Do More than a Million Children Really Live in Poverty?

Children poverty is a vital issue for Canada. There are Canadian children that go without basic needs. If we as a society are going to help those most in need we must have an accurate depiction of the true depth of the problem. That is where Campaign 2000, a coalition of antipoverty groups, gets it wrong. They estimate child poverty using flawed measures which hinder us from determining those who are most in need and therefore how best to help them.

Campaign 2000’s figures about the number of poor in Canada are based on Statistics Canada’s low income cutoff lines. Low-income cut-offs are income thresholds at which a family is more likely to devote a larger portion of their income to food, shelter and clothing than the average Canadian family. Statistic Canada’s low income cutoffs change when average spending on food, shelter and clothing changes. In other words, low income cut-offs are relative, not absolute, measures. This relativism means that they are actually measuring inequality, and not poverty.

Low income cut-offs have never been intended to be used as poverty lines. Each year Statistics Canada warns that low-income cut offs are not a poverty measure yet groups such as Campaign 2000 continue to use them to gain significant press coverage. Bernard Paquet of Statistics Canada writes, “Neither low-income cutoffs nor low-income measures were designed to measure poverty, at most they were meant to show to what extent some Canadians are less well-off than others.”

In 2001, a family of four living in a city was counted as low income if their total after tax income was less than $29,900. While living on this budget might be tight, it can clearly afford to supply a family with a nutritious diet, satisfactory housing, clothing, items for personal hygiene, health care, telephone, and transportation.

Another problem with poverty numbers from Campaign 2000 is that they use before-tax low-income cut-offs to exaggerate estimates of poverty. Statistics Canada itself considers after-tax low-income cut-offs to be preferable since they reflect the full redistributive impact of Canada’s tax and transfer system. In 2001, 15.6 percent of children fell below the low income cutoff using before-tax income compared to 11.4 percent using after-tax income.

The final, and perhaps most serious flaw, of reports such as that from Campaign 2000 is that they take a snapshot of low-income. Low income is generally not a permanent experience. Many people, including students and young families, go through periods in which they are considered to be “in strained circumstances”. Given their initial lack of experience, their incomes start out low, peak when they hit middle age, the prime earning years, and then begin to fall as they approach retirement.

According to Statistics Canada’s report, Income in Canada 2001, 10.4 percent of all Canadians and 11.4 percent of children were living in low income in 2001, measured using after tax income. Most of these families how ever moved out of low income within 6 years. Over a six-year period, from 1996 to 2001, only 3.2 percent of Canadians and 3.0 percent of children remained in low income for all 6 years. Clearly, for many families low income is a transitory experience.

A superior approach to evaluating poverty has been created by Chris Sarlo, a Professor of Economics at Nipissing University. Sarlo’s Basic Needs Line is the level of income needed to meet such basic needs as a nutritious diet, satisfactory housing, clothing, health care, public transportation, household insurance, telephone service and a host of others and household supplies and telephone service.

Using the Basic Needs Line, approximately 10.0 percent of children were in poverty in 1996, the most recent year for which data is available. Compare this figure with the 16.7 percent of children living below Statistics Canada’s low income cutoff in 1996. Basic Needs estimates of poverty reduce the exaggerated figures presented by Campaign 2000 by over 40 percent. Keep in mind that poverty estimates obtained using the Basic Needs Line are also a snap shot of 1996 and that the percentage of children living in poverty has most probably decreased significant over the past 6 years.

No Canadian can ignore that fact that there are Canadian children living in poverty. There is no excuse for the fact that some children go without basic needs. However, grossly overstating the problem using flawed estimates and ignoring income mobility, results in a misleading depiction of reality. Exaggerated poverty levels reported by Campaign 2000 impede our ability to identify the true dimension of the problem and to assist those that need our help the most.