A record number of Alberta households now rely upon income support to meet their basic financial needs, benefits that are set to erode over time following new measures introduced in last week’s provincial budget.
In August, there were close to 62,000 income-support caseloads in Alberta, the highest number since the current version of the program went into effect in 2005. It’s a sign that Alberta’s labour market continues to struggle, five years after the oil shock started to decimate thousands of jobs across the province.
The United Conservative Party has announced it will de-index the benefits, meaning payouts won’t increase every year with inflation, which was set to happen for the first time in January. The move, outlined in the provincial budget, is part of a broader curb on spending to help bring Alberta’s books back to balance.
“As part of our budget process, [Ministers] had to look at a number of things ... to try to identify areas where we could find some cost savings,” Rajan Sawhney, Minister of Community and Social Services, said in an interview.
The pause is “only temporary” and will resume once Alberta gets its “financial house in order,” Ms. Sawhney said, without providing specific benchmarks.
Pausing indexation is “actually pretty serious,” said Ronald Kneebone, an economics professor at the University of Calgary. The UCP projects inflation will rise by nearly 8 per cent over the course of its mandate – meaning, those receiving benefits will see an equivalent reduction in their purchasing power, Prof. Kneebone added.
Despite the darkest days of Alberta’s recession being well in the rear-view mirror, the number of income support caseloads continues to rise. (Each caseload represents a household, ranging from single individuals to two-parent families with children.)
The increase in caseloads has been largely driven by those who are single and available for work, according to provincial data. Single adults expected to work can receive as much as $745 a month under Alberta Works for “core" items that include shelter, food and other living costs. Benefits increase with household size, and can be received in conjunction with many other forms of provincial and federal assistance.
However, the number of Albertans receiving Employment Insurance benefits has been falling as income support caseloads have risen, suggesting some people have moved off EI as their benefits have been exhausted, and onto social assistance.
“We don’t actually have data that says when John Smith left EI, he moved on to social assistance,” said Prof. Kneebone. “But the data is certainly suggestive of that."
About half of those on income support are located in the Edmonton area (the province’s catchment area for Edmonton social assistance is much broader than the city itself).
Prof. Kneebone suspects many single people moving onto income support are former oil-service workers, “many who would be located in Edmonton and north of Edmonton.”
Dan Edwards has seen the fallout up close, as executive director of the Wood Buffalo Food Bank Association in Fort McMurray.
“You’re seeing people who were making really great money and had amazing jobs, suddenly don’t have it,” Mr. Edwards said.
As a result, those accessing the food bank’s services now include more people directly affected by oil-and-gas layoffs, he said.
Over the UCP’s mandate, spending on employment and income support is projected to decline by close to $200-million. These savings, said Ms. Sawhney, are “predicated on economic recovery” and a subsequent boost in hiring that reduces caseloads.
Historically speaking, that’s generally been the case – as the percentage of people employed has risen, the rate of those on income support has declined. Not this time, Prof. Kneebone said.
His research has shown that, starting in 2016, the link between hiring and caseloads has become weaker. He suspects this is because, during previous boom and bust cycles, laid-off oil workers would eventually get rehired in the industry.
This time around, “there are new jobs being created, but they are not jobs in the oil-service sector,” Prof. Kneebone said.
Ms. Sawhney noted the government’s spending targets are subject to revision.