Low Income in Canada: 2000-2006 Using the Market Basket Measure - October 2008

5. A Focus on the "Working Poor"

An important group experiencing low income is a population commonly described as the "working poor." These are families whose MIR had significant annual hours of paid work but whose total family income was less than their low income threshold.

This report uses the following definition of the working poor:¹⁴ persons aged 18 to 64 who are not full-time students, who have worked for pay a minimum of 910 hours in the reference year, and who live in families whose total disposable income is below the MBM low income threshold in that year for their community or community size and family configuration.

The MBM is well-suited to analysis of the working poor since its definition of disposable income takes into account expenses commonly incurred when the MIR in the family takes up paid work, including income taxes and the employee portion of payroll taxes, mandatory deductions for employer-sponsored benefits, and out-of-pocket spending on child care and non-insured but medically recommended expenditures on prescription drugs, dental and vision care and aids, devices, and supports for persons with disabilities.

To analyze low income by the MIRs, work status, families are divided into four mutually exclusive groups (Chart 6). In the vast majority of working-age families,¹⁵ the MIR had at least 910 hours of paid work. Families where the MIR did not work for pay, was a full-time student, or worked for pay between 1 and 909 hours accounted for much smaller shares of the total.

5.1 Incidence

In 2006, 17.2% of all economic families where the MIR was aged 18 to 64 had a disposable income below their MBM low income threshold (Table 1a).¹⁶ But the incidence ranged from 7.3% for families where the MIR had 910 hours or more of paid work to 49.8% for economic families where the MIR did not work for pay.

Table 1a: Incidence of Low Income (%): MBM -Working-Age Families (MIR 18-64)
By Full-Time Student Status / Annual Hours of Paid Work

MIRs by paid work status	2000	2001	2002	2003	2004	2005	2006
All MIRs 18-64	19.7	18.6	18.2	17.9	18.5	17.8	17.2
MIR full-time student	54.0	51.0	52.5	46.1	50.1	46.9	48.2
MIR 0 paid hours	56.6	56.0	53.8	51.2	51.7	50.5	49.8
MIR 1-909 paid hours	42.1	36.8	41.2	40.3	42.4	40.3	35.3
MIR 910+ paid hours	8.3	7.7	6.9	7.7	7.9	7.9	7.3

As can be seen from Tables 1a and 1b, the incidence of low income for families where the MIR had at least 910 hours of paid work (and for children in such families) was much lower than for the other groups.

Table 1b: Incidence of Low Income (%): MBM - Children <18 in Working-Age Families
by Full-Time Student Status / Annual Hours of Paid Work by MIR

Children <18 by MIR's paid work status	2000	2001	2002	2003	2004	2005	2006
All MIRs 18-64	17.9	16.4	16.4	16.1	16.3	15.1	14.3
MIR full-time student	53.2	42.1	47.7	43.8	36.5	40.8	34.3
MIR 0 paid hours	72.6	79.9	74.0	73.3	78.6	69.9	69.7
MIR 1-909 paid hours	49.4	42.5	51.0	53.5	45.6	40.9	41.0
MIR 910+ paid hours	9.7	8.2	7.5	8.3	8.4	8.4	6.9

While the risk of low income for economic families where the MIR had 910 hours or more of paid work was much lower than for the other three economic family types, they accounted for a substantial share (35%) of all low income working-age families (Chart 7)¹⁷. This was because they accounted for such an overwhelming majority (77%) of all working-age families (Chart 6).

A similar pattern held for children living in economic families where the MIR was 18 to -64. Even though the risk of low income in 2006 for children in economic families where the MIR had 910 hours or more of paid work was by far the lowest (Table 1b), there were 332,000 low-income children in such families, accounting for 44% of all low-income children in working-age families (Chart 8). This high share, despite the lower risk, is explained by the fact that a large majority (85.5%) of all children in working-age families had an MIR who worked 910 hours or more (Chart 9).

 

5.2 Depth

As Table 2a reveals, the depth of low income for low-income families where the MIR worked for pay 910 or more hours was also significantly lower than for some other groups: 31.5% in 2006 compared to 42.8% where the MIR was a full-time student and 38.9% where the MIR was a non-earner. As Table 2b, shows the same pattern prevailed (at much lower depths of low income) for children among the four groups.

Table 2a: Depth of Low Income (%) MBM Working-Age Families
by Full-Time Student Status / Annual Hours of Paid Work by MIR

Children <18 by MIR's paid work status	2000	2001	2002	2003	2004	2005	2006
MIRs by paid work status	2000	2001	2002	2003	2004	2005	2006
All MIRs 18-64	37.8	36.9	36.6	36.6	37.0	37.8	37.1
MIR full-time student	49.0	47.5	47.7	45.3	47.7	43.7	42.8
MIR 0 paid hours	39.0	36.7	37.4	38.2	37.4	38.3	38.9
MIR 1-909 paid hours	35.7	36.9	35.8	34.6	40.6	41.2	37.1
MIR 910+ paid hours	30.5	31.5	30.4	30.2	31.1	31.3	31.5

 

Table 2b: Depth of Low Income (%) MBM Children in Working-Age Families
by Full-Time Student Status / Annual Hours of Paid Work by MIR

Children <18 by MIR's paid work status	2000	2001	2002	2003	2004	2005	2006
All MIRs 18-64	25.9	27.1	25.6	26.2	27.4	27.7	24.6
MIR full-time student	24.8	28.4	25.2	30.7	36.9	26.9	28.3
MIR 0 paid hours	29.2	32.6	31.3	30.4	31.1	30.4	27.6
MIR 1-909 paid hours	29.5	30.2	26.5	28.3	30.6	33.0	26.6
MIR 910+ paid hours	22.4	23.4	20.7	21.3	22.8	22.3	21.6

5.3 Persistence

Adults and children in low-income, working-age families where the MIR had at least 910 hours of paid work in 2002 (the working poor) were also less likely to experience persistent low income ¹⁸ over the 2002 to 2006 period than those where the MIR had no hours of paid work in 2002. Note from Table 3a that only 27.0% (4.1/15.2) of those, in the former group, who experienced low income at least one year during this period also experienced persistent low income, compared to 67.3% (43.4/64.5) of those who had 0 paid hours of work in 2002. There was a similar contrast for children living in these families (Table 3b).

The incidence of persistent low income over the period from 2002 to 2006 was not significantly different statistically for those families where the MIR was a full-time student in 2002 or worked for pay between 1-909 hours in that year (Table 3a). This was also true for children living in these families. The differences between the other groups were statistically significant.

Table 3a: Incidence of Persistent Low Income (%) 2002-2006: MBM
MIRs in 2002 by Full-Time Student Status / Annual Hours of Paid Work

MIRs by work status	Low income at least 1 year	Low income all years	Persistent low income
All MIRs 18-60	24.5	4.6	9.7
MIR full-time student	53.9	4.9	19.4
MIR 0 paid hours	64.5	27.8	43.4
MIR 1-909 paid hours	54.0	10.3	24.9
MIR 910+ paid hours	15.2	1.6	4.1

 

Table 3b: Incidence of Persistent Low Income (%) 2002-2006: MBM Children <14 in 2002
by Full-Time Student Status / Annual Hours of Paid Work by MIR in 2002

Children <14 in 2002 by MIRs' paid work status	Low income at least 1 year	Low income all years	Persistent low income
All MIRs 18-60	25.0	4.2	10.5
MIR full-time student	49.1	7.1	23.6
MIR 0 paid hours	85.2	31.8	60.8
MIR 1-909 paid hours	69.2	9.6	32.1
MIR 910+ paid hours	17.4	1.8	5.1