during the recession. This continues an ongoing trend to precarious work, which already before the recession constituted 1 in 3 jobs in Canada.

June’s employment numbers also show a reduction in the number of hours worked. In essence, according to Erin Weir, “less work was divided up between more workers.” At the same time, while the number of jobs increased by 93,200, the number of unemployed was only reduced by 31,200. Clearly, we have a long way to go yet before recovery in unemployment can be considered complete.

Employment Insurance 

667,400 unemployed Canadians received regular EI benefits in April. This is a decline of 161,900 people since the peak of 829,300 in June. However, because there were 1,498,300 unemployed Canadians in June, this means that there were 830,900 unemployed Canadians not receiving EI. EI coverage was thus 44.5%, well below the peak coverage of 51%. There were 227,800 new and renewed claims in April.

Quebec, which is the only province to report such statistics, saw 888 new cases of social assistance due to EI benefits ending in April, with an additional 802 new cases due to job loss among those not qualified for EI benefits. In December, there were 1,065 new social assistance cases due to EI benefits ending and 1,315 new cases due to job loss without EI.

Social assistance

Social assistance caseloads have continued to rise despite the end of the recession. In the 6 provinces that publicly publish data, caseload increases have ranged from 1.1% to 5.5% between December 2009 and April 2010. All 6 provinces have experienced their peak caseload since the recession began in October 2008 in 2010. Both Alberta and Ontario may not have peaked yet, as their caseloads are highest in the most recent month for which data is available.

• Alberta: Alberta reached its highest caseload in over 13 years at 40,177 cases in April. This is a 49.9% increase over October 2008.
• British Columbia: The caseload for BC Employment and Assistance peaked at 133,843 cases in March, an 8 year high. Since then, the caseload has declined to 133,207 cases in May. May’s caseload is a 22.9% increase over October 2008.
• New Brunswick: New Brunswick reached its peak caseload in June, with 24,499 cases. New Brunswick actually had the smallest increase over the course of the recession, rising 0.5% between October 2008 and December 2009. Since December, New Brunswick’s caseload has risen 6.5%, bringing its total increase since October 2008 to 7%. New Brunswick has thus been hit considerably harder since the recession officially ended than it was during the recession itself. Because New Brunswick benefited from the highest EI coverage in the country in 2009, this increase in social assistance caseloads likely represents the unemployed exhausting their EI benefits without finding new work.
• Newfoundland and Labrador: Newfoundland and Labrador saw its peak caseload in May, at 25,174 cases. In June, the number of cases declined slightly to 24,983. June’s caseload is a 2.8% increase over October 2008. Of the provinces with available data, Newfoundland and Labrador thus had the smallest increase in social assistance cases since October 2008.
• Ontario: Ontario Works cases climbed to 251,429 cases in May, an increase of 55,699 cases or 28.7% over October 2008.
• Quebec: The Last Resort Financial Assistance caseload peaked at 339,516 cases in March. It then declined slightly to 338,853 cases in April. April’s caseload is a 3.9% increase over October 2008.

Cost of living

The news is more positive for cost of living. Statistics Canada reports that inflation was 1.4% in May. Shelter costs – rent/mortgage plus utilities – increased 1.3%, largely because of higher prices for natural gas, fuel and electricity. But food prices rose only 0.8%, the smallest increase in over 2 years. Of course, for the past two years, food prices have outstripped inflation by such a large margin that this represents more some breathing room than a break for family budgets.

Housing

Average rent for a two-bedroom apartment increased 1.8% between April 2009 and April 2010 (CMHC does not do comparisons between October and April, to avoid seasonal differences in the data), matching inflation for this period. This increase was considerably lower than the 2.9% hike in rent between April 2008 and April 2009.

Rent increases were the highest in Regina (7.1%), Saskatoon (5.3%), and St. John’s (5%). The highest average monthly rents for a two-bedroom apartment were Vancouver ($1,150), Toronto ($1,134), Calgary ($1,082) and Ottawa ($1,061).

Bankruptcy 

First quarter data for 2010 show a decline in the number of consumer insolvencies. Bankruptcies across Canada were down to 33,855 from 35,331 in the last quarter of 2009. However, consumer proposals (alternative arrangements for payment) actually increased, rising to 10,467 from 10,289. Newfoundland and Labrador, Saskatchewan, Alberta, British Columbia and the Northwest Territories all witnessed an increase in consumer insolvencies in 2010, while in New Brunswick an increase in bankruptcies was offset by a decline in proposals.

Overall, insolvencies are still higher than in the fourth quarter of 2008, suggesting that economic insecurity remains high.

Food bank use 

While the Hungercount survey won’t be available until the end of the year, the Daily Bread Food Bank in Toronto has already released its own statistics, revealing a 15% increase in food bank use in the Greater Toronto Area in 2010. Anecdotally, other reports suggest a rise in food bank use across Canada. This serves to reinforce the conclusion that even if GDP is growing, economic insecurity is not diminishing in Canada.

Still waiting for recovery

The impacts of the recession continue to be felt. While unemployment is improving, there are still reasons for caution and far too many unemployed Canadians. EI coverage has dropped, leaving over 830,000 unemployed Canadians without benefits. Social assistance caseloads are still rising and food bank use is still increasing, demonstrating the continued growth in economic insecurity. While consumer insolvencies are declining, they remain high. Recovery is not reaching all Canadians.

The one bit of good news is that cost of living has been easier on family budgets, as food prices and rent have been in line with inflation or lower.

Still, there is more to be done. Despite all the talk of austerity at the G8 and G20 meetings, the government needs to be careful of ending the stimulus funding and cutting the deficit too soon and too fast for fear of provoking another recession. And more needs to be done to help those Canadians still feeling the effects of the last recession. Congratulating ourselves on our robust economic recovery because GDP is growing is meaningless, unless we pay attention to those who are still waiting for recovery.