Poverty and Affluence Poverty and Affluence in Canadain Canada

Measuring PovertyMeasuring Poverty

What does it mean to be poor?What does it mean to be poor? What characteristics does poverty What characteristics does poverty

involve?involve?

Economists disagree as to how they Economists disagree as to how they should determine who is poor, why should determine who is poor, why people become poor and what needs people become poor and what needs to be done to reduce povertyto be done to reduce poverty

Absolute PovertyAbsolute Poverty

A state of utter destitutionA state of utter destitution

Due to Canada’s social welfare Due to Canada’s social welfare system, the incidence of this system, the incidence of this extreme form of poverty is rare in extreme form of poverty is rare in CanadaCanada

Relative PovertyRelative Poverty

Not necessarily a Canadian that Not necessarily a Canadian that lacks food, safe water, shelter, or lacks food, safe water, shelter, or clothingclothing

A Canadian that feels poor and that A Canadian that feels poor and that other Canadians see as poor other Canadians see as poor compared to (relative to) otherscompared to (relative to) others

Low-Income Cut-OffLow-Income Cut-Off

Developed by Stats Canada in 1968Developed by Stats Canada in 1968

Used to identify income levels below Used to identify income levels below which a household is statistically which a household is statistically classified as being in a relatively classified as being in a relatively limited income situationlimited income situation

Low-Income Cut-OffLow-Income Cut-Off

Average Canadian household spends Average Canadian household spends about 35% of its before-tax income about 35% of its before-tax income on on food, clothing, and shelterfood, clothing, and shelter

A household that is “relatively worse A household that is “relatively worse off” spends more than 55% on these off” spends more than 55% on these three necessitiesthree necessities

Before/After Tax IncomeBefore/After Tax Income

LICO’s are calculated using both LICO’s are calculated using both before-tax incomebefore-tax income and and after-tax after-tax incomeincome

Before-tax income is easier to Before-tax income is easier to calculate, but after-tax income is calculate, but after-tax income is used more…why?used more…why?

Before/After Tax IncomeBefore/After Tax Income

……because it provides a truer because it provides a truer picture. All necessities are picture. All necessities are purchased with after-tax dollarspurchased with after-tax dollars

Money that people really do not have Money that people really do not have would have been considered.would have been considered.

Poverty LinePoverty Line

LICO’s are often used by analysts as LICO’s are often used by analysts as indications of povertyindications of poverty

Media often refers to LICO’s as Media often refers to LICO’s as “poverty lines”“poverty lines”

The PoorThe Poor

The working poor – people who The working poor – people who work, but whose wages do not keep work, but whose wages do not keep them out of poverty (absence of them out of poverty (absence of unions, temporary work etc)unions, temporary work etc)

The welfare poor – people who do The welfare poor – people who do not work and are experiencing not work and are experiencing poverty (elderly, poor health, single poverty (elderly, poor health, single parents, job loss)parents, job loss)

Welfare StateWelfare State

Early in the 20Early in the 20thth century, Canada century, Canada established a “welfare state” established a “welfare state”

Philosophy – that governments Philosophy – that governments should use social programs and should use social programs and transfers financed out of taxation to transfers financed out of taxation to help people who are poor, suffer help people who are poor, suffer illness, or are otherwise illness, or are otherwise disadvantaged. disadvantaged.

Progressive Tax SystemProgressive Tax System

First step of the welfare state was to First step of the welfare state was to allow low-income earners to keep allow low-income earners to keep most of the money they makemost of the money they make

Progressive Tax System – taxes Progressive Tax System – taxes higher-income at a higher higher-income at a higher percentage. The more you make the percentage. The more you make the more tax you pay.more tax you pay.

StatisticsStatistics

In Canada, there are drastic In Canada, there are drastic income income inequalitiesinequalities based on based on gendergender and and racerace

Two parent families - highest incomesTwo parent families - highest incomes Single mothers - lowest incomes (45% live in Single mothers - lowest incomes (45% live in

poverty)poverty) Uneducated single mothers – 90% live in Uneducated single mothers – 90% live in

povertypoverty Visible minorities have lower average Visible minorities have lower average

incomes than the rest of societyincomes than the rest of society

Why does this imbalance in income Why does this imbalance in income

distribution exist?distribution exist?

Attacking PovertyAttacking Poverty

Programs to combat poverty can be Programs to combat poverty can be divided into two broad but divided into two broad but overlapping categories:overlapping categories:

Structural Strategies Structural Strategies Relief StrategiesRelief Strategies

Attacking PovertyAttacking Poverty

Structural Strategies – attempt to Structural Strategies – attempt to eliminate the causes of poverty (long eliminate the causes of poverty (long term)term)

Relief Strategies – immediate Relief Strategies – immediate support (food banks, government support (food banks, government transfers). Often criticized as “band-transfers). Often criticized as “band-aid solutions”aid solutions”

Key QuestionsKey Questions

Does society have an obligation to Does society have an obligation to individuals/families in poverty – to individuals/families in poverty – to

introduce introduce social change/programssocial change/programs to assist those in need?to assist those in need?

OR…OR…

Should this be a matter for the Should this be a matter for the individuals/ families themselves to individuals/ families themselves to

deal with?deal with?

The Employment Equity Act The Employment Equity Act (1986)(1986)

PurposePurpose: to tackle systematic : to tackle systematic discriminationdiscrimination

Act identifies four main groupsAct identifies four main groups: : minorities, Aboriginals, people with minorities, Aboriginals, people with mental and physical disabilitiesmental and physical disabilities

Requires employers to provide these Requires employers to provide these groups with groups with equityequity by setting by setting hiring hiring goalsgoals for each group (reflective of for each group (reflective of these groups in Canadian workforce) these groups in Canadian workforce)

Welfare in OntarioWelfare in Ontario

Easiest Easiest short-term tool short-term tool for raising for raising income level of the poor = $income level of the poor = $

Money required for survival Money required for survival Some people unable to earn money for Some people unable to earn money for

various reasonsvarious reasons

- i.e.- i.e. severely disabled, mentally ill, severely disabled, mentally ill, woman with children who has left an woman with children who has left an abuse husband, single parent attending abuse husband, single parent attending school, etc.school, etc.

Problems with WelfareProblems with Welfare

How much do you give? To How much do you give? To whom? whom?

DisincentivesDisincentives: Discourages some : Discourages some recipients from finding employmentrecipients from finding employment

Functional RepercussionsFunctional Repercussions: Logical : Logical outcome of “high” payments – people outcome of “high” payments – people receiving welfare didn’t feel a receiving welfare didn’t feel a needneed to to look for work look for work

What are some What are some alternatives to alternatives to

welfare?welfare?

Competing PerspectivesCompeting Perspectives

Does welfare Does welfare discouragediscourage people people from looking for from looking for work? Or, is it a work? Or, is it a

mythmyth put forward by put forward by people unfamiliar people unfamiliar with the with the realityreality of of life on welfare?life on welfare?