Waterloo Region’s economy presents a puzzling contradiction. It has an enviable history of economic performance that has created an economy only slightly smaller than that of New Brunswick [Smith 1997a]. At the same time, it has undergone an economic transformation that is leaving a large proportion of its residents living in poverty.

Statistics Canada’s low income cut-offs (LICOs) are used as the standard for measuring poverty. These low-income lines represent levels of gross income where households spend an above-average share of income on food, shelter and clothing. The ‘poverty rate’ refers to the percentage of households that fall below the low income cut-offs. The 1995 LICO for the Waterloo Region was $14,473 for a single person, $18,091 for a two-person household, $22,500 for a family of three and $27,235 for four.

In May 1998, Statistics Canada released the 1996 Census data on 1995 incomes for 25 major Census Metropolitan Areas (CMA). The Kitchener CMA includes Cambridge, Kitchener, Waterloo and the Township of Woolwich.

The 1996 Census data found that 14.6 percent of the Kitchener CMA – 55,250 individuals – had low incomes in 1995 (see Table 1). This is a significant increase from the 12 percent poverty rate in 1990. In comparison to other urban centres in Canada, the Kitchener Census Metropolitan Area had the third lowest rate of poverty, behind only Oshawa at 12 percent and Thunder Bay at 14.5 percent. Montreal had the highest rate at 27.3 percent. While the rate for the Kitchener CMA is low compared to other urban centres, its increase since 1990 reflects a troubling trend affecting many communities across Canada.

Growing poverty across Canada

The progress against poverty that Canada managed to achieve in the 1960s and early 1970s has stalled since 1975. Poverty has not declined overall in the last 20 years. The low-income population was substantially larger in 1995 – 20 percent of all Canadians – than in 1975 when it was 15.4 percent [Battle 1996; Statistics Canada 1998a].

Moreover, in the 1990s, the ranks of the poor have grown faster than the general population. While the total population of Canada increased by six percent between 1990 and 1995, the low-income population grew by 29 percent. An additional 1.2 million persons were poor in 1995 than in 1990.

The profile for families in Canada shows a similar trend. The number of families increased by only six percent between 1990 and 1995, but the number of low-income families rose by 32 percent [Statistics Canada 1998a: 17]. In the Kitchener CMA, the percentage of families with low incomes went up from 10 percent in 1990 to 12.1 percent in 1995.

Low-income households are a dynamic population. Many households move in and out of poverty in response to labour market fluctuations or changes in their life circumstances, such as divorce. Some people remain poor for a long time, while others leave poverty only to return soon after. Still other households manage to leave poverty forever. The fact that poverty affects so many adults and children at some point in their lives suggests that it is deeply rooted in the economy and society.

Labour market transformation

Waterloo Region is typical of many Canadian communities that are making the transition to a post- industrial economy. Historically, the economy of Waterloo Region has been one of the most successful in Canada thanks to a diverse manufacturing sector and its proximity to major North American markets.

Like many other Canadian communities, however, the economic recessions of the early 1980s and 1990s hit the Region hard as many industries down-sized or closed in response to depressed consumer demand, labour-displacing technologies and lower production costs in other countries [Torjman and Hodgson 1998]. In the first half of the 1990s, nearly 50 manufacturing plants closed, resulting in the loss of 15,000 manufacturing jobs and thousands of spin-off jobs. These layoffs are reflected in the rise in the unemployment rate after 1989 (Figure 1). This increase partly explains the rise in the poverty rate. Figure 2 shows the actual number of unemployed.

However, the Region has made a solid recovery particularly in high-value, knowledge-intensive industries like computing hardware and software, telecommunications equipment, engineering, environmental design and the expansion of the finances, insurance and real estate sector. Even with the recession, Figure 3 shows that the real Gross Domestic Product (GDP) of Waterloo Region grew by $2.05 billion or 27.4 percent in real terms (i.e., adjusting for inflation) between 1987 and 1996. By contrast, Ontario’s GDP increased in real terms by only 18 percent in the same period [Essential Economics Corporation 1998: 4]. The economic future of the Region is promising: The combination of gains in housing and business investment spending, along with strong export performance and increases in consumer spending, was expected to produce a four percent growth rate in 1998 [City of Kitchener 1998].

Declining unemployment, but growing gap between ‘good’ and ‘bad’ jobs

This dramatic economic recovery has created new jobs. Between 1987 and 1996, the number of people employed in Waterloo Region grew at a faster rate than in the province of Ontario as a whole. Only Vancouver, Victoria, Calgary and Sudbury had higher rates of employment growth [Essential Economics Corporation 1998: 6-9].

These impressive economic figures fail to reveal, however, that the shift from a primarily manufacturing- based to a more knowledge-based economy has left many of the Region’s residents without the skills they need to participate fully in the new economy.

As one local economist notes, the economies of Ontario and Waterloo Region are demanding more skilled workers with a postsecondary diploma, trade certificate or degree. Between 1990 and 1994, for example, the proportion of skilled employment in Ontario rose from 40 percent to 47.2 percent. By contrast, workers with less than secondary school graduation declined from 26.8 percent of those employed in 1990 to 20.7 percent in 1994 [Smith 1997b: 1-2].

Professional or managerial workers (including teaching, health care, and natural and social science occupations) comprised 24.6 percent of all Ontario workers in 1981; by 1991, this proportion had risen to 31.8 percent. In Waterloo Region, professional or managerial workers rose from 21.7 percent to 28.7 percent over the same period [Smith 1997b: 4].

But while unemployment has declined since the 1992 recession, the rise in poverty suggests that the jobs created leave many people with insufficient hours and wages to earn an income above the poverty line.

A growing number of low-income households belong to the category of ‘working poor’ – those who are working but whose earnings are insufficient to raise them above the poverty line. In fact, more than 20 percent of Waterloo Region’s labour force works part time with low wages and few benefits [Regional Municipality of Waterloo 1995].

Falling average incomes

In the last Census, Statistics Canada found that: “The recession of the early 1990s lowered the incomes of individual Canadians by six percent between 1990 and 1995, wiping out the gains made during the second half of the 1980s” [Statistics Canada 1998a: 1]. In the Kitchener CMA, the decline was smaller, with the average income for all individuals aged 15 and over falling by three percent from $27,918 in 1990 to $27,074 in 1995.

Average family income in the Kitchener CMA fell by 2.6 percent from $61,244 in 1990 to $59,658 in 1995. Average household income, which includes both single-person households and families, fell by 4.2 percent from $55,813 to $53,492 during the same period.

However, average employment income in the Kitchener CMA rose from $27,777 in 1990 to $27,893 in 1995, even as the averages for Ontario and Canada fell. Average employment income for full-time workers in the Kitchener CMA rose from $38,015 in 1990 to $38,444 in 1995.

By contrast, the income for other workers – including part-time and nonstandard workers, and those who did not work during 1995 – fell from $15,233 to $15,136. These trends reflect the split in the workforce between traditional full-time workers and those working in nonstandard or part-time positions for lower wages.

Figure 4 shows the changes in income distribution for the Kitchener CMA between 1990 and 1995. The percentage of the population with incomes below $20,000 went up, while the proportion with incomes between $20,000 and $40,000 declined.

Demographic factors

Certain demographic factors are linked to higher levels of poverty.

a. age

Single Canadians under age 25 have a high rate of poverty, reflecting the fact that many still are completing their education/training and are earning only part-time or casual wages. In the Kitchener CMA, young people aged 18 to 24 had a poverty rate of 22.4 percent in 1995, up from 17.2 percent in 1990.

At the other end of the spectrum, seniors aged 65 to 69 in the Kitchener CMA had a poverty rate of 9.8 percent in 1995, up from 9.4 percent in 1990. People over age 70 faced a higher rate of poverty at 12.9 percent in 1995, though less than the 14.8 percent rate in 1990.

b. gender

In addition to age, gender is a critical demographic factor in the poverty story. On average, women have higher poverty rates than men. In Waterloo Region, the 1990 poverty rate for females (13 percent) was significantly higher than the rate for males (10 percent); 1995 figures are not yet available [CCSD 1996: Table B.14].

c. family type

Family type is a strong predictor of poverty. The high rate of marriage breakdown places many single parents in difficult economic circumstances. Figure 5 shows the poverty rates by family type in the Kitchener CMA in 1990 and 1995. Couples with children had a poverty rate of 8.5 percent in 1995, up from 5.7 percent in 1990. The rate for single parents was 35.7 percent in 1995, up from 33.2 percent in 1990 [Statistics Canada 1998b].

The gender of the single parent greatly affects the incidence of low income. In 1995, male-led single- parent families had a poverty rate of 20.5 percent (up from 15.2 percent in 1990). The rate for female- headed, single-parent families was more than double at 44.5 percent in 1995, up slightly from 44.0 percent in 1990.

Young single parents are also more likely to experience poverty. While 51 percent of single parents in the Region were poor in 1990, the poverty rate was a very high 78 percent for single parents under age 30. Yet most single-parent families – 65.7 percent – participated in the labour market.

Unattached individuals experience poverty in disproportionate numbers; 34.3 percent of unattached individuals in the Kitchener CMA had incomes below the poverty line in 1995. Gender differences are significant as well. The poverty rate for Canada was 31.1 percent for single men and 37.2 percent for single women in 1995 [Statistics Canada 1998b].

d. child poverty

Child poverty continues to grow. One in four Canadian children under age 6 lived in low-income families in 1995 compared with one in five in 1990 [Statistics Canada 1998a: 17]. Even though the House of Commons passed a Resolution in 1989 to work towards eradicating poverty by the year 2000, there were 482,000 more low-income children in Canada in 1996 [Battle 1997]. For all children under age 15, the poverty rate was 23.4 percent in 1995, up from 18.5 in 1990.

The upward trend was mirrored in the Kitchener CMA. The poverty rate for children under age 6 was 19.5 percent, up from 16.1 percent in 1990. The poverty rate for children under age 15 was 18.3 percent, up from 14.5 percent in 1990.

e. other factors

In the Kitchener CMA, 4,585 individuals or 1.1 percent of the population are of Aboriginal origin [Regional Municipality of Waterloo 1998]. The poverty rate for Aboriginal individuals over age 15 was 15 percent in 1990 in the Kitchener CMA; 1995 figures are not yet available [CCSD 1996].

In the Kitchener CMA, visible minorities comprised 8.5 percent of the population in 1995 (34,050 individuals) [Regional Municipality of Waterloo 1998]. In 1995, about 36 percent of the visible minority population was poor. The rate for children under age 6 in this population was 45 percent in 1995.

Income security programs

Statistics on unemployment and poverty tell one part of the story. It is also important to consider the income programs and social services available to low-income households. The social safety net is becoming increasingly threadbare.

High unemployment creates heavy pressure on income security programs, such as Employment Insurance and welfare. The new Employment Insurance program imposes tougher rules for qualifying and reduces the maximum length of benefits. Those who exhaust their EI benefits or who do not qualify often turn to Ontario Works (formerly General Welfare Assistance). Persons with disabilities now receive assistance under the Ontario Disability Support Program, but are not required to participate in workfare.

Figure 6 shows the average monthly caseload for General Welfare Assistance/Ontario Works for Waterloo Region between 1990 and July 1998. The figure represents caseload only; the number of dependents (i.e., spouses and children) is not included.

The sharp increase in caseload between 1990 and 1993 reflects the effects of the economic recession. The decline since 1993 results from improvements in the economy and from welfare cuts and changes in welfare eligibility. In October 1995, the Ontario government altered its calculation of family income to include adults residing in a house who did not have legal responsibility for children.

Welfare rules also can create barriers to self-sufficiency. A recent report by the Inter-Faith Social Assistance Reform Council discussed the difficulties in obtaining community start-up funds after living in an institution or hostel, the requirement that Ontario residents have health cards before receiving treatment and the exclusion of people with addictions from receiving disability supports [Balmer 1998]. While some welfare recipients succeed in moving from welfare to work, one local income support worker suggested that they usually find low-paying jobs unlikely to help them escape poverty [Goodwin 1998].

Inability to meet basic needs

People living in poverty often experience higher rates of illness, stress, food insecurity, inadequate housing and difficulty accessing community services. One of the most troubling correlates of poverty is an increase in food insecurity. The Food Bank of Waterloo Region’s 1997 Hunger Count survey of its 31 member agencies found that 99,422 people received emergency food hampers in Waterloo Region during 1997.

While this number represents a drop of seven percent since 1996, the demand is still seven percent greater than what it was in 1995 (the lowest point since 1992). Children under age 18 accounted for 46 percent (45,735) of the total number of food recipients.

Moreover, for the sixth year in a row, people in two-parent households used emergency food programs in greater numbers than people in single-parent families. While 58 percent of the recipients were on welfare, nine percent were working full time and four percent were working part time. As the Hunger Count survey notes: “Labour force participation is growing overall, but many people who are unskilled or semi-skilled still face a constant struggle for survival. In 1993, 1,902 recipients listed full-time work compared to 3,620 in 1997, a 90 percent increase over a four-year period” [Strickland 1998].

Cuts to social services

Even as local agencies face increased demand, they must cope with far fewer resources due to budget cuts. In 1995, local agencies serving primarily immigrants, low-income residents, abused women and children sustained an estimated $1.6 million in cuts [Social Planning Council of Kitchener-Waterloo 1996].

In a recent survey of social service providers, the Social Planning Council of Kitchener-Waterloo found that between October 1995 and June 1997, these organizations cancelled 31 programs, due primarily to funding cuts. Most of the cancelled programs were in the areas of counselling, outreach/support and education/employment training, even though demand for these programs had increased by an average 18 percent. More than half of the groups surveyed had experienced funding cuts and half were anticipating further reductions in 1998. An additional 20 programs were under review [Social Planning Council of Kitchener-Waterloo 1998: 3].

A similar study in Cambridge and North Dumfries found that 23 of 176 programs had been cancelled between October 1995 and spring 1997, while another 27 were under review or likely to be cancelled. The study found that many social service agencies were facing greater demand for their services despite staff reductions, and they were doing more crisis work than prevention [Social Planning Council of Cambridge and North Dumfries 1998].

The survey also noted a disturbing rise in poverty among agency clients. The increased demand for emergency food and clothing was tied directly to changes in eligibility criteria for welfare and to cuts in welfare benefits [Social Planning Council of Cambridge and North Dumfries 1998: 22].

Conclusion

Despite improvements in the local economy, poverty is continuing to grow in Waterloo Region. While many people are returning to work, the jobs sometimes do not pay enough to avoid poverty. The challenge for programs like Opportunities 2000 is to promote job creation and training as well as improvements in the quality and quantity of the available work.

Dwayne Hodgson


References

Balmer, Brice. (1998). Briefing Stories and Recommendations. Presented to the Minister of Community and Social Services by the Inter-Faith Social Assistance Reform Coalition. Kitchener, March 17.

Battle, Ken. (1997). Persistent Poverty. Ottawa: Caledon Institute of Social Policy, December.
Battle, Ken. (1996). Precarious Labour Market Fuels Rising Poverty. Ottawa: Caledon Institute of Social Policy, December.

Canadian Council on Social Development. (1996). A Statistical Profile of Urban Poverty. Ottawa.

City of Kitchener. (1998). “Solid Growth in 1998 Predicted For Waterloo Region.” Good Business Newsletter. Kitchener: City of Kitchener Economic Development Division, http://155.194.200.20/kitchener_bus_goodbus W98.html. Winter.

Essential Economics Corporation. (1998). Dynamic Profile of the Economy of Canada’s Technology Triangle: Interim Findings. Kitchener, January.

Goodwin, Carol (1998). “Waterloo Region: Workfare makes progress despite problems.” Kitchener-Waterloo Record, January 31.

Human Resources Development Canada. (1998). “Estimated Annual Unemployment Rate for Kitchener CMA.” Kitchener: Southwest Area Economist’s Office.

Perry, Leslie. (1997). Waterloo Region Social Services Department. Personal communication, October 27.

Regional Municipality of Waterloo. (1998). Statistical Profile (Draft). Kitchener: Planning and Culture Department, Regional Municipality of Waterloo.

Regional Municipality of Waterloo. (1995). Employment Services Division Annual Report 1995. Waterloo: Employment Services Division.

Smith, Larry. (1997a). Regional Municipality of Waterloo. Dynamic Profile of Canada's Technology Triangle. Essential Economics Corporation, October.

Smith, Larry. (1997b). Regional Municipality of Waterloo: Education in Waterloo Region. Waterloo Region: Essential Economics Corporation.

Social Planning Council of Cambridge and North Dumfries. (March 1998). 1997 Cambridge and North Dumfries Social Services: Inventory, Impact of Cuts and Implications. Cambridge.

Social Planning Council of Kitchener-Waterloo. (1998). Less With Less: Impact of Funding Reductions in Social Services in Kitchener, Waterloo, Wellesley, Wilmot and Woolwich. Kitchener, April.

Social Planning Council of Kitchener-Waterloo. (1996). “Common Sense Revolution Updates.” Kitchener-Waterloo Labour Review 1996. Kitchener.

Social Services Department, Regional Municipality of Waterloo. (1997). “General Welfare Assistance (GWA) Recipients for Waterloo Region including the Cities of Cambridge, Kitchener and Waterloo.” http:wwinet.hrdc-drhc.gc.ca/mi./unstats/sars/gwaat.html/. Kitchener Labour Market Information Unit, Human Resources Development Canada.

Statistics Canada. (1998a). “1996 Census: Sources of Income, Earnings and Total Income and Family Income.” The Daily, Ottawa, May 12.

Statistics Canada. (1998b). The Nation: 1996 Census of Population. Ottawa, May.

Strickland, Sean. (1998). Hunger Count 1997. A Report on Emergency Food Assistance in Waterloo Region. Kitchener: Food Bank of Waterloo Region, April.

Torjman, Sherri. (1997). “The Story Behind the Story: The Socioeconomic Context of Opportunities Planning.” In Brian Reid. From Welfare to Work: A Community Success Story in Creating Employment Opportunities. Cambridge: Community Opportunities Development Association, pp. 90-113.

Torjman, Sherri and Dwayne Hodgson. (1998). Poverty in Waterloo Region. Ottawa: Caledon Institute of Social Policy, February.

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