Poverty in Canada refers to the state or condition in which a person or household lacks essential resourcesfinancial or otherwiseto maintain a modest standard of living in their community.
Researchers and governments have used different metrics to measure poverty in Canada including Low-Income Cut-Off (LICO), Low Income Measure (LIM), and Market Basket Measure (MBM). In November 2018, Employment and Social Development Canada announced the establishment of Canada's first Official Poverty Line to be based on the MBM. The MBM considers the cost of a basket of basic goods and services needed by a family of two adults and two children to maintain a modest standard of living.
There was an increase in poverty in Canada and many other industrial nations in the 1980s. By 2008, Canada's poverty rate was among the highest of Organisation for Economic Co-operation and Development (OECD) member nationsthe wealthiest countries in the world.
The number of people living below the official poverty line decreased substantially from 14.5% in 2015 to 10.1% in 2019, and 6.4% in 2020.
Child poverty in Canada declined since 2015, with the number of children who were living in poverty decreasing 71% by 2020. Child poverty has a disproportionately high effect on Indigenous households in Canada. According to a 2019 study by researchers at the Assembly of First Nations and the Canadian Centre for Policy Alternatives (CCPA), nearly 50% of Indigenous children in Canadaboth on and off reservewere living in poverty.
As of 2020, about 2.4 million Canadians, or 6.4% of the population, lived below the poverty line, according to Statistics Canada Canadian Income Survey, 2020 released on March 23, 2022.
Current overview The 2020 Canadian Income Survey (CIS) released in March 2022 by Employment and Social Development Canada (ESDC) said that there was a substantial decrease in the poverty rate from 14.5% in 2015 to 6.4% in 2020. This represents the largest 5-year decrease since 1976. Approximately 2.4 million Canadians are living below Canada's Official Poverty Line, based on 2020 income tax returns. While the results were encouraging, the ESDC minister cautioned that the 2020 Canadian Income Survey needs to be contextualized against the backdrop of "unprecedented and temporary government income support measures". In 2020, 84% of Canadians 15 and over received income from government transfers compared to 69% in 2015. Transfers included Old Age Security Pension (OAS)/Guaranteed Income Supplements (GIS), Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) benefits, Employment Insurance (EI) benefits, and Child benefits. But the increase was mainly in the form of emergency and recovery benefits related to the COVID-19 pandemic in Canada, including COVID-19 Emergency and Recovery Benefit (ERB), Canada Recovery Benefit (CRB), Canada Recovery Caregiving Benefit (CRCB), Canada Recovery Sickness Benefit (CRSB), Canada Emergency Student Benefit (CESB) mainly through emergency and recovery benefits related to the COVID-19 pandemic.
In the age group 0 to 54 the prevalence of low income decreased sharply; there was a slight increase in the number of low income in those over 65.
The Gini coefficient declined from 0.343 in 2010 to 0.302 in 2020, which is an indicator of lower inequality.
Defining poverty in Canada Statistics Canada's 1968 report on Canadians' incomes provided the "basis for defining and measuring low incomes in Canada."
The 1971 Special Senate Committee on Poverty in Canada "brought poverty out of the shadows".
In 1976, Canada ratified the International Covenant on Economic, Social and Cultural Rights, which obligated the federal government to consider poverty as a human rights issue.
In his 2020 publication, The Global Politics of Poverty in Canada: Development Programs and Democracy, 1964–1979, historian Will Langford described the significance of development in the two decades of debates on "global politics of poverty" from the late 1950s through the late 1970s in response to the "profound inequalities" at both local and global levels. In liberal democracies, such as Canada at that time, development was seen as a viable tool for poverty alleviation. Langford described how this idealistic approach was ineffective in eliminated poverty in any meaningful way as poverty was embedded in "capitalist social relations and economic hierarchies".
The shift away from the welfare state took place in the late 1970s and 1980s, as national governments led by Margaret Thatcher in Britain in 1979, Ronald Reagan in the United States in 1980, Helmut Kohl in Germany in 1983, and Brian Mulroney in Canada 1984 adopted economic policies that favoured the free-market, globalization, free trade, and reductions in government spending with an accompanying increase in privatization. According to David Harvey, governments that implemented neoliberal policies focused on optimizing conditions for market activity and capital accumulation and stepped away from a social state and redistributive policies. In 2004, the World Health Organization (WHO) described these ideas as an "extension of the traditional liberal philosophy" or neo-Liberal"the philosophy that underpins and drives economic globalization", supports the free market and capitalism by facilitating the "flow of goods, services and capital", limits government interference to corporations, and reducing public expenditures. These free market concepts and public policy recommendations were promoted by think tanks, libertarian organizations, and political parties, and are the subject of substantial scholarly debate. In Canada, the Fraser Institute and the Broadbent Institute provide arguments on both sides of these debates as they related to issues such as definitions of poverty.
The 2002 Senate Committees's report on "Poverty, Housing And Homelessness: Issues And Options", said that poverty, housing and homelessness remained as grave challenge a challenge in Canada as it had been in 1971 according to the 1971 Special Senate Committee on Poverty Poverty in Canada, but by 2002, the phenomena and the understanding of poverty, housing and homelessness had increased in complexity.
By 2013, there was a shift from poverty research, to income inequality at the international level in research and publications by the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and the World Economic Forum (WEF). By 2014, the WEF described the increasing wealth gap as the "biggest risk facing the world". A 2014 article in the journal Forum for Social Economics, said that neoliberal policies enacted since the 1980s resulted in a global trend of inequality in income distribution. An April 29, 2014 Administrators Colloquium organized by the Canada School of Public Service noted that there was a shift in research from poverty in Canada to examinations of income inequality, for example in the Standing Committee on Finance's December 2013 report.
Under its 2016 mandate to develop a national poverty reduction strategy, the federal department of Employment and Social Development Canada (ESDC) consulted with First Nations, Inuit and Métis communities, the three levels of government, and concerned communities. The resulting report"Opportunity for All: Canada's First Poverty Reduction Strategy"was released on August 21, 2018. It set the Market Basket Measure (MBM) as Canada's official measure of poverty, established Canada's first Official Poverty Line, and presented poverty reduction targets. Based on their research, the report expanded the definition of poverty to include not just monetary concerns but also "access to suitable housing, healthy and nutritious food, and health care." Poverty in Canada refers to the state or condition in which a person or community lacks essential resources, financial or otherwise, to maintain a modest standard of living. In November 2018, Employment and Social Development Canada announced the establishment of Canada's first Official Poverty Line to be based on the Market Basket Measure (MBM). The MBM considers the cost of a basket of basic goods and services needed by a family of two adults and two children to maintain a modest standard of living.
Poverty measurement in Canada
A variety of poverty measurements have been used in Canada by researchers and governments to monitor the number and percentage of Canadians who live below the poverty line. This includes the including the Low-Income Cut-Off (LICO), Low Income Measure (LIM), and Market Basket Measure (MBM).
Tracking the number and percentage of Canadians who fall below Canada's Official Poverty Line can be used to measure the progress on and effectiveness of initiatives designed to lift Canadians out of poverty.
In August 2018, the federal government, under Prime Minister Justin Trudeau, adopted the Market Basket Measure (MBM) of poverty as the official poverty line, which will enable researchers and governments to measure how effective poverty reduction initiatives have been.
Based on the MBM, a March 2022 Statistics Canada report said that overall poverty in Canada had fallen from 14.5% in 2015 to 6.4% in 2020. This release provided estimates using the Canadian Income Survey that had been updated to include 2016 Census population estimates and thus estimates for the years 2012–2019 were also updated. Note also that current measures of poverty using the MBM rely on the 2018 base values and so cannot be compared with poverty statistics constructed using the 2008 MBM.
In the 2018 report on Canada's first poverty reduction strategy, "Opportunity for all" the goal to reduce the percentage of people in poverty to 10% by 2020 and to 6% by 2030.
Market Basket Measure (MBM) Government of Canada is using the Market Basket Measure (MBM) of poverty as official poverty line since August 2018. The MBM was developed in 2003 and the 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. The MBM was back-calculated until 2000 and in the years until 2009 was on average 10.4% with a high of 11.9% in 2000 and a low of 8.8% in 2007. The latest available value for 2020 reports the MBM based poverty rate at 6.4%.
Statistics Canada and ESDCin collaboration with the Yukon and the Northwest Territorieshave been designing a Northern Market Basket Measure (MBM-N) for use in the territories. The MBM-N would include food, clothing, transportation, shelter and other necessities in establishing the threshold. The MBM-N will also take into account the unique characteristics of life in Nunavut in measuring the official poverty line.
Low-Income Cut-Off
In 1959, the federal government used the first set of published Low-Income Cut-Off (LICO) measurements to calculate an income threshold families were expected to spend on food, shelter and clothing below which a family will likely devote a larger share of its income than an average family would based on Statistics Canada's Family Expenditure Survey. If a family spends 20% more than the average Canadian family on these expenditures, they are considered to be below the LICO poverty line. A Canadian Council on Social Development backgrounder reported that the LICO has been reported by Statistics Canada since the 1960s.
Based on data from the 1992 Family Expenditures Survey, the average family spent 43% of its after-tax income on food, shelter and clothing. Statistics Canada added an additional 20% margin.
In 2000, Statistics Canada began to use the post-tax LICO rates for the first time, as well as the "pre-tax" rates. After-tax LICO rates going back to 1986, were retroactively calculated. As of 2011, 8.8% of Canadians are in a family whose income is below the after-tax low-income cut-off.