Health, Dignity, and Dollars: Poverty Costs Canada

By Alex Paterson From the Catalyst, Winter 2018

Poverty costs Canadians our health, our dignity, and our dollars. The Federal government’s newly announced National Housing Strategy and Canadian Poverty Reduction Strategy both commit Canada to reduce poverty and housing need by 50 per cent over the next one to two decades.

Yet keeping the other 50 per cent of people in poverty and with inadequate housing will continue to drain our pocketbooks. When we crunch the numbers, there is a good business case to be made that being more ambitious in addressing poverty simply makes economic sense. This goes hand-in-hand with the human rights-based approach to confronting poverty.

In 2014, our organization Upstream calculated the cost of poverty to the economy of Saskatchewan to be $3.8 Billion per year. Understanding the cost of poverty involves measuring the additional health care, criminal justice, and social spending that are invested in the lives of people living in poverty. Costs also include the tax revenue and GDP contributions that are lost because of social policies that keep people in poverty rather than capable of fully contributing to Canada’s economy.  

The tradition of costing poverty in Canada originates with Nathan Laurie. In 2008, Laurie calculated Ontario’s annual cost of poverty to be between $10-13 Billion, a figure representing as much as 16 per cent of the Ontario government’s annual budget at the time. In British Columbia, the 2011 numbers were similar. The Canadian Centre for Policy Alternatives estimated the cost to be up to $9 Billion of BC’s provincial economy.

Poverty costs because it makes lives harder, less healthy, and more miserable for those living in poverty. This is reflected in the statistics on poverty within a population. Income statistics group Canadians into five income groups, from lowest to highest, known as the income quintiles. According to Canada’s death database, Saskatchewan children born into areas with the most poverty (having the most people from the lowest income quintile) start out with 7.5 fewer years of life expectancy than children born into Saskatchewan’s richest neighbourhoods.

Similarly, national life expectancy at age 18 is 6.8 years less for the lowest income group compared to the richest. People living in poverty have 2.3 fewer years of life expectancy than their neighbours who are in the second income quintile.

According to global public health expert Michael Marmot, this trend plays out globally, with the least deprived afforded more years before they acquire a chronic disease or disability. In other words, those experiencing poverty have shorter life expectancies and more health problems earlier in life than people that are more wealthy. Every income quintile has more healthy years to live. This is called the Marmot curve. Lower life expectancies and related illnesses make up additional health care costs associated with poverty. Governments can bend this curve the right way with smart policy.

Poverty also costs the well-being and enjoyment of the years that people do have. Poverty makes healthy years more difficult and stressful. For example, the cycle of poverty and state surveillance of people on welfare create a climate of stress that attacks their dignity. Marmot, in his Whitehall study, showed that people can become sick when they are in stressful situations where they lack control or autonomy. Provinces spend money on denying people coverage and policing recipients for welfare fraud. This creates a climate of stress for those on social assistance that makes their health worse.

This money could be put to better use. Governments can choose to implement rights-based policies that lessen the stress and increase the dignity of those currently living in poverty.

With this in mind, over the next year, we at Upstream will be working on a project researching the costs of poverty on all of Canada since the year 2000. We are making an educated guess that addressing poverty would mean less crime, better health, less uncontrolled stress, and more dignity for all Canadians. We will be working alongside CPJ to ask the Federal Government to continue creating more meaningful and comprehensive plans to get all people in Canada out of poverty.

It’s time we stop letting poverty cost us health, dignity, and dollars.

Alex Paterson is the Policy and Research Manager at Upstream.

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