I read your article on low income earners. A key hurdle in the equation is how to compete with places like Mexico. As more manufacturing plants move offshore, we are left to wonder – are we in a race to the bottom? Because there are lower wage places than Mexico if Mexicans start demanding higher wages. It’s not clear where this is going.
You mention lowering taxes on the first $20,000 of taxable income. I suggest we eliminate tax on the first $20,000. That will not discourage people from working and every cent will be pumped back into the economy.
We spend a lot on physical and intellectual infrastructure and corporations can pick and choose where they pay taxes. How do we recoup our investment?
Several years ago, I did a little consulting project for the province looking at two industries – biotechnology and environmental industries. I interviewed the head of the National Research Council and he said the biotech industry doesn’t care what the wages are. They want the talent. A fresh grad at that time earned in excess of $100,000 per year and that was no problem. The overall results of my research indicated Nova Scotia has a strategic advantage that is not found in many places. We have a well-educated workforce, research institutes with province-wide capabilities, stunning scenery, an active arts community and so forth. We have the ability to arrange clusters that are embedded in ways that once established, are likely to stay put. High earners are looking for lifestyle and we have it in spades. Knowledge based industries can be enticed to set up shop here. I provided my recommendations and one in particular, was to stop advertising Nova Scotia as a place where industry can take advantage of low wages. That is not our strategic advantage but it was on the front page of our Economic Development website.
We have to drop the “poor Nova Scotia” narrative. We are more than that. We need leadership that recognizes the riches we are blessed with in this province. We don’t need to pay people to come here, we need a kick-ass marketing strategy that let’s the world know we have a lot to offer. And that will be no idle boast.
There is one subject that gets scant attention and that is the deplorable poverty in Nova Scotia of those who have fallen on hard times and those who get disability income.
Here is an example for a disability income. The annual income is $9228.The rate for shelter was established in 2001 at $535/month and it has not been raised since. This covers rent and utilities. There is no allowance for clothing, household maintenance or grooming. There is no allowance for laundry and it costs $2 per load for washing and $2 per load for drying. If you do the math, you will see there is not much left for maintaining a life after shelter is paid and certainly, there is no dignity afforded in this budget. With a note from a family doctor or a psychologist, there is an additional $29/month allotted for phone and $70/month for a bus pass. Now the province is going to take away the allowances for phone and bus passes.
Instead, people will be expected to go somewhere (it is not clear where) to borrow a phone when needed and they will be expected to walk everywhere.
The number of pay phones is declining in the province and they may be located miles away from where people live. Because it is not possible to live on this allowance, most people on government assistance rely on the Food Bank to supplement their income. In fact, the Food Bank is now a structural part of Nova Scotia’s economy. Users can go to the Food Bank once per month for processed food, which does not provide the kind of nutrition needed to maintain health and they are expected to walk miles to pick it up and carry it home unless they can arrange a ride from someone.
The 80% of cost allowed for minimal dental care is not really accessible because it is difficult to raise the other 20% needed to get the service.
Many people living in these circumstances do not have family or friends to rely upon for extra help. One can only imagine the stress these people live under just trying to survive.
Successive governments have failed to address the destitution of our most vulnerable. Instead, they have chosen to cut their budgets. Howard Epstein reports the NDP, known to excel in their support of social services, issued a communications standard for the Department of Community Services instructing employees to not use the word “poverty” or to speak of “the poor”. They have been warehoused for years. Now they are being “disappeared” from view in terms of how they are referred to by government agencies as well as their connections with the outside world in terms of phones and transportation allowances.
We read of the steady rise of people in the autistic spectrum and many are part of the next wave of people who will be users of social services. A number of users have mental health issues or conditions that make it difficult for them to fit in to the established social order. Many could be contributing members of society with an intelligent and compassionate approach to their situations. Many are square pegs that cannot be squished into round holes no matter how hard we push. Some are the first wave of the autistic spectrum who were not diagnosed in their earlier years because we did not have the ability to detect the condition. Some have simply fallen on hard times. In other words, it is difficult to generalize the reason they are where they are. I don’t have the numbers, but I suspect they make up a fairly significant part of the health budget. Poor food and high stress are precursors to poor health. We know that investing ounces in prevention yields pounds in cures and yet successive governments fail to take effective measures. By ignoring this problem, we are paying more than we should and there is no accounting for the misery of those stuck in this Dickensenian scenario.
I am not suggesting they should live in the lap of luxury. I am advocating for a realistic approach to this overlooked segment of society.
I have provided only a very broad and general overview of the situation; however, a good many productive and effective solutions are available.
I agree with your analysis Bill and have read of two other similar ideas in the same vein of supporting low income earners.
One comes from UKIP – who have pledged to index zero percent income tax to the minimum wage. So if you are fully employed at 40 hours/week, 52 weeks a year @ minimum wage you are incentivized to work by paying no income tax on that. It’s a bit tricker here in Canada to implement due to the Federal/Provincial split but it would put money back in the pockets of those who need it most. It would definitely not be revenue neutral without adjusting spending elsewhere however.
Another idea comes from Milton Friedman – a negative income tax. A short paragraph cannot do the concept justice so I’ve linked this video: https://www.youtube.com/watch?v=xtpgkX588nM
The idea is that governments give each person who earns less than a determined amount (i.e. minimum wage or ‘liveable wage’) a negative income tax…. The governments would then cut out other forms of low income workers assistance – i.e. they get out of the business of social housing. He makes a point of how the then current system of 1968 punishes people for trying to get a job while on assistance by clawing back money here and there (sound familiar?).
Finally of course, we could index our tax brackets to inflation like other provinces do…
In my earlier comment I alluded to the potential benefits of governments leading by example as opposed to what we so very frequently read/hear about..An example of the situation I mentioned very recently (and currently) was dealt with in the press….To wit: Politicians, both Federal and Provincial,changed their pension situations so that those retiring after this year will wait an additional ten years before commencement of their generous pensions.So we now are seeing sudden announcements of retirements before the new situation comes into effect..In the instance of the recent Provincial examples, there might well be some reason to suspect that some early advice could have become available shortly before hand…In most, if not all of these situations, personal and quite possibly valid reasons are announced but they just might not provide a great incentive for those working part time at minimum wage jobs to knuckle down so that they can contribute more to the system….
Are we talking about lower income ‘earners’ or ‘producers’?
On ‘the road’ of life workers have every opportunity to ‘compete’ in what has become rather more of a global workplace. It is becoming more apparent that ‘competitive’ individuals, must take to ‘the road’, for ‘supportive’ ‘guarantees’ are not relieving income inequalities.at home. (As for Alberta etc. which contemplate increasing minimum wages; just wait and watch their productivity after the ‘road’ becomes well travelled… . These minimum arrangements are known to primarily harm the ‘earners’.)
Prepare our youth. We already ‘subsidize’ education. Perhaps that ‘subsidy’ is misspent?
Thank you for raising this troubling issue Bill .Your suggested methods of attacking the problem appear to be good ones….We can afford to improve the situation if govt (s) at all levels, would clean up their act as regards financial wastage (and worse that we read about on just about a daily basis) and direct these funds to incentive programs to help the citizens in question to improve their lot i.e. training, taxation and supplementary income support on a temporary basis…This could produce long term benefits for all…
In this day and age , we can have more far better management of every government expense simply by using technology better . Government should be doing more to be transparent about every program and be able to show what it costs and what it produces . There are many ways to support the lower income earners . At the same ,we can have those who need support also give something back in return to boost their support and that would be by giving them an opportunity to perform “community service”, where ever they have a skill or just can provide time. Those hours give them credits to earn more but also as credits to maybe government or government contracted job opportunities, like for summer and winter seasonal jobs . I would expect that single parents are a large number of the total we assist . Too low an income for them forces them into situations where it can limit their ability to not only get work , but to also get their kids to school . We need to do more income testing and have more flexibility based on locations and whether there is any “family support” . Deferred taxes would be better than this CAP system . Have bulk buying systems for those on low income that need building repairs or upgrades . Give contractors “credits” as well for doing such work so the more they do , the more they are eligible for more work. What about reaching out to unemployed graduates to offer them “apprentice ” work in government as part time or seasonal workers?? We do nothing to try to match the student to the trade to try to ensure the aptitudes are even taken into account . Employers should be more involved in the trades training /NSCC to ensure the enrolled are better matched to a potential employer.
Morning Bill,
Best of luck in your new position.
Keith.
Saint Andrews, NB
keith ltimas | July 25, 2015 |
I read your article on low income earners. A key hurdle in the equation is how to compete with places like Mexico. As more manufacturing plants move offshore, we are left to wonder – are we in a race to the bottom? Because there are lower wage places than Mexico if Mexicans start demanding higher wages. It’s not clear where this is going.
You mention lowering taxes on the first $20,000 of taxable income. I suggest we eliminate tax on the first $20,000. That will not discourage people from working and every cent will be pumped back into the economy.
We spend a lot on physical and intellectual infrastructure and corporations can pick and choose where they pay taxes. How do we recoup our investment?
Several years ago, I did a little consulting project for the province looking at two industries – biotechnology and environmental industries. I interviewed the head of the National Research Council and he said the biotech industry doesn’t care what the wages are. They want the talent. A fresh grad at that time earned in excess of $100,000 per year and that was no problem. The overall results of my research indicated Nova Scotia has a strategic advantage that is not found in many places. We have a well-educated workforce, research institutes with province-wide capabilities, stunning scenery, an active arts community and so forth. We have the ability to arrange clusters that are embedded in ways that once established, are likely to stay put. High earners are looking for lifestyle and we have it in spades. Knowledge based industries can be enticed to set up shop here. I provided my recommendations and one in particular, was to stop advertising Nova Scotia as a place where industry can take advantage of low wages. That is not our strategic advantage but it was on the front page of our Economic Development website.
We have to drop the “poor Nova Scotia” narrative. We are more than that. We need leadership that recognizes the riches we are blessed with in this province. We don’t need to pay people to come here, we need a kick-ass marketing strategy that let’s the world know we have a lot to offer. And that will be no idle boast.
Heather | July 5, 2015 |
There is one subject that gets scant attention and that is the deplorable poverty in Nova Scotia of those who have fallen on hard times and those who get disability income.
Here is an example for a disability income. The annual income is $9228.The rate for shelter was established in 2001 at $535/month and it has not been raised since. This covers rent and utilities. There is no allowance for clothing, household maintenance or grooming. There is no allowance for laundry and it costs $2 per load for washing and $2 per load for drying. If you do the math, you will see there is not much left for maintaining a life after shelter is paid and certainly, there is no dignity afforded in this budget. With a note from a family doctor or a psychologist, there is an additional $29/month allotted for phone and $70/month for a bus pass. Now the province is going to take away the allowances for phone and bus passes.
Instead, people will be expected to go somewhere (it is not clear where) to borrow a phone when needed and they will be expected to walk everywhere.
The number of pay phones is declining in the province and they may be located miles away from where people live. Because it is not possible to live on this allowance, most people on government assistance rely on the Food Bank to supplement their income. In fact, the Food Bank is now a structural part of Nova Scotia’s economy. Users can go to the Food Bank once per month for processed food, which does not provide the kind of nutrition needed to maintain health and they are expected to walk miles to pick it up and carry it home unless they can arrange a ride from someone.
The 80% of cost allowed for minimal dental care is not really accessible because it is difficult to raise the other 20% needed to get the service.
Many people living in these circumstances do not have family or friends to rely upon for extra help. One can only imagine the stress these people live under just trying to survive.
Successive governments have failed to address the destitution of our most vulnerable. Instead, they have chosen to cut their budgets. Howard Epstein reports the NDP, known to excel in their support of social services, issued a communications standard for the Department of Community Services instructing employees to not use the word “poverty” or to speak of “the poor”. They have been warehoused for years. Now they are being “disappeared” from view in terms of how they are referred to by government agencies as well as their connections with the outside world in terms of phones and transportation allowances.
We read of the steady rise of people in the autistic spectrum and many are part of the next wave of people who will be users of social services. A number of users have mental health issues or conditions that make it difficult for them to fit in to the established social order. Many could be contributing members of society with an intelligent and compassionate approach to their situations. Many are square pegs that cannot be squished into round holes no matter how hard we push. Some are the first wave of the autistic spectrum who were not diagnosed in their earlier years because we did not have the ability to detect the condition. Some have simply fallen on hard times. In other words, it is difficult to generalize the reason they are where they are. I don’t have the numbers, but I suspect they make up a fairly significant part of the health budget. Poor food and high stress are precursors to poor health. We know that investing ounces in prevention yields pounds in cures and yet successive governments fail to take effective measures. By ignoring this problem, we are paying more than we should and there is no accounting for the misery of those stuck in this Dickensenian scenario.
I am not suggesting they should live in the lap of luxury. I am advocating for a realistic approach to this overlooked segment of society.
I have provided only a very broad and general overview of the situation; however, a good many productive and effective solutions are available.
Heather | July 5, 2015 |
I agree with your analysis Bill and have read of two other similar ideas in the same vein of supporting low income earners.
One comes from UKIP – who have pledged to index zero percent income tax to the minimum wage. So if you are fully employed at 40 hours/week, 52 weeks a year @ minimum wage you are incentivized to work by paying no income tax on that. It’s a bit tricker here in Canada to implement due to the Federal/Provincial split but it would put money back in the pockets of those who need it most. It would definitely not be revenue neutral without adjusting spending elsewhere however.
Another idea comes from Milton Friedman – a negative income tax. A short paragraph cannot do the concept justice so I’ve linked this video: https://www.youtube.com/watch?v=xtpgkX588nM
The idea is that governments give each person who earns less than a determined amount (i.e. minimum wage or ‘liveable wage’) a negative income tax…. The governments would then cut out other forms of low income workers assistance – i.e. they get out of the business of social housing. He makes a point of how the then current system of 1968 punishes people for trying to get a job while on assistance by clawing back money here and there (sound familiar?).
Finally of course, we could index our tax brackets to inflation like other provinces do…
George Hornmoen | June 20, 2015 |
In my earlier comment I alluded to the potential benefits of governments leading by example as opposed to what we so very frequently read/hear about..An example of the situation I mentioned very recently (and currently) was dealt with in the press….To wit: Politicians, both Federal and Provincial,changed their pension situations so that those retiring after this year will wait an additional ten years before commencement of their generous pensions.So we now are seeing sudden announcements of retirements before the new situation comes into effect..In the instance of the recent Provincial examples, there might well be some reason to suspect that some early advice could have become available shortly before hand…In most, if not all of these situations, personal and quite possibly valid reasons are announced but they just might not provide a great incentive for those working part time at minimum wage jobs to knuckle down so that they can contribute more to the system….
bob mackenzie | June 20, 2015 |
Are we talking about lower income ‘earners’ or ‘producers’?
On ‘the road’ of life workers have every opportunity to ‘compete’ in what has become rather more of a global workplace. It is becoming more apparent that ‘competitive’ individuals, must take to ‘the road’, for ‘supportive’ ‘guarantees’ are not relieving income inequalities.at home. (As for Alberta etc. which contemplate increasing minimum wages; just wait and watch their productivity after the ‘road’ becomes well travelled… . These minimum arrangements are known to primarily harm the ‘earners’.)
Prepare our youth. We already ‘subsidize’ education. Perhaps that ‘subsidy’ is misspent?
gordon a.... | June 19, 2015 |
Thank you for raising this troubling issue Bill .Your suggested methods of attacking the problem appear to be good ones….We can afford to improve the situation if govt (s) at all levels, would clean up their act as regards financial wastage (and worse that we read about on just about a daily basis) and direct these funds to incentive programs to help the citizens in question to improve their lot i.e. training, taxation and supplementary income support on a temporary basis…This could produce long term benefits for all…
bob mackenzie | June 19, 2015 |
Well said Bill! A very well reasoned point of view.
Hector Jacques OC | June 19, 2015 |
In this day and age , we can have more far better management of every government expense simply by using technology better . Government should be doing more to be transparent about every program and be able to show what it costs and what it produces . There are many ways to support the lower income earners . At the same ,we can have those who need support also give something back in return to boost their support and that would be by giving them an opportunity to perform “community service”, where ever they have a skill or just can provide time. Those hours give them credits to earn more but also as credits to maybe government or government contracted job opportunities, like for summer and winter seasonal jobs . I would expect that single parents are a large number of the total we assist . Too low an income for them forces them into situations where it can limit their ability to not only get work , but to also get their kids to school . We need to do more income testing and have more flexibility based on locations and whether there is any “family support” . Deferred taxes would be better than this CAP system . Have bulk buying systems for those on low income that need building repairs or upgrades . Give contractors “credits” as well for doing such work so the more they do , the more they are eligible for more work. What about reaching out to unemployed graduates to offer them “apprentice ” work in government as part time or seasonal workers?? We do nothing to try to match the student to the trade to try to ensure the aptitudes are even taken into account . Employers should be more involved in the trades training /NSCC to ensure the enrolled are better matched to a potential employer.
peter S | June 19, 2015 |