After a strong year of political action in PEI, residents can have hope that the standard of living in the province is on the rise. While report card grades may not reflect a population that is thriving, if PEI continues in this direction, low incomes and poverty should soon be improved.

Poverty Overview

PEI has a poverty rate of 9.8 per cent which is relatively similar to that of Canada as a whole (9.9 per cent). Between 2015 and 2021, poverty rates in PEI declined by almost half, and about 7 per cent faster than the national average.

Despite the province’s being relatively on par with Canada as a whole in terms of overall poverty rates, people from some key demographics in PEI are struggling with higher rates of poverty. The poverty rate for children in PEI is 10.2 per cent, for example, which is noticeably higher than the national rate of 8.5 per cent. Similarly, seniors (aged 65+) living alone have a 12.3 per cent poverty rate, while the national average is 10 per cent. For all adults who live alone, including seniors, the poverty rate is 21 per cent. While this number is similar to the national average, it is a worryingly high figure that merits the government’s attention.

Single parents also continue to struggle, just as they do across all Canadian jurisdictions. A single adult caring for a child or children had a poverty rate of 15 per cent, which is similar to the national rate of 14.4 per cent, and 15 per cent of all food bank visits in the province were from single-parent families. The poverty rate for couples with children in PEI is 5.3 per cent.

When it comes to poverty reduction in PEI, solutions to reduce food costs, improve health care, reduce taxes on households with low incomes, and expand affordable housing would make the biggest impact. Among these solutions, health care stands out as an important issue, with 85 per cent (the highest in Canada and almost 20 percentage points above the national average) of Islanders stating that a stronger health care system is very important and that addictions are an issue in their community that needs to be addressed (65 per cent, or 13 percentage points above the national average).

Labour and Education

While it is well known thatmPEI has an aging population (residents aged 65 and over represented 21 per cent of the population in 2023), the province is also experiencing the second-fastest population growth in Canada which has caused the median age to fall. This has in turn translated into the fastest employment growth in the country, with the number of employed Islanders having increased by nearly 6 per cent in 2023.

Based on this year’s population survey, labour is one of the most significant issues for people in PEI. As of January 2024, the unemployment rate in PEI was 7.7 per cent, which is similar to a year ago but higher than the national rate of 5.7 per cent.

More significantly, PEI has the highest rate of any province of people reporting that low wages are affecting their ability to make ends meet (43 per cent). One-third of all visits to food banks in PEI were from employed individuals in 2023—the highest rate in the country. Beyond this, 38 per cent of people say that it is difficult to access stable employment in their community (8 percentage points higher than the national average). One significant factor that may be affecting this is mental health. Nearly one-quarter of people in the province say that their mental health is impacting their ability to work, maintain finances, or work effectively (the highest rate of any province).

While mental health challenges are holding people back from improving their financial situation, a lack of knowledge about the tax system is also likely resulting in people with low incomes missing out on key benefits they are eligible for. Over 60 per cent of people in PEI say they are not sure which tax benefits they are eligible for—this rate is a staggering 25 percentage points higher than the national average.

Given these issues, the working population in PEI may be feeling very disenfranchised and unsupported by the government.

Poverty and Inequality in PEI

Limited economic diversification, seasonal (un)employment, and demographic shifts, all of which contribute to poverty and inequality in the province, are key challenges in PEI. Indigenous peoples, newcomers, and households with low incomes experience barriers to accessing affordable housing, health care, and education. In terms of income levels, racialized people are nearly five times as likely to have a low income as people who are not racialized (24.4 per cent and 4.9 per cent, respectively).

The rate of poverty for racialized Islanders (27.3 per cent) was more than double the overall Canadian rate (12.1 per cent) in 2021. In addition, the majority (86 per cent) of racialized individuals were first-generation immigrants (born outside of Canada) who experienced a poverty rate of 30 per cent, which is more than double the overall national rate for this group (14.1 per cent).

The poverty rate was 15.4 per cent among all immigrants, and 23.8 per cent for recent immigrants. The overall national rate of poverty for recent immigrants is 16.1 per cent. This is an issue of concern that merits monitoring, particularly in light of PEI’s recent population boom.

Non-permanent residents (people who have a work or study permit or have claimed refugee status) represent a small share (approximately 3 per cent) of the population and their poverty rate was 43 per cent.

The poverty rate among the Indigenous population in PEI was 12 per cent, which is the same as the rate for this group in Canada as a whole (12 per cent) but still higher than among non-Indigenous people.

Of all the Canadian provinces, PEI is tied with Nova Scotia for the highest overall rates of food insecurity. The people who are already stretched because of a combination of low income and high housing costs are also the most likely to experience heightened food insecurity. Strengthening social safety nets, investing in sustainable economic development, and promoting inclusive policies are essential for advancing equity and inclusion in PEI

The Cost of Living and Affordable Housing

Between December 2022 and December 2023, the overall price of goods and services in PEI increased by 2.6 per cent. This increase was slightly lower than it was across Canada as a whole (3.4 per cent), but PEI had the highest increase in food prices of any province at 7.1 per cent during that period.

This increase in the cost of food would partially explain the almost 30 per cent increase in food bank visits in PEI between March 2022 and March 2023. In addition, 80 per cent of Islanders agreed that reducing the cost of food is very important (10 percentage points higher than the national average).

The overall cost of shelter, however, held steady in PEI, compared with the 6 per cent increase across Canada as a whole. However, 30 per cent of people—the highest rate of any province—said that they had difficulty finding adequate housing. As in all other provinces, people who rent in PEI struggle more with poverty and food insecurity than people who own their own homes (with or without a mortgage), with almost 60 per cent of food bank visitors being renters. PEI also has the highest rate of any province for the number of social housing tenants who visit the food bank.

Given the vacancy rate of approximately 1 per cent, these issues are likely to persist. Continued population growth without greater investment in housing and the development of a mix of affordable housing options for all Islanders will put significant strain on the province’s ability to provide affordability for everyone

Thanks to broad, multi-party support and commitment to poverty reduction, PEI has one of the best provincial poverty reduction strategies in Canada. It has clear and measurable targets, includes a commitment to regular reporting and updating, and incorporates a focus on food insecurity and a disaggregation of different metrics beyond simply a broad-based reduction in the average proportion of poverty.

Despite their strong leadership, the 2024 provincial budget has been criticized for including only modest investments in areas that meaningfully address poverty. However, it does respond to several of the recommendations we made in our provincial report card last year. For example, the province has announced that starting in January 2025, families with a net income of less than $80,000 will begin to receive a tax-free provincial child benefit in addition to their Canada Child Benefit. Although it will only provide a maximum of $360 in annual support per child to begin with, it fills a gap we previously identified when comparing PEI to other provinces.

PEI has also announced an intention to increase social assistance rates by 5 per cent for 2024, which slightly exceeds 2023’s inflation level. While the province stopped short of formally legislating ongoing indexation, which we previously recommended for both tax brackets and social assistance, the increase is a welcome first step to ensure that benefits do not erode over time. As it continues with its commitment to increase the generosity of the basic personal exemption and other tax-related credits, the province should step forward with formal indexation.

Recent housing market challenges and low vacancy rates have prompted the provincial government to step up investments in housing construction, particularly to better support co-ops and non-profit providers. The 2024 provincial budget allocated an additional $10 million for this initiative, which represents a greater level of proportional investment in affordable housing compared to other Atlantic provinces at this time.

However, given the high levels of population growth and the already tight - and deteriorating rental market - there is an urgent need to expand this level of commitment and ensure it continues. Like most provinces, PEI is building new homes and rental units at about only half the rate that is required to achieve affordable housing conditions. It is already short about 5,000 units.

The province continues to make significant new investments in health care in response to the needs of a growing and aging population. While there is a strong need to improve services for older Islanders, the openness to invest in health care should prompt provincial leaders to explore different primary care models that could address the social determinants of health that lie behind food insecurity and poverty.

Poverty Reduction

Affordable Housing