Canada’s real poverty problem

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The Conference Board of Canada ranks Canada’s record on poverty as “among the worst of developed countries – and slipping.” That’s appalling, if true. But is it true?

Citing the low-income measure (LIM) of poverty used by the Organization for Economic Co-operation and Development (OECD), the Conference Board observes: “With more than 12 per cent of the working-age population living in poverty, Canada is in 15th place out of 17 countries, ahead of only Japan and the United States.”

Perhaps so, but these figures are misleading, inasmuch as they apply only to Canadians of working age. The OECD reports that for all age groups, Canada actually has a lower rate of overall poverty than Greece, Portugal, Spain, Poland, Korea, Ireland, Japan and the United States.

Besides, LIM is only a relative measure of poverty based on the supposition that a person is poor if he or she is living in a household with an income that is less than half of the average income for all households of similar size in the country. By the LIM measure of relative poverty, almost all impoverished people in Canada would rank among the wealthiest in most low-income countries.

Note also that by the LIM standard, many, if not most, medical students in Canada are impoverished, because they are living in households with below average incomes. Is it reasonable for the Conference Board to include these medical students and others like them with temporarily low incomes in an indictment of Canada’s poverty record?

Given the limitations of relative measures of poverty like the LIM or Low-Income Cutoffs (LICO) devised by Statistics Canada, Chris Sarlo, an economist at Nipissing University, has developed a poverty standard based on the number of people living in households with insufficient income to cover all basic needs including a nutritious diet, satisfactory housing, clothing, health care, public transportation, household insurance and telephone service.

Sarlo reports that by this basic-needs measure, 4.9 per cent of Canadians were living in poverty in the mid-2000s, down from 6.8 per cent 10 years earlier. Also, during this same period, Canada’s child poverty rate declined to 5.8 per cent, down from 9.1 per cent.

Clearly, Canada does not have an exceptionally bad and ever worsening poverty problem as contended by the Conference Board of Canada. Yet it is also evident that there are millions of impoverished people in Canada who struggle with not enough income to cover all basic needs.

What can be done to help these genuinely impoverished Canadians?

John Richards has addressed this issue in a report published last month by C. D. Howe Institute, “Reducing Lone-Parent Poverty: A Canadian Success Story.” He points out that provincial work incentives for employable welfare recipients initiated by the conservative governments of Alberta and Ontario in the 1990s have proven enormously successful in persuading and empowering millions of impoverished Canadians to move from chronic welfare dependency to productive employment.

As a result, even by Statistics Canada’s LICO measure of relative poverty, the proportion of impoverished Canadians living in lone-parent families was reduced to 20 per cent in 2007, down from 50 per cent in 1996.

Nonetheless, the poverty rate remains four time greater for lone-parent families than for two-parent families with children. This is one among many good reasons for the federal and provincial governments to encourage Canadian couples to get married and to stay married.

In the 1990s, the overwhelming majority of welfare dependants in Canada were employable adults. In Ontario and some other provinces, most are now classified as unemployable “persons with disabilities.”

Richard explains: “A high-profile category is the urban homeless, most of whom combine mental illness with abuse of drugs or alcohol.” Many of these poor are victims of the cruel policy adopted by the provinces in the 1970s of deinstitutionalizing psychiatric patients without providing them with adequate support in the community.

Alleviating the misery of these neediest of impoverished Canadians will not be easy or inexpensive, but should get top priority in Canada’s ongoing struggle against the evils of real poverty.

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