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Canadian child poverty, income inequality and other inconvenient truths

January 28, 2011


Key words

Absolute measure of poverty is the standard used by the U.S. If a family can afford a modicum level of food, clothing and shelter they are not considered poor. The U.S.A. is the only OECD country that uses an absolute measure of poverty in order to capture how social inequality impacts the well-being of children (UNICEF. Child Poverty in Rich Nations. Innocenti Report Card. Issue No. 1, June 2000.)

Lebenslage is a concept “defining child well-being by the scope given for the development of each child’s interests and capabilities”. Austria, France and Germany are using Lebenslage as part of their efforts to develop multi-dimensional indicators of the well-being of children.

LICO Statistic Canada’s Low Income Cut Off. Although Canada does not have a measure of poverty the LICO is the most accepted. LICO measures the number of families who are below the low-income cut-off (LICO), which means those who spend 20 percentage points more of their gross income on food, shelter and clothing than the average Canadian. This figure is often used as the unofficial “poverty line.”The Fraser Institute’s social-policy director Fred McMahon claims the LICO is too broad. McMahon promotes the absolute measure of poverty as used in the USA.

LIM Statistics Canada’s Low-Income Measure is a purely relative measure of “poverty” which is calculated each year from taxfiler information. The LIM is equal to onehalf of the median income of Canadian families, adjusted for family size and composition. Statistics Canada advises that the LIM produces a slightly more conservative estimate of “poverty” in a large urban area like Toronto, compared to the LICO, because of Toronto’s higher cost of living. This means that fewer households will be counted as being in “poverty” using the LIM (UWGT 2007:39).

Poverty line: “In the absence of an official poverty line in Canada, Campaign 2000 ascribes to the position held by most Canadian social policy organizations studying the issue and by UNICEF. UNICEF uses a relative measure of poverty to describe those whose material, cultural and social resources are so limited as to exclude them from the minimum acceptable way of life where they live (Rothman 2000).”

Relative measure of poverty, defined as households with income below 50 per cent of the national median. It is noteworthy that all OECD countries, except the U.S., use a relative measure of poverty in order to capture how social inequality impacts the well-being of children. UNICEF has sided with a relative approach to understanding poverty and has described the plight of children in industrial societies as the “twilight world in which . . . physical needs may be minimally catered for, but . . . painfully excluded from the activities and advantages that are considered normal by their peers.” (UNICEF. Child Poverty in Rich Nations. Innocenti Report Card. Issue No. 1, June 2000.) “In recent years, relative child poverty has become a key indicator for the governments of many OECD countries. The European Union’s efforts to monitor its Social Inclusion Programme, for example, include relative child poverty and the percentage of children in workless families as the only indicators specifically related to children (drawing the poverty line as the proportion of children in each country living in households with an equivalent income of less than
60% of the median for that country) (http://www.unicef-irc.org/publications/pdf/rc7_eng.pdf).

Who’s Who

Atkinson, A. B. is an economist who wrote Macroeconomics and the Social Dimension which informed part of the “Child Poverty in Rich Nations” Innocenti Report Card. Issue No. 1, June 2000.

Campaign 2000 “is a cross-Canada public education movement to build Canadian awareness and support for the 1989 all-party House of Commons resolution to end child poverty in Canada by the year 2000. Campaign 2000 began in 1991 out of concern about the lack of government progress in addressing child poverty. Campaign 2000 is non-partisan in urging all Canadian elected officials to keep their promise to Canada’s children (Campaign 2000 ).” Campaign 2000 puts out an annual national Report Card on Child Poverty in Canada measuring the progress, or lack of progress, of the 1989 unanimous all-party resolution. Campaign 2000 Discussion Papers (including our most recent policy paper called Pathways to Progress) contain a set of proposals for public policies and social investments based on the life cycle approach to addressing child poverty. Its 2007 Report Card on Child & Family Poverty in Canada was financially supported by the Family Service Association of Toronto and United Way of Greater Toronto. Their impressive list of partners include a few in Alberta: Public Interest Alberta, Edmonton Social Planning Council, Jewish Family Service (Calgary). There is no partner in Nunavut.

CCPA Canadian Centre for Policy Alternatives. Armine Yalnizyan is an economist and research associate with the Canadian Centre for Policy Alternatives.

C.D. Howe Institute “John Richards, an economist and professor at Simon Fraser University in British Columbia, says this good fortune signals that anti-poverty initiatives implemented during the last decade are working. In his report for the C.D. Howe Institute, entitled Reducing Poverty: What has worked, and what should come next.”

Wellesley Institute in Toronto: “Michael Shapcott, a long-time poverty activist and policy analyst at the Wellesley Institute in Toronto, says the big flaw Richards is making is the assumption that all the people who are off welfare are now gainfully employed (Ligaya 2007).”

EU-SILC European Union Community Statistics on Income and Living Conditions. “Since 2004, the 25 countries of the European Union (EU) have been developing a new statistical data source, EU-SILC which “aims to become the reference source of comparative statistics on income distribution and living conditions within the EU. A primary purpose of EU-SILC is to monitor the common indicators (the so-called Laeken Indicators) by which the EU has agreed to measure its progress towards reducing poverty and social exclusion. EU-SILC therefore replaces the European Community Household Panel (ECHP) which was the main source of such data from 1994 until 2001 (for the then 15 Member States of the EU). Designed to fill some of the acknowledged gaps and weaknesses of the ECHP, EU-SILC collects every year comparable and up-to-date cross-sectional data on income, poverty, social exclusion and other aspects of living conditions – as well as longitudinal data on income and on a limited set of non-monetary indicators of social exclusion. The first EU-SILC data for all 25 Member States of the current EU, plus Norway and Iceland, should be available by the end of 2006. The first 4-year longitudinal data on ‘those at-persistent-risk-of-poverty’ will be available by the beginning of 2010. In addition to populating these core indicators, each round of EU-SILC also gathers data on one particular theme – beginning in 2005 with data on the intergenerational transmission of poverty.” (http://www.unicef-irc.org/publications/pdf/rc7_eng.pdf. For more see (Marlier, Atkinson, Cantillon and Nolan 2006.)

Fraser Institute. Fred McMahon

OECD Organisation for Economic Co-operation and Development. The Innocenti Report Cards investigate child well-being in rich nations. The series draws data from
the 29 members of the Organisation for Economic Co-operation and Development (OECD), the countries that produce two-thirds of the world’s goods and services.
The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, the Republic of Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom of Great Britain and Northern Ireland, and the United States of America. “All families in OECD countries today are aware that childhood is being reshaped by forces whose mainspring is not necessarily the best interests of the child. At the same time, a wide public in the OECD countries is becoming ever more aware that many of the corrosive social problems affecting the quality of life have their genesis in the changing ecology of childhood. Many therefore feel that it is time to attempt to re-gain a degree of understanding, control and direction over what is happening to our children in their most vital, vulnerable years. That process begins with measurement and monitoring. And it is as a contribution to that process that the Innocenti Research Centre has published this initial attempt at a multi-dimensional overview of child well-being in the countries of the OECD.” (UNICEF. Child Poverty in Rich Nations. Innocenti Report Card. Issue No. 1, June 2000.)

OECD PISA Programme for International Student Assessment (PISA)

The UNICEF Innocenti Research Centre, located in Florence, Italy, was established in 1988 to strengthen the research capability of the United Nations Children’s Fund and to amplify its voice as an advocate for children worldwide. The UNICEF Innocenti Research Centre studies how such poverty can best be defined, measured, and reduced. The Innocenti Research Centre provides an in-depth annual report on child poverty. In 2007 the “report builds and expands upon the analyses of Report Card No. 6 which considered relative income poverty affecting children and policies to mitigate it. Report Card 7 provides a pioneering, comprehensive picture of child well being through the consideration of six dimensions: material well-being, health and safety, education, family and peer relationships, subjective well-being, behaviours and lifestyles informed by the Convention on the rights of the child and relevant academic literature.” UNICEF. 2007. “Report Card on Child Well-being in Rich Countries.”

WHO HBSC World Health Organization’s survey of Health Behaviour in School-age Children (HBSC) http://www.hbsc.org/index.html

Timeline

1950 [In 2000] despite a doubling and redoubling of national incomes in most nations since 1950, a significant percentage of their children are still living in families so materially poor that normal health and growth are at risk. And as the tables show, a far larger proportion remain in the twilight world of relative poverty; their physical needs may be minimally catered for, but they are painfully excluded from the activities and advantages that are considered normal by their peers (UNICEF. 2001. Innocenti Report Card. Issue No. 1.).”

1980 The number of Canadians living under the low-income cut-off after taxes was 11.6 per cent in 1980, according to Statistics Canada, far lower than the 1996 peak of 15.7 per cent (Yalnizyan cited in Ligaya 2007). “In 1980, the disparity between the top income-earning category and the lowest was $83,000, according to Statistics Canada. By 2005, that gap had reached $105,400 (Shapcott cited in Ligaya 2007).”

1981-82 Canada experienced a transformational recession for the labour market and it took the country about eight years to climb out of the rut (Yalnizyan cited in Ligaya 2007).

1988 The UNICEF Innocenti Research Centre, located in Florence, Italy, was established in 1988 to strengthen the research capability of the United Nations Children’s Fund and to amplify its voice as an advocate for children worldwide.

1989-11-24 The child poverty rate in Canada was 11.7%. On November 24, 1989, the House of Commons unanimously passed a resolution to seek to achieve “the goal of eliminating poverty among Canadian children by the year 2000 (Campaign 2000 ).”

1991 Canada experienced a transformational recession for the labour market and began emerging from that only in 1997 (Yalnizyan cited in Ligaya 2007).

1990s “The growth in the number of low-income families in the City of Toronto in the 1990s was alarming, soaring from 41,670 at the start of the 1990s to 84,750
by the decade’s end. The factors that contributed to this change are well known – the deep recession in the early 1990s, corporate downsizing, the rise in precarious employment, decreased access to Employment Insurance, reduced welfare payments, and the barriers that skilled immigrants faced finding work for which they were qualified (UWGT 2007:40).”

1995-2005 The national Irish government set firm targets, created timetables and reported annually so the public could easily see progress being made against poverty. In this way they reduced poverty from 15 per cent to 6.8 per cent (Yalnizyan in Monsebraaten and Daly 2007).

1996 The number of Canadians living under the low-income cut-off after taxes was 11.6 per cent in 1980, according to Statistics Canada, far lower than the 1996 peak of 15.7 per cent (Yalnizyan cited in Ligaya 2007).

2000-06-01 Innocenti Report Card. Issue No. 1. The first Innocenti Report Card presents the most comprehensive analysis to date of child poverty in the nations of the
Organisation for Economic Co-operation and Development (OECD). “Whether measured by relative or absolute poverty, the top six places in the child poverty league are occupied by the same six nations – all of which combine a high degree of economic development with a reasonable degree of equity” In the league table of relative child poverty, the bottom seven places are occupied by the Canada (15.5%), Ireland (16.8%), Turkey, United Kingdom, Italy, the United States (22.4%), and Mexico (26.2%). In the league table of absolute child poverty, the bottom four places are occupied by Spain, the Czech Republic, Hungary, and Poland.” “The countries with the lowest child poverty rates allocate the highest proportions of GNP to social expenditures (Figure 8). Differences in tax and social expenditure policies mean that some nations reduce ‘market child poverty’ by as much as 20 percentage points and others by as little as 5 percentage points (Figure 9).”

2000 Table 1. shows the percentage of children living in ‘relative’ poverty, defined as households with income below 50 per cent of the national median. Using this standard of relative poverty countries at the bottom of the list included Canada (15.5%), Ireland (16.8%), Turkey, UK, Italy, USA (22.4), Mexico (26.2%), . Innocenti Report Card. Issue No. 1. http://www.unicef-irc.org/publications/pdf/repcard1e.pdf

2000-12-05 The editorial in the Toronto Star dealt with child poverty in Canada.

2000-12-06 A letter entitled “No surplus for kids” by Pedro Barata, the Ontario Coordinator of Campaign 2000, was published in the Toronto Star. Barata asked, “Why is it that Ontario was one of only two provinces where since 1996 poor families fell deeper below the poverty line?” or, “Why does Ontario have the highest monthly fees for child care in Canada?”

2000 Almost 1 in 5 children still living in poverty in Ontario

2000-11-24 The National Post published an editorial dismissing Campaign 2000’s Annual National Report Card on Child Poverty in Canada (Rothman 2000). Nov. 24

2000-12 Laurel Rothman, the National Coordinator of Campaign 2000 wrote a Letter to the Editor entitled “Richer, poorer” to the National Post in response to their editorial dismissing Campaign 2000’s annual report card (Rothman 2000).

2001-05 The National Council on Welfare using the LICO claimed that 5 million Canadians are living in poverty.

2002 Quebec introduced anti-poverty legislation. The “Province of Quebec and Ireland have tackled poverty head on, with impressive results that show poverty reduction can be achieved against planned goals (UWGT 2007:73).”

2004 Since 2004, the 25 countries of the European Union (EU) have been developing a new statistical data source, known as Community Statistics on Income
and Living Conditions (EU-SILC). EU-SILC aims to become the reference source of comparative statistics on income distribution and living conditions within the EU. A primary purpose of EU-SILC is to monitor the common indicators (the so-called Laeken Indicators) by which the EU has agreed to measure its progress towards reducing
poverty and social exclusion. EU-SILC therefore replaces the European Community Household Panel (ECHP) which was the main source of such data from 1994 until 2001 (for the then 15 Member States of the EU). Designed to fill some of the acknowledged gaps and weaknesses of the ECHP, EU-SILC collects every year comparable and
up-to-date cross-sectional data on income, poverty, social exclusion and other aspects of living conditions – as well as longitudinal data on income and on a limited set of non-monetary indicators of social exclusion. The first EU-SILC data for all 25 Member States of the current EU, plus Norway and Iceland, should be available by the end of 2006. The first 4-year longitudinal data on ‘those at-persistent-risk-of-poverty’ will be available by the beginning of 2010. In addition to populating these core indicators, each round of EU-SILC also gathers data on one particular theme – beginning in 2005 with data on the intergenerational transmission of poverty (http://www.unicef-irc.org/publications/pdf/rc7_eng.pdf.

2005 According to Stats Canada the disparity between the top income-earning category and the lowest was $105,400 (Shapcott cited in Ligaya 2007). Statistics Canada income figures showed 788,000 children were living in poverty in 2005, a rate of 11.7 per cent.

2005 41 per cent of all low-income children lived in families in Canada where at least one parent had a full-time job (Campion-Smith 2007).

2006 Newfoundland announced a strategy to become the province with the lowest poverty rate by 2016.

2006 20,900 Canadian children used food banks, double the number in 1989.

2006-11-24 CBC news summarized details from the Campaign 2000 (2006) National Annual Report on Child Poverty with the headlines “Aboriginal children are poorest in country: report: B.C. and Newfoundland have highest rates; Alberta and P.E.I. have lowest rates.” November 24, 2006. One aboriginal child in eight is disabled, double the rate of all children in Canada; Among First Nations children, 43 per cent lack basic dental care; Overcrowding among First Nations families is double the rate of that for all Canadian families; Mould contaminates almost half of all First Nations households; Almost half of aboriginal children under 15 years old residing in urban areas live with a single parent; Close to 100 First Nations communities must boil their water; Of all off-reserve aboriginal children, 40 per cent live in poverty. See http://www.campaign2000.ca/rc/rc06/06_C2000NationalReportCard.pdf

2007-03 The Ontario Child Benefit, announced in the March 2007 Ontario Budget, pledged $2.1 billion over the first five years to help low-income families support
their children (UWGT 2007:73).

2007-04 Ontario’s provincial budget “put poverty reduction on the agenda with a new Ontario child benefit for all children in low-income families – not just those on welfare. And it outlined a plan for raising the minimum wage to $10.25 by 2010, from $8 today (Monsebraaten and Daly 2007).”

2007-05 A study by economist Yalnizyan was released by the Canadian Centre for Policy Alternatives, showing a widening income gap in Ontario. “40 per cent of Ontario families have seen no gain in real income – and often a loss – compared with their predecessors 30 years ago. The richest 10 per cent, meanwhile, have seen their incomes soar. And even though Ontario parents are better educated, they spend more time working than the previous generation did, the study says (Monsebraaten and Daly 2007).”

2007-05-09 The former Ontario premier Bob Rae was one of four panellists at at the Toronto Star-sponsored forum on the growing income gap held at the St. Lawrence Centre and attended by 250. Rae argued that, “We now have to restore and renew our commitment to help people in difficult times [to invest] in affordable housing, child care and education” [. . .] Rae noted that Canada is the only government in the Organization for Economic Co-operation and Development that doesn’t have a national housing policy, and that’s reflected in the country’s poverty figures. Economist Yalnizyan, research director of the Toronto Social Planning Council remarked that “Income inequality is the second inconvenient truth in our society. [G]overnments need to act now – not only to tackle poverty, but to ensure everyone is benefiting from a healthy economy (Monsebraaten and Daly 2007).” Stop picking away at the edges of poverty, say forum speakers, and take a leaf from Ireland’s comprehensive plan.

2007 The child poverty rate in Canada was still 11.7%. Canada experienced a 50% real increase in the size of its economy from 1989 to 2007.

2007 In 2007 Report Card on Child Well-being in Rich Countries: The most comprehensive assessment to date of the lives and well-being of children and adolescents
in the economically advanced nations. builds and expands upon the analyses of Report Card No. 6 which considered relative income poverty affecting children and policies to mitigate it. Report Card 7 provides a pioneering, comprehensive picture of child well being through the consideration of six dimensions: material well-being, health and safety, education, family and peer relationships, subjective well-being, behaviours and lifestyles informed by the Convention on the rights of the child and relevant academic literature.” UNICEF. 2007. “Report Card on Child Well-being in Rich Countries.”

2007-11-12 Ligaya, Armina. 2007. “The debate over Canada’s poverty line.” CBC News On-line. http://www.cbc.ca/news/background/economy/poverty-line.html November 12. “[C]hild poverty numbers have not budged at all since 1989 when Canadian parliamentarians stood up and promised to do their best to eradicate it within a decade. Even today, 11.7 per cent of children under 18 are living below the low-income cut-off line.” There are now record numbers of tenants being evicted from their homes and a rising dependency on food banks (Shapcott cited in Ligaya 2007).

2007 “Jean Swanson, co-ordinator of the Carnegie Centre Action project in the heart of Vancouver’s Downtown Eastside, said restricting access to employment insurance and welfare only punishes the poor. The poverty activist said she has watched Canada’s homeless epidemic multiply what she says is 10-fold over the last decade (Ligaya 2007).”

2007-11-26 Campaign 2000 released their national annual report card on poverty in Canada entitled “It Takes a Nation to Raise a Generation: 2007 Report Card on Child & Family Poverty in Canada.” Despite a growing economy, soaring dollar and low employment, 788,000 children (1/8 of Canadian children) live in poverty. Ontario remains the “child poverty capital,” with 345,000 children living in impoverished conditions.

2007-11-26 Almost 30 per cent of Toronto families – approximately 93,000 households raising children – live in poverty, compared with 16 per cent in 1990. [The Mercer annual Cost of Living Survey of 143 major cities around the world measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. In 2006, Toronto was ranked as the most expensive city in Canada, just slightly ahead of Vancouver.] Since 2000, the city has seen a net loss of jobs, many of them well-paying and unionized, while elsewhere job creation is on the rise. At the same time jobs have been replaced by temporary, part-time and contract work that offer no job security, benefits or eligibility for employment insurance. As a result, an alarming number of households are in deep financial trouble as seen by an increase in the number of evictions, family debt and bankruptcies since 2000, a year when the crippling recession of the 1990s had clearly eased in the rest of the country, the report says. From 1999 to 2006, landlord applications for eviction due to nonpayment of rent climbed from 19,795 to more than 25,000. Also, the number of people receiving credit counselling in Toronto has almost doubled in the past six years to an average of 4,534 per month. Not surprisingly, the number of moneylending outlets has increased almost eightfold since 1995 to more than 300, largely concentrated in the low-income neighbourhoods. United Way of Greater Toronto. 2007. Losing Ground: The Persistent Growth of Family Poverty in Canada’s Largest City, (Monsebraaten and Daly 2007-11-26 ).

Bibliography and Webliography

Atkinson, A. B. Macroeconomics and the Social Dimension.

Barata, Pedro. 2000. “No surplus for kids.” Letter of the Day. Toronto Star. December 6. http://www.campaign2000.ca/res/per/nosurplus.html

Bradshaw, J. and Mayhew, E. (eds.) 2005. The well-being of children in the UK, Save the Children, London.

Campaign 2000. 2006. “Oh Canada! Too Many Children in Poverty for Too Long.”

Campaign 2000. 2007. “It Takes a Nation to Raise a Generation: 2007 Report Card on Child & Family Poverty in Canada.”

Campion-Smith, Bruce. 2007. “Ontario leads in child poverty.” Feature on Poverty. Toronto Star. November 26.

CBC. 2006. “Aboriginal children are poorest in country: report: B.C. and Newfoundland have highest rates; Alberta and P.E.I. have lowest rates.” November 24, 2006.

CBC. 2007. “Child poverty rates unchanged in nearly 2 decades: report.” November 26.

Ligaya, Armina. 2007. “The debate over Canada’s poverty line.” CBC News On-line. http://www.cbc.ca/news/background/economy/poverty-line.html November 12.

Marlier, E.; Atkinson, A.B.; Cantillon, B.; Nolan,B. 2006. The EU and social inclusion: Facing the challenges, Policy Press, Bristol.

McMahon. Fred. 2000. “The true measure of poverty.” Op-Ed. Peterborough Examiner on ?

Monsebraaten, Laurie; Daly, Rita. 2007. “In search of a poverty strategy.” Toronto Star. May 09.

Monsebraaten, Laurie; Daly, Rita. 2007. “Toronto families slip into poverty.” Toronto Star. November 26.

Richards, John. Reducing Poverty: What has worked, and what should come next.

Rothman, Laurel. 2000. “Richer, poorer.” Letter to the Editor. National Post. Toronto. December.

Rothman, Laurel; Shillington, Richard. 2000. “A place for every child: building an inclusive society.” Peterborough Examiner. December 7.

UNICEF. 2001. Innocenti Report Card. Issue No. 1.

UNICEF. 2007. “Child poverty in perspective: An overview of child well-being in rich countries: The most comprehensive assessment to date of the lives and well-being of children and adolescents in the economically advanced nations.” Innocenti Report Card 7, 2007. UNICEF Innocenti Research Centre, Florence. http://www.unicef-irc.org/publications/pdf/rc7_eng.pdf

United Way of Greater Toronto. 2007. Losing Ground: The Persistent Growth of Family Poverty in Canada’s Largest City,

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