Poverty comes with a high price; Failing to address the root cause is expensive in current and future costs

Iglika Ivanova, economist and the public interest researcher at the Canadian Centre for Policy Alternatives’ B.C. office; Times Colonist (Victoria)

Poverty is costing British Columbians a lot more than a few cans of non-perishable food and a new toy donated at Christmas.

A study by the Canadian Centre for Policy Alternatives estimates that poverty costs the average man, woman and child in B.C. as much as $2,100 each, every year.

The cost adds up to $8.1 billion to $9.2 billion per year, close to five per cent of the total value of our economy. Failing to address the root causes of poverty is expensive, in both current and future costs.

Study after study has linked poverty to poorer health, lower literacy, more crime, poor school performance for children and greater stress for families.

Poverty takes an enormous toll on the people who struggle with it, but society at large pays a very high price.

British Columbians pay about $1.2 billion per year in higher public health care costs linked to poverty. We spend another $745 million annually on policing and criminal justice costs, driven by poverty-related crime. Higher costs of income supports and lost tax revenues that come with inadequate earnings account for more than $900 million per year.

Poverty also acts as a significant drag on our economy. We all lose out when people are excluded from the workforce because they don’t have access to the supports or training they need to do better, or when they are stuck in low-wage jobs in our polarized labour market.

Underusing the human potential of poor British Columbians to contribute to society and to our economy is among the biggest costs of poverty ($6.3 billion to $7.2 billion per year).

This is a conservative assessment, as our estimates do not capture all of the costs of poverty.

Notably, we exclude the costs that child poverty imposes on future generations by perpetuating the cycle of poverty. We also do not measure many of the less tangible costs, such as the impact of high poverty levels on social cohesion and our feelings of safety in our communities. Nor do we include the direct cost of providing front-line social services to those in poverty.

The government’s approach to poverty is to deal with negative consequences as they arise. This is akin to handling a leaky roof by repeatedly mopping the floor. It makes things look passable when the guests arrive, but it does nothing to address the root causes. And like a leaky roof, poverty’s consequences only get harder and more expensive to fix the more we put off dealing with them.

Governments often balk at the high costs of policies that would effectively reduce poverty, such as building more social housing, increasing welfare rates and funding high-quality public early learning programs for all children.

This kind of thinking assumes that sticking to the status quo of keeping one in nine British Columbians in poverty is free. This is not true, as our study demonstrates.

Seven Canadian provinces have recognized the high cost of poverty and have implemented poverty reduction strategies, or are developing them. Poverty reduction has emerged as an issue that transcends party politics and ideology to receive all-party agreement in most provinces.

B.C. should follow their lead and introduce an all-party endorsed, comprehensive poverty reduction plan with legislated targets and timelines.

We estimate that once fully implemented, such a plan would cost between $3 and $4 billion per year. That’s less than half of what poverty is costing us now.

The economic case for government action on poverty is strong. In the long run, it is cheaper to address the root causes of poverty directly than to continue to pay for the long term consequences of poverty year after year.

It’s time for our government to rise to the challenge and commit to a comprehensive plan to systematically tackle the root causes of poverty. It is the right thing to do. And it’s also the fiscally responsible thing to do.

The biggest challenge is that up-front investments are needed to bring savings down the line. The four-year election cycle hardly encourages long-term thinking or investments.

What’s needed is leadership, vision and a willingness to do the right thing.