Canada is one of the richest and most developed countries in the world. But it’s not a perfect place. There’s poverty here and New Brunswick is the poorest among its provinces. So, why is New Brunswick so poor?
New Brunswick is one of Canada’s poorest provinces. This is due to various factors such as low productivity, small tax base and high public debts, the decline in the private sector and limited opportunities, and poor wages. All these make New Brunswick the province with the lowest household income.
However, it’s not only New Brunswick that has a fairly poor economy. In fact, all the Maritimes provinces have weaker economies compared to other provinces. Here, we look at the poverty rate in New Brunswick and why it’s that high.
How Poor is New Brunswick
New Brunswick is one of the smallest provinces in the country. It’s a maritime province with a population of less than 800,000. While it’s a beautiful place with amazing weather conditions and a great natural ecosystem, the province also faces significant economic challenges.
Child poverty in the province affected more than 1 in 5 children (21.8%) in 2018, showing that over 30,000 children live below the poverty line. This is according to the Human Development Council’s 2020 Child Poverty Report Card, which defined the poverty line to be an annual income of $30,877 or less for a single parent with one child or $37,816 for a household with one child. At this rate, the child poverty rate is higher than the overall average for Canada, which is 18.2%.
It’s not only the children that are facing hard times here. A significant number of seniors are also living in poverty. As far back as 2009, 10.9% of New Brunswick seniors live in poverty, and 13.8% of residents do too. In 2019, the percentage of the population with low income was 14.9%
Although the cost of living in the province is very cheap compared to the several provinces, many households are still struggling. 16.8% of households in New Brunswick spend over 30% of their income on housing, which means that housing isn’t affordable for those people. All these show the dire state of things in New Brunswick.
Causes of Poverty in New Brunswick
It’s not news that the poverty rate in New Brunswick is high, but what experts are still trying to figure out is the factors responsible for this. Here are some of those factors.
1. Lower Tax Base and High Debts
New Brunswick has a population of around 800,000, which makes it very small. Its small population limits the tax base of the provincial government, which means the government struggles to generate sufficient revenue. Due to its low tax base, the province has operated on deficit budgets for several years, thereby increasing its debts. According to Richard Vaillant, New Brunswick government spending doesn’t match the demographic reality of the province.
Budget deficits became a serious issue in 2008 after the great recession. New Brunswick was one of the provinces that struggled to recover from the recession, with only an average of 0.2% growth in GDP on average till 2014. Even though the provincial government increased spending with hopes of stimulating the economy, the results have been poor. Public debts per capita in New Brunswick are higher than that of Quebec and Nova Scotia.
2. Low Productivity
Productivity is also low in the province due to its shrinking labour force and population. New Brunswick was the only Canadian Province with a population decline between 2011 and 2016. Several young people are migrating out of the province in search of better opportunities. As a result, New Brunswick is the third-lowest province for labour productivity across all industries in 2019, with 48.3 chain 2012 Canadian dollars per hour to the GDP.
The ageing population has contributed to low productivity. The New Brunswick Labour Market Outlook explains the situation best. In 2009, the ratio of one senior of 65 years or higher to those of working age was 1 to 4.5 residents. By 2018, it was 1 to 3.1 residents, and according to projections, it’ll be 1 to 2.3 residents by 2027. As a result, the labour force is expected to shrink by 0.9% by 2027.
3. Poor Wages
Another factor responsible for the poverty in New Brunswick is the employment conditions. The province has the lowest minimum wage rate among Canadian provinces and territories at $11.75 per hour. This is a 5 Cents increase from the minimum wage in 2020. The minimum wage is so low that those earning minimum wage may still be below the poverty line.
According to Statistics Canada, an individual has to earn a yearly wage of around $21,000 to live above poverty. But with the current minimum wage, workers in New Brunswick earn only around $20,480.
4. Limited Opportunities and Decline in Private Sector
It’s also worth noting that the private sector’s contribution to the provincial economy has substantially reduced. This means that job opportunities in the private sector for residents are limited and most people work in the public sector.
The major contributors to the New Brunswick economy are mining, forestry, fishing, manufacturing, and agriculture. But there has been a significant decline in the contributions of these sectors over the years. For example, the mining industry, worth about 900 million in 2010, dropped to around $350 million by 2014. This alone affected the province’s economy significantly, and it also meant lesser opportunities.
In addition, the dependence of major industries in the province on limited natural resources also affects long-term economic growth. Most cities depend heavily on the industries in them, and the closure of these industries after there’s nothing left to extract or mine affects everyone. For instance, the closure of several mines, paper, and lumber mills in Miramichi in the past century continues to affect it to this day.
New Brunswick is a poor province due to various socio-economic factors. The aging population, decline in the private sector, poor employment conditions, etc., are some of the factors that led to the high poverty rate.