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The role of family and government financial supports in helping Canadian workers avoid poverty - October 2007
Abstract
In Canada, a considerable volume of research has been conducted over the last decade which has helped identify the populations most likely to experience poverty as well as the factors increasing the risk of living in poverty. However, only recently have we done more in-depth analyses of low-income Canadians that are actively participating in the labour market (see Fleury and Fortin, 2004, 2005 and 2006). Many interesting findings came out of this research, but one of the most striking was that for those that already work many hours, depending on only one earner and/or having many dependent children are the most important determinants of poverty, even more so than being low paid.
Because the financial support of the family appeared crucial to avoiding poverty, the next logical step was to identify and study who, among Canadians that work many hours and that are not actually poor, would become poor if they lost family support because of a change in family structure or because of the unemployment of other family earners. In other words who is vulnerable to poverty? The objective of the present study is to shed light on vulnerable workers in Canada. Because government benefits prevent many workers from living in poverty, sensitivity analysis of the role of benefits was also conducted. Data from the master file of Statistics Canada’s Survey of Labour and Income Dynamics for years 1999 to 2003 were used to carry out the research. The main findings of the research are the following.
- In 2002, despite having a strong attachment to the labour market many Canadians were poor or were vulnerable to poverty as a result of changes in their family.
- About 622,000 Canadians were working poor.
- In addition, among non-poor workers with at least 910 hours of paid work, 3.4 million would have been poor had they separated or divorced, had other breadwinners in their family ceased to earn income, had they received half of their government benefits or had they relied solely on their own earnings to meet their personal needs.
- The main personal characteristics that increase the vulnerability of workers to low income are: to be a woman, to live in the Atlantic Provinces, to be young and not to have completed high-school. The main labour market characteristics are: to be low-paid, to be self-employed, to work less than full-time, full-year and to have little work experience. In comparison, the main determinants of poverty for workers are to be the sole earner in the family and/or to have many dependent children.
- A study of vulnerable and poor workers over 1999 to 2003 shows that:
- Even today, where they are highly educated and have strong links with the labour market, many women still greatly rely on another breadwinner to make ends meet, both in a given year and over a longer time period.
- Although vulnerable workers could become poor if they lost family and/or government financial support, over a 5-year period they are not more likely than other workers to experience separation or divorce, to lose the financial support of other family breadwinners or to experience a drastic drop in government benefits.
- Actually being poor has long-term negative consequences that ’simply’ being vulnerable to poverty does not.