Canadian Poverty Rate Exaggerated Fivefold

Contact:

Chris Sarlo, Professor
Nipissing University, (705) 474-3450, ext.4569

Michael Walker, Executive Director
The Fraser Institute, (604) 714-4545 Email: michaelw@fraserinstitute.ca

Release Date: 14 January 1996

VANCOUVER, BC>>>  The Fraser Institute released today the revised and updated edition of Poverty in Canada (2nd ed.), which presents the only needs-based measurement of poverty in Canada.

Author Chris Sarlo argues that low income cut-off lines (LICO) - the standard tool used in virtually all studies measuring poverty - is badly flawed and doesn't provide an accurate measurement of poverty in Canada. Sarlo develops a Basic Needs Index - one based on necessities - as a more accurate and relevant measurement of poverty.

Poverty vs Inequality

The updated comparison between poverty lines and poverty rates for a family of four demonstrates the degree of exaggeration that results when high, relative lines are used. The LICO and Canadian Council on Social Development (CCSD) lines are roughly twice the basic needs line, and the poverty rate about four to five times higher than Sarlo's index (see Table 1-1).

"A basic needs index provides more relevant information about the nature and extent of poverty in Canada," said Sarlo, professor of economics at Nipissing University, North Bay, Ontario. "Most of those who are now defined as poor using conventional measures would have been solidly middle class a generation ago. These conventional measures, such as LICO, tell us about inequality and the lack of 'social comforts', but very little about the true nature of poverty."

Patterns of Poverty

According to Sarlo's basic needs index, Quebec continues to have the lowest rate of poverty, Newfoundland the highest. In terms of household size, unattached individuals continue to have the highest rates of poverty. In 1988 and 1990, families of four had the lowest poverty rates; now, families of two have the lowest rates. (This may be due to the increasing number and proportion of elderly couples in Canada. The social security pensions they receive put them above the poverty line.)

Immigrants continue to have low poverty rates. Older immigrants - those who came to Canada prior to 1966 with few skills and without English or French - have about half the poverty rate as those born in Canada. Even the group of immigrants arriving between 1966 and 1980 have lower poverty rates than Canadian-born citizens.

Child Poverty

Canadians have been shocked to learn that there are more than one million poor children in this country. While this estimate is based on a definition of poverty that is not credible, there is legitimate concern about the number of children that are malnourished. "Irresponsible parents are far more of a threat to children than an uncaring welfare system," added Sarlo.

A new table has been added to Poverty in Canada to present more formally the evidence on child poverty. Table 2 shows that there were about 313,000 children below the age of 18 living in families whose reported incomes were below the basic needs poverty lines. Almost half of the poor children were age 7 or less. Overall, the child poverty rate was 4.6 percent, somewhat higher than the poverty rate for the general population.

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.

For further information contact:

Suzanne Walters, Director of Communications,
The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca

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Last Modified: Wednesday, October 20, 1999.