Financial Hamster Wheel

November was ‘Financial Literacy Month’, and that prompted a very good opinion piece in The Province. Mike Schilling, CEO of Community Savings, made the point that ‘financial literacy’ is not the priority issue for many people without a living wage or adequate income. Mike challenged our normalization of institutionalized low wages, predatory lending, and barriers to social mobility. He called out the larger systems that direct our eyes elsewhere. I was pleased to see Mike turn the conversation from financial literacy to ‘financial viability’.

“Low-income households are trapped in cycles of debt not because they have mismanaged their money, but because they do not have money in the first place. Payday loans exist because people cannot make ends meet.”

But as Mike states, credit is not the real answer. Credit should be there when needed, but incomes need to be higher. People need reasonable incomes to cover basic living costs. The stories about low paid care-aids in long-term care homes (holding down two and three jobs) are too real. There are too many people struggling with minimum wages, precarious employment, and high housing costs. More than 4 million Canadians are ‘precariously employed‘.

Stats Canada trend data is referenced in one National Observer article, “Between 2005 and 2015, employment incomes for the lowest 20 per cent of income earners in B.C. dropped by 7.5 per cent, using the 2015 dollar. At the same time, incomes for the top 20 per cent grew by 7.4 per cent, the federal statistics agency confirms.” Growing income inequality is the big issue.

Income disparities are converted into wealth disparities. ‘Land wealth’ in BC was surveyed as of 2016. The top 20% of households by income owned 62% of the value in principal residences, and 80% of the net value of holdings in “other real estate”. The top 40% of households by income owned 87% and 95% of these respective real estate categories (see Alex Hemmingway).  The deck gets stacked against those with lower incomes.

Daphne Bramham highlights the child poverty story in light of COVID-19. The real progress made with an improved Federal child tax benefit has been great, but low income levels and income insecurity remain.

I agree with Mike. Yes, employers need to pay living wages. But governments have to set the bar higher when it comes to both wages and benefits. Benefits such as sick leave, which was the big reason for COVID-19 transmission in meat packing plants when workers did not want to go without pay if they stayed home.

Yes, as he says, more affordable housing has to be built. This is a direct challenge to a host of government policies that have failed lower income households.

And yes, all businesses have to take down the barriers that trap people in poverty. Mike is critical of the way financial institutions may insist on things like clean credit checks and security deposits that force people to go the street to the loan sharks. Requirements that are ‘easy’ for the affluent may not be so ‘easy’ for those on low incomes. Financial institutions, retailers, landlords and others all need to be more critical of the ways they are complicit in ‘the poverty game’.

I think it was great to see this opinion piece. Credit unions need to step up, and speak up in public debates, to ensure all families, all seniors, all Canadians, have living wages and/or incomes.