Gap Between Rich and Poor: Overall Poverty Rate

In 2005, the median family income in Canada was $60,600. That is a 19.3% increase over 2000 which, when adjusted for inflation, gave most families a 6.4% increase in real income.22

Vital Comment

"Over the past 25 years there has been barely a ripple in the fight against poverty. In order to fashion a strong social fabric we need to weave in many threads. One is adequate and affordable housing; others include alternative programs for youth at risk, who learn by doing and many of whom have unrecognized, underdeveloped manual skills (skills needed in the labour force of today and tomorrow). We need to emphasize prevention in health, encourage parenting skills and provide affordable childcare options. And we need mentors who live around the corner and who are there for us. We must raise the public consciousness of the nation and it begins at the top." More »

Dr. Erminie J. Cohen, retired Canadian senator, Saint John, New Brunswick

The real story, however, lies beneath the surface: over the past quarter century Canada has barely moved the needle on poverty. Too many Canadians remain trapped in the cycle – just getting by while others are doing better than ever.

There are two common measuring sticks for poverty:

  • The LICO (Low Income Cut-Off measure) considers a family poor when it spends more than 63.6% of its after-tax income on food, shelter and clothing. In 2005, using the LICO, 20.6% of Canada’s families lived in poverty.
  • The LIM (Low Income Measures) considers a family poor when its income is less than half of the median income for their size and type of family. In 2005, using the pre-tax LIM, 21.7% of Canadian families lived in poverty

The chart below shows the percentage of Canadian families in low income each year from 2000 to 2005, using the two measures (LICO and LIM), calculated both before and after tax. Progress since 2000 has been negligible.

Gap between rich and poor
Source: Statistics Canada 23

And if we take a longer view? The poverty rate over the 25 years from 1980 to 2005, as measured by LICO, has dipped below 20% only once – back in 1989.

Gap between rich and poor
Source: Statistics Canada 24

Poverty levels vary considerably across the country, with higher levels in most of our largest cities. Poverty is also much higher in some populations than others. The average poverty rate (based on LIM) for Aboriginals in 2000 in all 27 Census Metropolitan Areas was 41.7 %t, more than double the rate for all persons of 17.7 %25. Lone-parent families and new Canadians are also much more likely to experience poverty.

Another perspective on our prosperity is the difference between the wealthiest in our community and the least well-off. The “income gap” measures the ratio between people near the top of the income spread (those at the 90th percentile) and people near the bottom (those at the 10th percentile). Local Vital Signs reports show an increase in the gap between rich and poor in most of our urban centres between 2001 and 2005. That growing gap is consistent with various other national measures that show increased income inequality over the past quarter century.

Taking Action

Vibrant Communities is a national movement dedicated to locally-driven efforts to reduce rather than to alleviate poverty in Canada. Its successful model includes comprehensive multi-sectoral collaboration where citizens, organizations, businesses and governments identify the multiple issues and create innovative solutions to reduce poverty. It’s an approach that allows communities to learn from — and help — each other. Now four years after the program began, Vibrant Communities has linked 15 urban centres from British Columbia to Newfoundland in the Vibrant Communities Pan-Canadian Learning Community with seven Trail Builder communities (BC Capital Region, Niagara, Montreal, Saint John, Edmonton, Calgary and Surrey). Local poverty reduction efforts have succeeded in reducing poverty for over 34,000 Canadians through partnering with: 315 non-profit organizations, 209 government agencies, 106 low-income leaders and 271 businesses along with 176 other key partners. Vibrant Communities believes that communities have the potential to reduce poverty but efforts have to be multi-sectoral, deliberate, and positive to be most productive.

Community Foundations of Canada is helping community foundations explore how they can best attack poverty in their communities. There are different approaches: in Winnipeg, the community foundation is focusing resources on one neighbourhood school, to test the notion that strengthening families and their relationship with education is a pathway out of poverty. In Hamilton, the community foundation is leading a city-wide, multi-sector initiative to reduce poverty and dedicating all its undesignated granting to poverty reduction, prevention and alleviation programs and. In Edmonton, the foundation is beginning a social enterprise fund that will use its assets to help generate affordable housing. In Red Deer, the community foundation (with other community organizations) is helping the aboriginal community address its challenges. An important step was creating an annual conference where aboriginal youth could learn about employment and careers and discuss issues like education and addiction. Concrete progress has come from the conferences. One example: Red Deer now has an important new voice in city government – the Community Facilitator, Aboriginal Affairs. There are many other approaches being explored and CFC has brought together a small learning community that, with support from the federal government, will share their experience in poverty reduction strategies with the 150+ other community foundations across the country.

 

23 Low Income Measures (LIM) from tax data [http://www.vitalsignscanada.ca/rpt2007/table-I-2-a.pdf]. LICO data is from the SLID [http://www.vitalsignscanada.ca/rpt2007/table-I-2-c.pdf]. 
24 CANSIM Table 202-0803 (SLID). 
25 Source: Statistics Canada. http://www.statcan.ca/english/research/89-613-MIE/2004001/89-613-MIE2004001.pdf#page=31.

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