The short- and long-term effects of poverty and unemployment on alcohol abuse are investigated using structural equation modelling (SEM) to better understand the observed conflicting relationships among them. We studied 795 community residents who provided complete data in both 1989 and 1991 in the Winnipeg Health and Drinking Survey (WHDS), with equal representation of males and females. Results indicate that (a) increased poverty causes increased alcohol use and alcohol problems, and (b) recent unemployment decreases alcohol use while longer unemployment increases it. It is concluded that the effect of unemployment on alcohol abuse changes direction with time and, thus, both cross-sectional and longitudinal data are required to assess any meaningful relationship between them.