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Human Resources and Skills Development Canada

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Low Income in Canada: 2000-2007 Using the Market Basket Measure - August 2009

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 «working poor»: Footnote 17 persons aged 18 to 64 who are not full-time students, have worked for pay a minimum of 910 hours in the reference year living 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 MIR's work status, families are divided into four mutually-exclusive groups (Figure 6). In the vast majority of working-age families, Footnote 18 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.

Figure 6: A link to the description follows the figure

Text version of Figure 6: 2007(%) Distribution of Working-Age Families by Work Status of Main Income Recipients (MIRs)

5.1 Incidence

In 2007, 15.4% of all economic families where the MIR was aged 18 to 64 had a disposable income below their MBM low income threshold (Table 1a). Footnote 19 But the incidence ranged from 5.9% for families where the MIR had 910 hours or more of paid work to 47.3% 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 2007
All MIRs 18-64 19.7 18.6 18.2 17.9 18.5 17.8 17.2 15.4
MIR Full-Time Student 54.0 51.0 52.5 46.1 50.1 46.9 48.2 42.9
MIR 0 Paid Hours 56.6 56.0 53.8 51.2 51.7 50.5 49.8 47.3
MIR 1-909 Paid Hours 42.1 36.8 41.2 40.3 42.4 40.3 35.3 33.9
MIR 910+ Paid Hours 8.3 7.7 6.9 7.7 7.9 7.9 7.3 5.9

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 2007
All MIRs 18-64 17.9 16.4 16.4 16.1 16.3 15.1 14.3 11.9
MIR Full-Time Student 53.2 42.1 47.7 43.8 36.5 40.8 34.3 25.4
MIR 0 Paid Hours 72.6 79.9 74.0 73.3 78.6 69.9 69.7 62.2
MIR 1-909 Paid Hours 49.4 42.5 51.0 53.5 45.6 40.9 41.0 38.8
MIR 910+ Paid Hours 9.7 8.2 7.5 8.3 8.4 8.4 6.9 5.6

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 economic families with other work status, they still accounted for a substantial share (31%) of all low income working-age families Footnote 20(Figure 7). This was because they accounted for such an overwhelming majority (77%) of all working-age families (Figure 6).

Figure 7: A link to the description follows the figure

Text version of Figure 7: 2007(%) Distribution of Working-Age, Low Income Families by Work Status of MIR

A similar pattern held for children under age 18 living in economic families where the MIR was 18 to 64. Even though the risk of low income in 2007 for children under 18 in economic families where the MIR had 910 hours or more of paid work was by far the lowest, (Table 1b) there were 334,700 low income children in such families accounting for 43% of all low income children under age 18 in working-age families (Figure 8). This high share, despite the lower risk, is explained by the fact that a large majority (85.7%) of all children under age 18 in working-age families had an MIR who worked 910 hours or more (Figure 9). Footnote 21

Figure 8: A link to the description follows the figure

Text version of Figure 8: 2007(%) Distribution of Low Income Children in Working-Age Families by Work Status of MIR

Figure 9: A link to the description follows the figure

Text version of Figure 9: 2007(%) Distribution of Children in Working-Age Families by Work Status of MIR

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- 30.2% in 2007 compared to 49.5% where the MIR was a full-time student and 38.3% 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
MIRs by paid work status 2000 2001 2002 2003 2004 2005 2006 2007
All MIRs 18-64 37.8 36.9 36.6 36.6 37.0 37.8 37.1 37.6
MIR Full-Time Student 49.0 47.5 47.7 45.3 47.7 43.7 42.8 49.5
MIR 0 Paid Hours 39.0 36.7 37.4 38.2 37.4 38.3 38.9 38.3
MIR 1-909 Paid Hours 35.7 36.9 35.8 34.6 40.6 41.2 37.1 37.9
MIR 910+ Paid Hours 30.5 31.5 30.4 30.2 31.1 31.3 31.5 30.2

 

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 2007
All MIRs 18-64 25.9 27.1 25.6 26.2 27.4 27.7 24.6 25.4
MIR Full-Time Student 24.8 28.4 25.2 30.7 36.9 26.9 28.3 38.1
MIR 0 Paid Hours 29.2 32.6 31.3 30.4 31.1 30.4 27.6 25.8
MIR 1-909 Paid Hours 29.5 30.2 26.5 28.3 30.6 33.0 26.6 22.4
MIR 910+ Paid Hours 22.4 23.4 20.7 21.3 22.8 22.3 21.6 21.2

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 (i.e. the «working poor») were also less likely to experience persistent low income Footnote 22 over the 2002 to 2007 period than those where the MIR had no hours of paid work in 2002. Note from Table 3a that only 22.0% (3.7/16.8) of those, in the former group, who experienced low income at least one year during this period also experienced persistent low income, compared to 59.0% (41.1/69.7) of those who had no paid hours of work in 2002. There was a similar contrast for children living in these families (Table 3b).

Between 2002 and 2007, families where the MIR was a full-time student in 2002 did not experience a statistically different risk of persistent low income than families who worked for pay between 1-909 hours in 2002 (Table 3a). This was also true for children living in these families. The differences between the other groups were statistically significant.

Table 3a
Experience of Persistent Low Income (%) 2002-2007: MBM MIRs in 2002 By Full-Time Student Status / Annual Hours of Paid Work
MIRs by work status Low Income At least 1 Yr Low Income All Years Persistent Low Income
All MIRs 18-59 25.4 3.4 8.1
MIR Full-Time Student 52.7 2.8 12.9
MIR 0 Paid Hours 69.7 25.7 41.1
MIR 1-909 Paid Hours 52.0 7.7 22.5
MIR 910+ Paid Hours 16.8 1.1 3.7

 

Table 3b
Experience of Persistent Low Income (%) 2002-2007: MBM Children < 13 in 2002 by Full-Time Student Status / Annual Hours of Paid Work by MIR in 2002
Children <13 in 2002 by MIRs' paid work status Low Income At least 1 Yr Low Income All Years Persistent Low Income
All MIRs 18-59 26.1 2.3 8.4
MIR Full-Time Student 49.6 4.3 17.9
MIR 0 Paid Hours 85.1 20.1 46.1
MIR 1-909 Paid Hours 64.3 4.1 34.2
MIR 910+ Paid Hours 19.4 0.8 4.1
  • 17 The definition first appeared in Dominique Fleury and Myriam Fortin, «Canada's Working Poor» Horizons, Volume 7 Number 2, (December 2004), pp.51-57. This is an analytical definition developed by these HRSDC analysts for research purposes. Return to reference 17
  • 18 This statement refers to those families where the MIR's hours of paid work and full-time student status were known in 2007. This applies to all other pie charts in this section. Return to reference 18
  • 19 These incidence numbers are higher than for all persons because families include unattached individuals who have a high incidence of low income but contain only one person. Return to reference 19
  • 20 This is the share of all working-age families where the hours of paid work for the MIR were reported in the Survey of Labour and Income Dynamics for 2007. The same method was used to determine the share of low income children under age 18 in «working» families in the next paragraph. The numerical estimates assume that working-age low income families where the work status of the MIR was unknown were divided in the same proportions as those whose MIR's work status could be identified. Return to reference 20
  • 21 For this calculation it is assumed that those children under age 18 in families which cannot be identified as belonging to one of the four groups are distributed in the same proportions as those in families which can be identified as belonging to one of these groups. Return to reference 21
  • 22 When doing longitudinal analysis it is necessary to fix the status of the group being analyzed at the beginning of the period and then follow them for the remainder of the period even though their status may change in the later years of the period. For example when we follow what happened to persons who worked for pay 910 hours or more in 2002 and were the MIR in a specific economic family in that year it must be kept in mind that in subsequent years they may work for pay for less than 910 hours or may cease to be the MIR in their economic family. Return to reference 22

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Date Modified:
2011-12-14