Rising cost of living is underestimated for the poorest

17 June 2020

Iris study on inflation inequality

Mindful of the professional and financial well-being of its members, the Fédération du personnel de soutien scolaire (FPSS-CSQ) gave the Institut de recherche et d’informations socio-économiques (IRIS) a mandate to measure the impact of inflation on the lowest-paid workers, which includes the majority of its 30,000 members.

“We’ve been saying it for a long time.  The impact of inflation in significantly greater for our members who devote more of their budgets to basic needs.  It was time to measure this impact on Quebeckers, because it has been widely studied elsewhere in the world.  That was the purpose of this study.  But I must admit, the results are much more worrisome than I thought they would be,” says FPSS-CSQ President Éric Pronovost.

Using special data from Statistics Canada, the study shows that households of two or more people with a total annual income between $0 and $70,000 experienced an increase of over 30% in the cost of their market basket between 1999 and 2019.  Households made up of two or more people, each with a salary in excess of $110,000, experienced a cost increase of 24%.

“We’re talking about a 6% difference for low-income households.  Or an increase 1 and a quarter greater.  In what universe is it normal for the less fortunate to be paying more for their basic needs?” laments Pronovost.

Concrete repercussions

As a concrete illustration of what the study reveals, let’s compare the impact of this inflation disparity on the salary of a caretaker, class II earning an annual salary of close to $38,000, to that of a director general of a service center (formerly called a school board) earning an annual salary of more than $150,000.

When you adjust each salary to the average inflation rate, instead of protecting everyone’s purchasing power, inequality is increased.  And since the cost increase of the market basket in the poorest households is greater than in rich households, an even more significant adjustment should be made to the former.  The IRIS study shows that over a period of 20 years, this underestimation of inflation conceals an additional income gap of more than $3,000.

Possible solutions!

Aside from the alarming findings, the IRIS study highlights the usefulness of measuring cost of living increases which are differentiated according to income levels.  This makes it possible to adjust economic and social variables (wages, social programs and tax credits) taking into account purchasing power protection for various sorts of families.

This is also why the FPSS-CSQ is asking the government, in its 2020 negotiating demands, that wage increases for low-income school support staff come in the form of dollars rather than percentages.

“Even when our wages and benefits increase, the rate of growth is insufficient to match the cost increase of various products.  To compensate for higher cost of living growth, wage increases in dollars are more significant for our members. Dollar-based wage increases have more of an impact for our members,” says Pronovost.

This is why Éric Pronovost reiterates to the government the importance of dollar-per-hour increases for its members.  Because, remember, school support staff are part of the solution!

To read the IRIS study