Recession takes its toll on Manitoba

Manitoba had one of the smallest increases in unemployment during the recession. But the recession nonetheless had a significant impact, increasing poverty and economic insecurity for Manitoba families. While job loss was low, Employment Insurance coverage was also low, leading to a surprisingly large increase in social assistance cases. Food bank use and bankruptcies also rose during the recession, as the cost of living increased sharply in 2009.

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. While Manitoba escaped some of the heaviest impact of the recession, it too fell victim to the national trend of rising poverty and child poverty rates as low income families bore the brunt of the recession’s impact.

Already before the recession, Manitoba had very high poverty and child poverty rates. Unfortunately, the recession has served to increase poverty in Manitoba.

Together, Manitoba and Saskatchewan lost only 3,400 jobs between October 2008 and October 2009, a decline of 0.3%. Unemployment rose in Manitoba from 4.3% to 5.8% over this period.

But while Manitoba had fairly low job losses, it also had very low EI coverage. The Beneficiaries to Unemployed rate increased from 39.2% in October 2008 to 45.1% in October 2009, the second lowest coverage in the country. Over half of Manitoba’s unemployed were thus not receiving EI benefits.

Because of this low EI coverage, social assistance needed to fill in the gap. While Manitoba had one of the smallest job losses in the country, it had the fourth highest increase in welfare caseloads. Employment and Income Assistance cases increased by 9.3% between October 2008 and December 2009. In December 2009, there were 33,632 cases.

Bankruptcies provided another visible effect of the recession’s impact on Manitoba, rising 24.2% between the third quarter of 2008 and the third quarter of 2009.

Food bank use also rose considerably, climbing 18% in 2009. 47,925 people needed to use a food bank in Manitoba in March 2009. Manitoba has the highest proportion of food bank clients who are children at 49%, considerably higher than the national average of 37.2%.

Food bank use also reveals a problem of working poverty, as 15.5% of food bank clients report employment as their main source of income. 3% of food bank clients are EI recipients.

One of the primary causes of this increased poverty and insecurity in Manitoba is the steep increase in the cost of living in 2009. Food prices rose 5.3%, compared to inflation of 0.6%. Prices for meat (6.8%), dairy (5.5%), fruits (5.9%) and vegetables (6.5%) all increased more than 5%.

Average rent for a two-bedroom apartment increased 4.1% between October 2008 and October 2009. Not surprisingly, given the jump in rent, affordability declined in Winnipeg. The median rent for a two-bedroom apartment in Winnipeg is now 30% of the median income earner’s income.

This large increase in the cost of living placed significant pressure on low income residents to stretch their meagre incomes far enough to pay for rent, utilities and food.

While Manitoba may have avoided the worst of the recession, these trends of increased poverty and economic insecurity are still a cause for concern. While media and governments focus on stories of economic recovery, recovery is far from the reality on the ground for too many families.

It is important not to lose sight of these families. After the last recession, it took almost eight years for the unemployment rate in Canada to return to its pre-recession rate. It took 14 years for the poverty rate to decline to its pre-recession level. So far, despite the increase in economic production, Canada’s unemployment scenario has barely budged.

If the Manitoba government and the federal government ignore the increase in poverty and economic insecurity, many Manitoba families could suffer from the recession’s effects for many years to come.