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The
Economic Freedom
Network

 

Things People Know That Aren't So

Michael Walker

"Once you are poor you will always be poor"

The first real world clue that this isn’t true comes from your own experience. Yes, I mean you, the reader. Because according to the way in which poverty is calculated, you were probably poor during your very early days. Students, including medical students, engineering students, lawyers in training, as well as all the rest are included in the poverty statistics. So are workers who frequently work part-time at minimum wage jobs as they are trying to break into the work force. One or both of those descriptions probably fit you.

That most of us were once poor according to the Statistics Canada measure of poverty should be enough to make most people suspicious of what, exactly, poverty statistics tell us. The problem with them, of course, is that they are a "snap-shot" of the entire population at a given point in time. This catches a lot of us, like students and young workers, at a very untypical part of our lives. It catches us at a time in our lives when we should be poor, in the sense that if we are going to have income growth over our lives we must start out at the bottom.

Statistics Canada has known about this problem with the statistics for some time. And now they have remedied the situation by taking a moving picture of us and our income process. The new approach consists of surveying the same 35,000 people each year to see what happens to them as time passes. Not surprisingly, the results are fascinating.

It turns out that in a single year, "over one million Canadians dropped into low income, while almost as many were able to climb out of their difficult financial straits." In other words, notwithstanding the biblical saying, "the poor you have always with you," it isn’t the case that "the poor" are the same people year after year. In fact, "the poor" are a constantly changing cast of characters who play their bit in les miserables for many reasons, most of which don’t have anything to do with the state of the economy!

Is Statistics Canada points out, 41 percent of those who fell into low income status and 28 percent of those who got out of it did so by having a "change in family composition." That means they got divorced, married, formed a common law relationship, had a death or a birth. By comparison, only a third of those who moved up in the world did so because they worked more hours or had another person in the household get a job, while 42 percent of those who fell into low income did so because there were fewer hours worked in their household unit. However, frequently this loss of work hours was the result of the departure of a spouse. In fact, one in four people who experienced a separation fell into poverty.

While this gives only a small taste of the statistical picture of poverty which is emerging from the new Statistics Canada study, it is clear that if you are poor at one stage in your life, it simply does not follow that you are destined for a lifetime of poverty.





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Last Modified: Wednesday, October 20, 1999.