Unravelling Child Poverty

Commentary, Frontier Centre, Poverty, Uncategorized

Here they go again.

The good folks at the Social Planning Council of Winnipeg have released the latest of their regular findings on child poverty, and what to do about it. As usual, this benevolent, necessary work is tainted by the use of faulty tools to measure the problem and by time-worn prescriptions for repair that miss the mark. They ignore the only proven method of reducing poverty, an expansion of wealth by the active promotion of economic growth.

The new report, from a national collaboration of anti-poverty groups, states that 22.5% of Manitoba’s children are poor, the worst rate in the country. Incredibly, that estimate excludes the First Nations, more than ten percent of Manitoba’s population, the poorest among us. The Child Poverty Report Card draws its numbers from government statistics on income, specifically one called the Low-Income Cut-Off (LICO), which compares income levels. The “cut-off” – the line at which a family’s income is less than half the average – stands at $34,000 for a family of four.

This figure has nothing to do with deprivation, as Chief Statistician Ivan Fellegi emphatically stated in 1997: “[LICO] identifies those who are substantially worse off than the average. Of course, being significantly worse off than the average does not necessarily mean that one is poor. . . . Statistics Canada does not and cannot measure the level of poverty in Canada.”

In the absence of honest reporting, what indicators of real poverty – lack of food, shelter or other amenities – are available? A federal agency looked at the first of these, in its National Longitudinal Survey of Children, and concluded that just under two percent of families with children sometimes experienced hunger. In his monumental work, Measuring Poverty in Canada, Nipissing University’s Chris Sarlo uses a “basic needs” standard. His work shows that the rate of poverty declined from about 40% in 1951 to about 8% in 1981, and has stayed at that level since.

That’s still too high, but it puts the problem in a much different perspective. Why haven’t massive government programs countered poverty? Since the Americans declared War on Poverty in 1965, they’ve tossed about $5 trillion at the problem, but the rate remained about the same. Richard Vedder at Ohio University looked at individuals who escaped poverty, and found that while welfare programs helped almost a fifth of recipients move up, 45% of those who received no assistance at all got out of the trap.

The Social Planning Council thinks “a new, comprehensive child benefit system,” including a national daycare program, will alleviate the exaggerated problem. According to Michael Tanner of the Cato Institute, there is little evidence to support such assertions. Such programs make it more rational for low-income working people to maximize their benefits by quitting work. Such incentives explain why welfare caseloads in North America grew steadily, during good times and bad, until reform programs pushed people off the dole.

Unsurprisingly, little of the money spent on such transfer programs actually reaches the poor. To quote Tanner, “In 1965, 70 cents of every dollar spent by the government to fight poverty went directly to poor people. Today, 70 cents of every dollar goes, not to poor people, but to government bureaucrats and others who serve the poor.” He recommends a wholesale dismantling of state welfare and a transfer of the task to private charities, few of which “have the bureaucratic overhead and inefficiency of government programs.”

Even more counterproductive is the Planning Council’s proposal to jack up the minimum wage to $9.25 an hour. Economists are nearly unanimous in concluding that wage regulation of this sort forces legions of the low-skilled into unemployment. Further, nine out of ten of minimum-wage workers are part-timers, most of them young students and middle-class housewives, not the hard-core poor.

Two basic strategies to counter poverty make more sense, one to reduce the supply of the poor and the other to expand the social wealth available to counter their plight. The first has nothing to do with the government, and the second everything.

We ignore the connection between child poverty and marital status at our peril. The point needs to be drummed into our heads again and again. Don’t get pregnant until there’s a wedding ring on your finger. Don’t have, or keep, children unless you’re married.

A poor grounding in basics is the other surefire ticket for the poverty train, and the government can do something radical about improving our public school system. It needs to be overhauled root and branch, deregulated and decentralized, the means for which are widely discussed at fcpp.org. It is simply unacceptable that many graduate from public schools without the ability to read or count.

Another, general policy of maximizing economic growth would increase the wealth available to counter real need. On local, national and international levels, an increasingly sophisticated understanding has emerged with regards to the connection between the size and power of governments and growth rates. If we tax and regulate beyond a certain point, we hobble the capacity of the economy to generate new wealth.

The Social Planning Council’s prescriptions will increase poverty, not reduce it. Let’s have honest numbers, and let’s do something real to deal with them.