Poverty in Canada
Poverty in Canada remains prevalent within some segments of society and according to a 2008 report by the Organisation for Economic Co-operation and Development, the rate of poverty in Canada, is among the highest of the OECD member nations, the world's wealthiest industrialized nations. Canada's official poverty line was set out in Opportunity for All- Canada's First Poverty Reduction Strategy, published in August, 2018 This measure is based on the cost of a basket of goods and services in the various regions of Canada. Dennis Raphael, author of Poverty in Canada: Implications for Health and Quality of Life reported that the United Nations Development Program, the United Nations Children's Fund (UNICEF), the Organisation for Economic Co-operation and Development and Canadian poverty researchers find that relative poverty is the "most useful measure for ascertaining poverty rates in wealthy developed nations such as Canada." In its report released the Conference Board. Currently, an income inequality measure known as low income cut-off (LICO) published by Statistics Canada is frequently used as a poverty rate and is 10.8% as of 2005. The Central Intelligence Agency uses the LICO as the relative measure results in a higher poverty figure than an absolute one. Statistics Canada has refused to endorse any metric as a measure of poverty, including the low-income cut off it publishes, without a mandate to do so from the federal government. Statistics Canada is looking into creating an initiative on how to better calculate the poverty line.
Some elements that work towards reducing poverty in Canada include Canada's strong economic growth, government transfers to persons of $164 billion per annum as of 2008, universal medical and public education systems, and minimum wage laws in each of the provinces and territories of Canada.
In recent times, after a spike in poverty and low-income rates around the 1996 recession, relative poverty has continued to decline. Certain groups experience higher low-income rates, including children, families with single-parent mothers, Indigenous peoples, the mentally ill, the physically handicapped, recent immigrants, and students.
Reflecting the practice in the British Isles, organized assistance to the poor was largely the realm of churches. In the early 20th century, the Catholic Encyclopedia reported that there were eighty-seven hospitals in Canada under the control and direction of various Catholic religious communities.
After the Great Depression, Bennett and Mackenzie King spurred the first stages of Canada's welfare state, and the size and role of the government began to grow immensely over the next decades. Many social programs developed during this time designed to increase the Canadian citizen's quality of life.
According to one estimate, 15% of Canadians lived in poverty by 1961, while at the end of the Sixties, Statistics Canada estimated that the number of Canadians living in poverty (using measurements drawn up by Jenny Podoluk) had fallen from about 25% of the population in 1961 to about 18% in 1969. A Senate inquiry in 1969, however, estimated that as many as 1 in 4 Canadians were living in poverty that year. From 1969 to 1982, the proportion of families with incomes below the poverty line fell from 20.8% to 13.9%. According to one definition, nearly two-fifths of Canadians lived in poverty in 1951, falling slightly to more than one-fifth in 1961 and to slightly less than one-fifth by 1968.
In recent years, newly arrived immigrants have higher than average low-income rates, although each immigrant arrival cohort year experiences a declining low-income rate over time.
Colonial history of poverty
Poverty in Canada must be understood within the context of this British colony (traditional Indigenous lands) being shaped by two intersecting of the pillars: racism and classism. Woodworth’s (1909) manuscript, “Strangers within our Gates or Coming Canadians” is a tell-all account of the hierarchical desirability of immigrants to recruit and accept for immigration and thus, colonization. We see these echoes in all facets of Canadian institutions and society today. White, wealthy male Protestants (and their families) from Great Britain were the most desirable. Second, white, wealthy male Catholics (and their families) from Great Britain. As one goes down the hierarchy of “desirable” immigrants, skin colour deepens and socioeconomic status decreases. This desirability included people who were viewed as most likely to assimilate to Northern European cultures, language, customs, etc. That is, British in most regions. The most desirable were immigrants from Great Britain; the least desirable were "the Negro and the Indian" (p. 9). "Indian" in this context refers to Indigenous peoples whose lands, cultures, languages were being stolen and lives destroyed.
The legacy of colonization continues to this day. See the Truth and Reconciliation Commission for more information.
Neoliberalism and poverty
For the last couple of decades, the world has been witnessing a trend that implicates an unequal distribution of wealth between the rich and the poor. This trend affects a large proportion of the global population and it is present in countries that hold high and lower levels of wealth. With that being said, wealthy citizens benefit from this inequality as they are the recipients of the larger portion of wealth. Policies that fall with the Neoliberal ideology are also witnessed to be increasing and many believe there may be a correlation between the two. Nonetheless, this global trend on the distribution of wealth is important as it affects an individual’s access to resources which has direct implications for their quality of life.
Neoliberal ideas were able to take life due to the economic conditions that were prevalent in the 1970s. Events that unfolded during this decade include regime change in Iran along with the formation of an organization that is composed of oil producing nations to implement policies on the production and extraction of oil. In addition, the decisions from large corporations to offset their costs by taking their plants to countries where they could pay workers less was also a significant change that took place within this decade. These events contributed to the slow growth witnessed in the global economy during the 1970s, leaving the world vulnerable to the Neoliberal order.
The Neoliberal ideology encourages a shift from emphasizing on the well-being of the collective population towards a focus on individualism. Implementation of Neoliberal policies influenced the way in which governments around the world saw their citizens. Due to this ideology’s emphasis on capital accumulation, governments implemented policies in which citizens where characterized as individuals who pay taxes to use resources from the government. These policies include a reduction in the welfare programs that are often used by the impoverished members of society. With that being said, this ideology calls for an increase in policies that are aimed to maximize wealth accumulation. Even employers who work alongside members of society, are expected to work with the goal of maximizing wealth and offsetting costs. These decisions leave gaps in social policy and the responsibility to fill these gaps are placed on members of society. In order to account for this rift in social services, individuals volunteer their time and engage in fundraising and charity events. Nonetheless, it is evident that the implementation of Neoliberal policies has affected many disadvantaged members of society. Further, these policies have a direct effect on resources that were developed to assist disadvantaged members of society.
Neoliberalism in Canada
Pierre Trudeau was the governing figure who introduced Neoliberalism to Canada. However, Canada’s embrace of Neoliberal policies was spearheaded by Brian Mulroney who came to power in 1984. Mulroney formed the framework for the implementation of Neoliberal policies in two ways. This government implemented policies which decreased the state’s involvement in the monetary sector. In addition, this government also worked to loosen restrictions on trade with the United States.
Mulroney’s overarching goal of solidifying the Neoliberal order was made possible through a combination of various policy changes. These include making Canada more attractive to overseas firms and through the introduction of legislation aimed at balancing the budget. Further, Mulroney’s government also strived to decrease the state’s involvement in the economy and related institutions. However, Canada was not the only country that was introducing legislation which would steer the country towards Neoliberalism, as many nations across the world were witnessing similar trends.
Researchers believe that Canada’s Neoliberal policies were moderate compared to what was happening in the United States. Many believe this is the case as American political decisions are vulnerable to being influenced by religious beliefs. In addition, another difference between the countries is that America has a large military that sways decisions made by political leaders. Due to this, researchers believe that Canada was able to ascertain a Neoliberal order which was not as radical as the one which took place in the United States.
Measures of poverty in Canada
Market basket measure
The Government of Canada's Department of Human Resources and Skills Development Canada developed the Market Basket Measure (MBM) of poverty in 2003. MBM thresholds take into account community size, location and household and composition, estimating the disposable income required to meet basic needs. Forty eight Canadian communities have been included in the measure.
Low-income cut-off (LICO) rates are often quoted by the media as a measure of poverty even though Statistics Canada has stated it is not a poverty measure. It is also used by statistics collators like the Central Intelligence Agency in lieu of an official measure, although the CIA also notes that it "results in higher figures than found in many comparable economies".
The measure has been reported by Statistics Canada since the 1960s. They were reported only in their "pre-tax" form until 2000, at which point Statistics Canada started to publish both pre and after-tax LICO rates. After-tax LICO rates have been retroactively calculated back to 1986. The measure is intended to represent an income threshold below which a family will likely devote a larger share of its income on the necessities of food shelter and clothing than the average family. As of 2011, 8.8% of Canadians are in a family whose income is below the after-tax low-income cut-off.
There are 7 family sizes and 5 community sizes, resulting in 35 total LICO groups, each one evaluated on a pre and after-tax basis (70 calculations in total). The LICO is currently set at 63% of the average family income within each group. This stems from the 1992 Family Expenditures Survey, which showed the average family spent 43% of its after-tax income on food, shelter and clothing, plus Statistics Canada added an additional 20% margin.
Statistics Canada prefers using the after-tax LICO over the pre-tax LICO "to draw conclusions about [families] overall economic well-being"; however, the pre-tax measures are needed depending on the study being conducted because some sources of data, such as the census, contain only pre-tax income information. It can also be useful to know the pre-tax income profile of groups before the effects of progressive tax rates.
Low Income Measure
The Low Income Measure is a purer measure of relative income. It is defined as 50% of median income, adjusted for family size. In effect, this measure indicates the percentage or number of people in the bottom income quartile.
It is considered an especially useful measure for international comparisons, and is popular with anti-poverty groups and some foreign governments (e.g., Ireland). It results in a higher measure of poverty compared to other measures. In 2017, it was estimated to be 12.9% on an after-tax basis.
The Gini coefficient is a measure of statistical dispersion most prominently used as a measure of inequality of income distribution or inequality of wealth distribution. It is defined as a ratio with values between 0 and 1: the numerator is the area between the Lorenz curve of the distribution and the uniform distribution line; the denominator is the area under the uniform distribution line. Thus, a low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income). The Gini coefficient requires that no one have a negative net income or wealth.
Serious consideration of the Gini coefficient for public policy implications is rare in Canada. Discussion of income inequality in the Canadian media generally implies that income inequality should be continually reduced as an objective, whereas international economists evaluating Gini coefficients generally focus on the idea of targeting an optimal range for the Gini coefficient. Some researchers have suggested the optimal Gini coefficient range is about .25-.40 (Wolfgang Kitterer, 2006, More Growth through Redistribution?). As of 2004, the Gini coefficient for Canada was estimated to be 0.315 on an after-tax basis.
Immigrant Poverty in Canada
New immigrants are more likely to face the adversity that comes with poverty for numerous reasons. Many find this fact unsettling as Canada has built their economic structure around the work performed by immigrants and as a result, is a leading destination for individuals wanting to leave their country. In addition, research suggests that recent immigrants are more disadvantaged compared to individuals who have immigrated in the past. There are many factors that contribute to this, but there is a strong emphasis on the fact that new immigrants often face an economic market that can only provide them with poorly paid occupations.
Many believe that even well-rounded immigrants are not immune to the impoverished living conditions that many newcomers face. It is recognized that immigrants who have worked for an education in their previous country of residence often face obstacles in getting their education accounted for in Canada. To build on this, individuals who immigrate to Canada tend to hold higher levels of education as compared to individuals who were born in Canada. This inevitably puts them in a disadvantaged position as they are competing for jobs against others who often have their educational achievements recognized by employers. It is evident that the problem is not necessarily that immigrants are under qualified, but that their qualifications often go unrecognized by employers.
As a result of these factors, immigrants tend to reside in parts of cities that are inhabited by individuals who are employed in low income positions. Residents of such areas are often left to confront problems such as unreliable transit systems and substandard living conditions. These areas often have fewer services available to individuals, that often puts new immigrants in a more difficult position. Further, this system of settlement often leads to segregated living conditions based on ethnicity.
Poverty in British Columbia
British Columbia holds the title of having the most prevalent rates of impoverishment and childhood poverty within Canada. There are many factors that lead up to the disproportionate rates of poverty which affects many British Columbians. The most notable of which is insufficient wages paired with inadequate social assistance resources. British Columbia does not record high rates of poverty because of large rates unemployment, but it has more to do with the insufficient wages that many British Columbians receive. This means that although many British Columbians are employed, their wages do not give them the opportunity to live without impoverished living conditions. To add on to this, this province has seen an increase in costs for accommodation and groceries which adds more obstacles that the poor must face. With that being said, it has been noted that British Columbia is the lone province within the country that does not have any measures put in place to reduce the instances of impoverishment. Although the quality of life for the poor has been on the decline, the wealthy residents have been benefiting from the policies that were put in place by the Liberal government when they held power. It goes without saying, that British Columbia is faced with a disproportionate rate of poverty because of many interlocking factors. Nonetheless, this province has a lot of room for improvement in terms of implementing policies that can increase of quality of life for a large proportion of its residents.
Indigenous children in Canada
According to a left-wing think tank, the Canadian Centre for Policy Alternatives, "Based on data from the 2006 census, this study found that the average child poverty rate for all children in Canada is 17%, while the average child poverty rate for all Indigenous children is more than twice that figure, at 40%." "50% — of status First Nations children live below the poverty line. This number grows to 62% in Manitoba and 64% in Saskatchewan." The study referred to used the Low Income Measure as their definition for poverty, which always shows a high rate. Nonetheless, the much higher LIM statistics for indigenous families indicates a much higher level of poverty among that demographic.
Canada has received international recognition for its social welfare system, but this image of Canada does not reflect the reality for many Indigenous children. Canada has been able to avoid criticism for its childhood poverty rate as statistics often do not include the rates of poverty within Indigenous reserves and the three territories in Canada. Once the data on childhood poverty in these areas is included, the statistics suggest that the number of children living in deprivation rises to around 18%. It goes without saying, that this percentage of childhood impoverishment seems to implicate that Canada’s allocation of funding designed to assist Indigenous children is failing to match the severity of the problem.
It is evident that all levels of government are not completing their role in assisting Indigenous children. Educational institutions that are located on reserves often do not get the resources they need which affects the quality of education these children receive. This includes projects that aim to help give Indigenous children a chance to continue with their studies after completing high school. The reality of these initiatives is that they do not have the necessary resources to help majority of applicants as the ratio of applicants far outweighs the funding that they receive.
With that being said, Indigenous children face many other obstacles due to the lack of assistance and resources from the government. There are reserves where residents are still fighting for access to safe drinking water. Further, such children are likely to reside in shelters that do not have enough room to adequately occupy all the residents. In addition, often children residing on reserves are living within houses that are in substandard condition and thus, needing urgent renovations.
Poverty reduction strategies
Several Canadian provinces are introducing poverty reduction strategies, following the examples set by the European Union, Ireland and the United Kingdom. Newfoundland & Labrador, Nova Scotia, Quebec, Ontario and Manitoba are all developing provincial strategies. Quebec and Manitoba have enshrined their efforts in legislation. Newfoundland & Labrador has established a provincial ministry. Ontario has set a cabinet roundtable to address child poverty, as per the Liberals's campaign promise.
Because of these moves, each province is exploring the development of a measurement tool to track any progress made on reducing poverty, such as the use of a Deprivation Index.
Assistance for poor people in Canada
Government transfers and intervention
Reduced tax burden
The Canadian income tax system is highly progressive. This can be seen by comparing the 2005 pre-tax low-income cut-off rate of 15.3% with the after-tax rate of only 10.8%. It is also evident in the Gini coefficient, which was estimated to be 0.428 on a pre-tax basis but only 0.315 on an after-tax basis. The Conference Board of Canada 2013 study noted the Canadian system provides relief to the poor which contributes to lowering poverty rates in Canada. Their 2013 report stated that without Canada's tax system and transfers, the poverty rate would have been 23 per cent not the current 12 per cent.
The Conference Board of Canada 2013 study noted "that due to the tax system and transfers to the poor, income inequality is 27 per cent lower than it otherwise would be." Canada has a wide range of government transfers to persons, which totaled $176.6 billion in 2009. Some of the transfers designed to assist low-income people in Canada include Welfare and Old age security. There is also an extensive mandatory Employment Insurance program designed to assist workers who have become unemployed to lessen the chance of them falling into poverty.
In addition to government transfers, there are number of other publicly funded services and social programs that benefit those with low-incomes like Medicare, Public education for grade school; subsidized post-secondary education, Subsidized housing, and Employment equity programs, which often target various groups of people who are deemed to be susceptible to having low-incomes.
Working income tax benefit
The WITB was introduced in 2007 to encourage low income people to enter the labour force, and to provide them with increased financial support. The WITB has been expanded considerably since its introduction. As of 2012, it is worth up to $970 for a single individual, $1762 for couples and single parent families. A person or couple must have at least $3,000 in employment income, and not be a student, to be eligible for WITB. Benefits increase, and then decrease, with income, and are completely clawed back at an income of $11,011 for singles, $15,205 for couples or single parents (in 2012).These credits are not taxed (see Income taxes in Canada#Income not taxed).
Low-income Canadians are eligible for the Canada Child Tax Benefit (a federal benefit), and provincial child tax credits or benefits and Québec family allowances. For example, Ontario pays a benefit scheduled to grow to $180 per month by 2011 for a family earnings less than $20,000 with two children. These credits are not taxed (see Income taxes in Canada#Income not taxed).
Minimum wage laws
Under the Constitution of Canada, the responsibility for enacting and enforcing labour laws including minimum wages in Canada rests with the ten provinces, the three territories also having been granted this power by virtue of federal legislation. This means that each province and territory has its own minimum wage. The lowest general minimum wage currently in force is that of the Saskatchewan ($11.06/hour), the highest is that of Alberta ($15.00/hour). Some provinces allow lower wages to be paid to liquor servers and other tip earners, and/or to inexperienced employees
Although listed here under assistance, some theories suggest that minimum wage laws are a net detriment to low-income people as a whole, because they reduce the attractiveness of hiring low-skilled staff (see Minimum wage#Debate over consequences).
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