Up to 2021, Stephanie S. was living what many consider a stereotypical working-class lifestyle.
She was able to make mortgage payments on time, cover necessary expenditures, and have some money left over at the end of each month for savings and investments.
Since inflation started escalating in early 2022, things took a turn for the worse.
Starting in March 2022, the Bank of Canada conducted 8 consecutive rate hikes that changed the dynamics of thousands of households across the country – Stephanie’s included.
By the end of these hikes, her monthly mortgage payment had gone up from $2,500 to $3,600.
For Stephanie and her husband, this increase depleted the savings they would usually have at the end of each month, and forced them to dip into their TFSA to meet day-to-day expenditures.
In 2023, Stephanie became one of thousands of Canadians that approached a food bank for the first time.
Stephanie’s story is a microcosm of a national trend that has seen food bank usage increase in each year since 2020.
In March 2023, The Daily Bread Food Bank reported a total of 270,000 visits for the month – the highest in its history over four decades.
Rewinding back to pre-pandemic, the corresponding number was 65,000.
Today, 1 in 3 people at food banks are first-time visitors.
From its initial days as a temporary measure to catch people in a ‘social safety net’, food banks today have become a growing component of Canadians’ everyday lives.
By the Numbers
Over the past few weeks, we had discussions with dozens of food banks to learn about the challenges they are currently facing.
A key theme we saw was an upward trend in usage at all food banks.
Here are some of the truly hard-hitting statistics they have shared:
- 18,394 individuals accessed emergency food support in January 2023 (up from 17,869 in December 2022)
- 1 in 14 Waterloo households are struggling to put food on the table. Last year, that number was 1 in 20 households
- 35% of individuals supported are under the age of 18
- 5.3 million pounds of fresh, frozen and non-perishable food has been distributed to community programs and agency partners throughout Waterloo Region
- London Food Bank served 13,000+ unique individuals in January 2023 (up from ~11,500 in December 2022)
- 4987 households served in January 2023 (up from 4736 in December 2022)
- Unique individuals served up 45% in 2022 vs 2021, while pounds of food served up 33% for the same period
- The organization has seen a ~10% increase in demand for food from all demographics, single people, children and larger families
- The food bank reported a marked increase in immigrants and international students, who they say make up a large percentage of new visitor volumes
- The organization helped 275 families (488 individuals) in February 2023, the corresponding number in February 2022 was 194 families (298 individuals)
- In February 2023, 122 visitors were children aged 17 and under, the corresponding number in February 2022 was 42
- +20% growth in number of visitors from December 2022 to February 2023
- Average of 1,244 new food bank clients registered each month over the last 6 months (including a record 1,721 in January)
- Helped 7,273 people in the area (5.4% increase from the same period last year)
- 16,300 food hampers distributed
- 7,813 households served in 2022 (up from 7,574 in 2021)
- 13,677 individuals served in 2022 (up from 11,906 in 2021)
- 5.9 million kilograms of food distributed in 2022 (+50% from pre-pandemic levels)
- $3.16M in total food purchases (+180% from pre-pandemic levels)
How Did We Get Here?
To understand how things came to a head recently, we can trace back to four key factors that were brewing in the Canadian economy.
Factor #1: Inflationary Impacts
The government’s rampant spending in the years leading up to and during COVID-19 should have been an early warning sign.
Social assistance programs such as CERB and CEWS were aimed to uplift the most vulnerable members of society, and it can be argued that the absence of such programs would have left those communities in an even more precarious position today.
Where the pot truly boiled over was the immediate aftermath of COVID-induced measures.
One of the biggest impacts of COVID was on global labour markets.
Many economists believe that a demographic shift that was decades in the making was accelerated by the pandemic as older baby boomer workers started to exit the workforce, leaving a gap with fewer young people available to take their place.
The second, and arguably more pressing, impact was on global supply chains.
The extent of the fragility of key supply chains such as food and medicine was an unknown– until it wasn’t.
With rigorous COVID prevention measures in place, these supply chains were immensely challenged with a full recovery still some distance away.
Meanwhile, demand for products has stayed constant or even grown in many cases.
Ultimately, the imbalanced dynamics of demand and supply results in higher prices charged by suppliers to retailers, which are then passed on to end customers as cost increases i.e., inflation.
In the years leading up to COVID, the government had done a reasonably good job of keeping inflation in check between the 2% to 3% range that is viewed as ideal for a growing economy.
Since supply chain issues entered the equation, inflation climbed to historical levels not seen in over 30 years, and peaked at a whopping 8.1% in June 2022.
Factor #2: Stagnating Wage Growth
While outsized inflation is a problem in itself, it becomes vastly more exaggerated when wage growth fails to keep pace.
The inflation equation ultimately boils down to a simple tenet: if Good X cost $10 last year and costs $10.20 this year, the inflation rate is 2%.
In a healthy, growing economy, higher prices charged on goods and services would be offset by higher wages year on year.
A person that earned $10 an hour last year (using hypothetical numbers for simplicity) would ideally gain a wage increase of 2% or more this year that would enable them to cover the increase in prices.
When the wage increase is substantially lower than the inflation rate, customers have to dip into their savings.
That can quickly become a problem if the situation does not change over a sustained period of time.
Since inflation first breached the 5% mark in January 2022, the equivalent wage growth in Canada has lagged behind by a meaningful amount.
The chart below shows the true extent of this divergence.
Factor #3: Rental Market Increases
As the Bank of Canada raised its benchmark interest rate (i.e., the rate that mortgage companies use as a benchmark for the mortgage interest rate they charge to borrowers), home ownership became progressively more expensive through the course of 2022.
With prospective homeowners dissuaded, the rental market absorbed the brunt of the housing demand.
Based on an April 2023 report from Rentals.ca, average rents for a 1-bedroom apartment increased by 16.9% year-on-year and 15.6% for a 2-bedroom apartment.
When compared against the equivalent wage growth in the same period as above, it is clear that the cost of housing has substantially increased as a proportion of total disposable income.
Homeowners such as Stephanie have faced increasingly higher interest costs on their monthly payments while renters have had to contend with double-digit market increases while average wages have only risen by low single-digits.
Factor #4: Recent Layoffs
Another factor impacting food bank usage recently has been the advent of layoffs that have been most prevalent in the technology sector, and are extending to other industries as well.
Over the last six months, hundreds of companies on both sides of the border have announced redundancies to adapt their businesses to the new macroeconomic environment and customer demand dynamics post-COVID.
Thousands of Canadians have been impacted by this movement, and coupled with the factors listed above, have contributed to rising food bank usage for daily meals.
How Does This Impact Canadians?
The higher costs of food due to inflation mean that food banks face a higher cost to operate their services, thereby making them potentially unfeasible to run in the long-term.
Since food banks are primarily used to help alleviate the challenges faced by potentially vulnerable members of society including low-income and differently-abled populations, there is a worrying risk of hundreds of thousands of Canadians going hungry if food banks are not able to acquire required funding.
However, increased food bank usage has direct and indirect social and economic consequences for all Canadians.
Food banks rely heavily on donations from the broader society, and the above-mentioned factors impact all Canadians.
A dearth of funding can potentially imply longer-term consequences.
Furthermore, a study by students at Western Washington University picked up a strong correlation between the prevalence of food banks and the incidence of crime.
A well-supplied and efficient food banking system was found to drive tangible improvements to the overall crime rate, specifically burglary, particularly in communities that had a greater number of lower-income households.
What Can You Do to Help?
Food banks across the country are in crisis mode right now.
As Kim Wilhelm, interim CEO of The Food Bank of Waterloo Region said, “It’s no secret the past few years have been difficult for many individuals and families across Canada, including Waterloo region.
People are making tough choices—choosing between paying rent, putting gas in their car to get to work, or putting food on the table.
Last year, we saw more than 40,500 people accessing emergency food through the Community Food Assistance Network, a system of more than 120 community programs and agency partners working together to provide food, support, and services to people in need.
That’s a 17 per cent increase over 2021, and we expect 2023 to be even busier.”
As members of the community, here is how you can help:
1. Volunteering at local food banks
Besides the availability and cost of food products, the major challenge that food banks can face is labour shortage.
If you can find out about food banks in your neighbourhood and donate your time for service, that can go a long way towards helping these programs remain operational and meet growing community needs.
2. Donating dollars
While food banks are non-profits, there are still expenses to keep facilities running.
Make no mistake though, most food banks make the stretch every dollar donated.
An example from our list above noted that $0.94 of every $1 donated goes towards their food hamper program, a testament to delivering on their mission.
Any amount is welcome and can help the broader goal.
3. Donating high-protein meals and fresh fruit
Healthy, nutritious food is always welcome at food banks.
To find out about how and what you can donate to your local food bank, it is best to contact each individual organization directly.
The organization can offer information about their specific needs that ultimately amplifies your impact.
4. Advocating for more affordable housing facilities and disability income support
As aforementioned, food bank shortages impact the most vulnerable members of society disproportionately.
If you are driven to make a change in your community, a good start is by gathering support for affordable housing and other government supports targeted towards these populations that directly address their core needs.
Over the past year, food banks have worked tirelessly to meet the alarming growth in the number of visitors.
Hundreds of food banks across the nation have adapted admirably to do more with less.
They deserve help.
The time is now to help make a change that lasts, and ensure that thousands of Canadians are well-fed along the way.