Paths to prosperity for all?

Kristina Craig Special to the News Poverty doesn't exist in the theory of free-market capitalism. If it did, it would be a temporary problem. Poverty might be a flaw that comes from government interference into the markets.

Poverty doesn’t exist in the theory of free-market capitalism. If it did, it would be a temporary problem. Poverty might be a flaw that comes from government interference into the markets. Or, poverty might be a consequence of individual decision making or of cultural traits.

In theory, poverty within our dominant economic system is a self-eliminating state. Through economic growth and the trickle-down effect, everybody will benefit from the accumulation of wealth and will automatically experience prosperity – for as long as an individual is fully participating economically and for as long as governments do not restrict or regulate the free market.

“Yukon is clearly on the path to prosperity and, I believe, the best place to live in Canada,” Premier Fentie said recently. “We are leading the country in economic growth.”

In contrast to market theory, Fentie makes it sound as if government is in charge and control of economic forces. He is not mentioning the ongoing reality, in which up to 20 per cent of Yukon’s population lives in poverty, which means many Yukoners can’t meet their basic needs with the income they earn.

Anecdotal evidence from the nongovernment sector speaks clearly about the conditions of one in every five Yukoners who are not yet on the proclaimed path to prosperity.

Despite Fentie’s assertion “we are seeing success through the lowest unemployment rate in the country; a growing population; a positive financial position and a robust private sector,” increasing numbers of people are seeking contributions from the food bank in recent months.

How can it be, in a prosperous society, that people can have jobs and need to ask for support from the food bank to feed themselves and their families?

There have been 3025 food bank recipients in less than two years: This means almost one in 10 Yukoners, or one in eight people from Whitehorse has experienced food insecurity in the last two years. That does not sound like the best place to live in Canada.

If feeding the family is difficult, consider the housing situation: the bureau of statistics reports the average house price in Whitehorse increased by $191,000, or 101.6 per cent, from 2004 to 2010. Inflation over the same time period was 11.4 per cent. This is a ‘real’ increase in average house price of 90.2 per cent over the past six years.

What about the average incomes?

From 2004 until the recession in 2008, the average income has increased from $36,665 to $46,666, a 27.3 per cent increase. Not bad, but with such a growth disparity between income and real estate it becomes clear why there is a very low vacancy rate in Whitehorse. Many working people cannot afford to own a house; they are forced to rent. And the rental prices in Whitehorse increased by 17.7 per cent, faster than the rate of inflation, between 2004 and 2010.

Thus, a bigger share of income is spent on housing costs – which leaves even less money for food and other necessities.

The current government has recognized that low-wage workers need a guard against exploitation and inflation. Since 2007, the minimum wage has been indexed to the Consumer Price Index.

In 2010, a

full time minimum wage worker in Yukon would have earned $18,574.40 per year (based on eight-hour days, a 260-day work year, and the 2010 wage level of $8.93 per hour). After taxes, that would leave the individual with disposable income of about $15,802.

For 2009, the unofficial poverty line in Canada, the Low-income Cut Off (LICO) was $15,384. Even with an adjustment for the rate of inflation, a full time minimum wage worker would not have been able to rise above the poverty line in 2010.

If this person was also a provider for other people in a household, it would be worse. Obviously, low-income earners need more protection than an indexed minimum wage.

These are not conditions for a path to prosperity for all. It is important to create the right conditions for a healthy economy. Our government should also create the conditions for all of its citizens to have a livelihood, and not just jobs.

It would be a lot more dignifying to make a living from full-time work, instead of becoming eligible for social assistance, various benefit programs, and food bank contributions. Or, do low-income earners need to wait until the wealth of the few, who can afford to speculate with investments and to turn over real estate at solid profits, has finally trickled down to them?

Provided by the Yukon Anti-poverty Coalition.

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