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measuring poverty in canada
« on: Jul 18^th, 2002, 3:34pm »

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this makes me soooo sad :bigcry:

, embarrassed Embarassed

and mad

at the same time! how dare we call ourselves advanced when in truth we are only as strong as our weakest link? :huh:

Measuring poverty
John Bowman, CBC News Online | May 7, 2002

Whenever a Canadian news outlet uses Statistics Canada numbers to say a certain percentage of Canadians are "below the poverty line," StatsCan makes it clear that its numbers say no such thing.

The agency sends off letters stating that its low-income cut-off (LICO) figures are not a measure of poverty, but of income inequality. Despite this, many media companies and poverty activists use StatsCan's LICOs as Canada's "unofficial" poverty line.

The LICO counts the number of Canadians who spend 20 per cent more of their gross income on food, shelter and clothing than the average Canadian. So, if a family spends more than 55 per cent of its gross income on those necessities, it's below the LICO.

About 17 per cent of Canadians are below the low-income cut-off.

Critics of the use of the LICO as a benchmark for poverty say the 55 per cent level is arbitrary and doesn't translate to a state of destitute poverty.

A 2000 National Post editorial put it this way: "Say 54% of a family's income goes to food, shelter and clothing, it still has 46% to spend elsewhere. That's not poverty."

Poverty activists and left-leaning newspapers say they use the LICO because that's the only information available to them.

"If Statistics Canada would supply us with an official poverty figure, we'd be happy to use it," wrote Toronto Star editorial page editor Carol Goar in August 2000.

"LICOs are used by anti-poverty groups because they are readily available and capture their view that poverty is relative," wrote Richard Shillington of Campaign 2000 in 1997.

In fact, StatsCan says there is no internationally, or even nationally, accepted formula or definition of who is poor.

StatsCan finds itself in a no-win situation. If they do come up with a way of calculating the number of poor people in Canada for example, using after-tax incomes the number will undoubtedly be lower than the number calculated by the LICO.

Anyone who uses the new number would be accused of using mathematical trickery to "reduce" the number of poor people in Canada.

On the other side of the political spectrum, StatsCan faced criticism from the right for updating the LICO in 2000 to reflect new spending patterns among Canadians. The previous cut-off level of $32,759 for a family of four was raised to $33,356, which put 1.4 per cent more Canadians below the cut-off.

Another feature of the LICO that causes controversy is that it's a relative measure of poverty. That is, as the economy grows and people make more money on average, the LICO moves up with it.

"Using the LICO to measure the poor means poverty can never be eliminated since there will always be a range of incomes in Canada unless we adopt a Soviet-style command economy," said the National Post in 2000.

On that point, the poverty activists seem to agree.

"In reality, relative poverty will not be reduced by economic growth unless there is redistribution to the poor," wrote Shillington.

Anti-poverty groups say the relative measures can show which low-income earners are missing out on their share of Canada's wealth, or their "inclusion in society."

The Organization of Economic Co-operation and Development uses another relative measure of poverty. It takes all of the after-tax incomes in a particular country and finds the income such that half the people in the country make more and half make less. That's the median after-tax income. Anyone who makes less than half of that median income is considered poor. By that measure, Canada's poverty rate in the 1993-1995 period was 10.9 per cent. In the U.S., the rate is 16 per cent, while in Denmark, it's 4.7 per cent. Statistics Canada uses a similar calculation, called the Low Income Measures, which uses pre-tax incomes.

Another way to measure poverty is in absolute terms: how many people make less than what is needed to survive or lead a decent life.

Human Resources and Development Canada is developing such a measurement, called the Market Basket Measure, based on the cost of goods and services needed for people to eat a nutritious diet, buy clothing for work and social occasions, house themselves in their community and pay for other necessary expenditures, such as furniture, public transportation and entertainment. By that measure, most of the country's poverty is in Ontario and British Columbia, where the living costs are highest.

Nipissing University economics professor Christopher Sarlo developed another absolute measure of poverty for the 1992 study Poverty in Canada. Sarlo defines poverty as lacking the means for the basic necessities of life, such as food, shelter and clothing.

The first version of his Basic Needs Index put the poverty rate at just four per cent. It was criticized for its frugality, though: Sarlo's weekly food budget for an elderly woman was $25. A revised version of the index was released in 2001, including such things as out-of-pocket medical expenses. That study put the poverty rate at eight per cent.

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