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

7. Conclusion

• This report provides data on low income using the MBM over the seven-year period of 2000 to 2006. This has enabled both time series analysis and a comparison of low income persistence over the periods 2000 to 2004 and 2002 to 2006.
• One of the key features distinguishing the MBM from Statistics Canada's measures of low income (the Low Income Cut-offs and the Low Income Measure) is its greater sensitivity to geographical differences in the cost of living. The MBM is based on the cost of a specified basket of goods and services in 48 geographical areas within the 10 Canadian provinces. The cost of the standard of living represented by the basket can vary between geographical areas in any given year, and changes in the cost of the basket over time can also vary between these geographical areas.
• Another important distinction between the MBM and the other low income measures is that the cost of the basket is compared to the disposable income available to purchase the goods and services in the basket. This requires deducting a number of items in addition to income taxes from a family's gross income before comparing it to the cost of the basket (for example, payroll taxes, out-of-pocket spending on child care and non-insured but medically recommended health care costs such as vision and dental care, prescription drugs, and aids for persons with disabilities).
• The report also provides data and analysis on two groups of working-age MIRs: those commonly referred to as the "working poor" and five socio-economic groups at disproportionate risk of experiencing annual and persistent low income. These high-risk groups include: lone parents, unattached individuals aged 45 to 64, the work-limited disabled, recent immigrants, and Aboriginal Canadians living off-reserve.

Results

The General Population

• The overall incidence of low income declined between 2000 and 2006 as measured by both the MBM and the LICOs-IAT.
• The MBM measured a higher incidence of low income for children under age 18 than the LICOs-IAT. This is mainly because the MBM accounts for childcare costs while the LICOsIAT does not.
• The depth of low income was considerably less for the low-income elderly and children than for the working-age population. This reflects greater generosity of government transfer programs to these two groups.
• For persons aged 18 to 60, 22.2% experienced low income for at least one year between 2002 and 2006; 7.5% experienced persistent low income during this period.

Working Poor

• While the risk of low income for economic families where the main income recipient (MIR) had 910 hours or more of paid work was much lower (7.3%) than for the other economic family types, they accounted for a substantial share (35%) of all low-income working-age families.
• For low-income families where the MIR worked for 910 hours or more, the depth of low income and the likelihood of experiencing persistent low income were lower than for the other economic family types.

High-Risk Groups

• The 2006 incidence of low income for families whose MIR belonged to a high-risk group averaged 28.4%. This was almost three times as high as for economic families whose MIR did not belong to a high-risk group (10.1%).
• There was a statistically significant decline in the incidence of low income from 2000 to 2006 for all high-risk groups except for Aboriginal Canadians living off-reserve and recent immigrants.
• The incidence of persistent low income, from 2002 to 2006, for families whose MIR was a member of a high-risk group was 20.1% (over four times higher than the 4.6% rate for families whose MIR was not a member of a high-risk group).