ÉDITORIAL

Poverty in Times of High Inflation

Ian Barrett

 

The impacts of the recent surge in inflation have been quite uneven.  Many of those who can work from home have been able to secure substantial wage gains, ending up better off than they were a few years ago.  Those in construction are also doing very well.  However, not everyone is so lucky.  The ways in which our governments support people on a fixed income will be extremely important over the coming years.

The most vulnerable are of course seniors dependent solely on Old Age Security and the Guaranteed Income Supplement, as well people on social assistance.  Although the amounts of these benefits do increase each year, social assistance payments in particular haven’t always kept up with inflation.  The current situation with inflation has been quite varied, with the prices of many groceries rising faster than clothing, electronics and services such as travelling and going out for dinner or a drink.  Increases in rent over the last year have at times been substantial, although these depend greatly on landlords and buildings.  Inflation measures, which account for a wide variety of goods and services, tend to better reflect monthly spending by the middle class.  Since those on the tightest budgets spend their money almost entirely on groceries and rent, governments should adjust low-income benefits according to the cost of basic necessities.

Another group that finds itself squeezed by the rise in the cost of living is those earning minimum wage.  There has been substantial progress as of late in raising the minimum wage, yet although it was quite necessary, it has also complicated life for many small business owners who were in shaky financial situations to start with.  Given that those in larger metropolitan areas may be unable to get by on even the higher minimum wage rates of recent years, there will be strong arguments for further increases in the near future if inflation stays high.  Yet whether small businesses in more rural areas can afford this is an open question.

One possible solution is to have a minimum wage which varies by the region, instead of simply by the province.  It seems odd that the minimum wage should be the same in expensive cities like Montreal as it is in Rivière du Loup, or that it’s as high in Thunder Bay as it is in super pricey downtown Toronto.

There is an argument that employers may flock to lower wage districts.  Yet property tax rates vary by municipality, and we haven’t seen towns with somewhat higher rates being deserted.  In the end, people and businesses take many factors into account when deciding on where to live or set up shop.  Allowing cities to decide which rates are best for their residents would give them a way to balance the impacts of the cost of living on residents and businesses according to factors specific to their regions.

By ensuring that our governments look out for the most vulnerable in society we can ensure that poverty rates don’t spike along with prices.