By Brian Lee Crowley
Halifax Chronicle Herald, Moncton Times and Transcript
The key to reducing poverty is work, not welfare dependency. But you’d never know it if you listen to the professional poverty advocates.
In fact the mere suggestion that many people on low-incomes could make themselves better off by changing their own behaviour is guaranteed to generate howls of outrage from the “friends of the downtrodden”. The cry of “blaming the victim” is the first response, rapidly followed by the claim that the reason poor people are poor is that rich people are rich. If only we could take enough away from the rich, we could give it away to those in need and poverty would be no more.
Yet anyone who follows the Statistics Canada data on low incomes knows that the picture the poverty advocates paint is just plain wrong, both in terms of how people come to be on low-incomes and how they escape that condition.
There is not a huge underclass in Canada trapped permanently on low incomes. On the contrary, there is huge turnover from year to year: somewhere between a third and a half of the people in the bottom fifth (quintile) of income earners one year are not there the next, because their income has risen. And Stat scan’s numbers are quite clear about what makes the difference between falling into poverty and escaping it: the best and most common route out is more family members working more hours. Hard work and a buoyant labour market do make the difference.
Moreover, not only is poverty dispelled by working more, but it is also much more common at certain stages of life than others. University students are often technically “low-income earners”, but they are also giving up income today in order to invest in their future earning capacity. Many people fall into low-income as a result of a temporary life crisis — a divorce, loss of a job, illness and the like — and rapidly recover, both economically and personally. Young parents, usually at the lowest step on the earnings ladder, often make temporary economic sacrifices so that one parent can spend more time with the children. But as the parents age, their incomes generally rise, and as the children age they are more and more in the hands of institutions like schools, freeing the parents to work more at higher salaries. At the other end of their working life — retirement — people have usually acquired assets, such as a home that they can live in rent free, thus reducing substantially the income they need in order to live comfortably. Many of the people on “low-incomes” are not in fact “poor” at all.
Now Thomas Sowell, a distinguished black economist at the Hoover Institution at Stanford University in California, has deepened our understanding of the relationship between work and poverty even further. In a recent article, he points out that while there are more than 19 million people working in households with incomes in the top 20 percent in the United States, there are fewer than 8 million people working in households in the bottom 20 percent. Among households in the bottom 20 percent in income, there are more than 13 million people who do not work at all. So unless you’re prepared to argue that it is unfair that work be rewarded, these huge differences in numbers of household members working go a very long way to explaining income differences between the so-called “rich” and those at the bottom of the income scale.
Just how much income do you need to get into the top 20 percent of income earners in the US? Household income of $85,000 will get you there. That’s two adults working at lower-middle class salaries. And remember that many of the people in this group will have been in the bottom 20 percent of income earners at another point in their lives. Far from it being the rich are rich and the poor are poor and never the twain shall meet, there is massive movement among income classes and for most people being on low-income is not a permanent condition but a normal way station in life.
Work is still the best most effective antidote to poverty. And contrary to what many people might think, the main obstacle to improving conditions for those on low-incomes is not the absence of jobs. On the contrary, industries around Atlantic Canada are getting increasingly exercised about looming labour shortages, and most employers tell pollsters they have real difficulty finding workers. No, it’s poorly designed social programs, both federal and provincial, that remain the biggest obstacle to helping people get back into the labour force and out of poverty. New Brunswick has done more than, say, Nova Scotia, but the whole region has been far too slow to draw the lessons of a decade of successful welfare reform throughout North America: work works.
Brian Lee Crowley is president of the Atlantic Institute for Market Studies