NCPA - National Center for Policy Analysis

Poverty is Temporary: Findings from Canada

April 26, 2004

Poverty indicators may overstate the problem because most low income families don't stay poor very long, concludes the Fraser Institute of Canada.

Though not an official measure of poverty, Canada monitors "low income" by calculating the level 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. For example:

  • In 2001, families were classified as low income when they spent 64 percent of their after-tax income on basic necessities.
  • In 2001, the proportion of Canadians that were defined as low-income was 10.4 percent; for children this figure was 11.4 percent.
  • However, over a six year period from 1996 to 2001, only 3.2 percent of Canadians and 3.0 percent of children lived in a low-income state for all 6 years.

Given their initial lack of work experience, many people such as students and young families go through periods where they have low levels of income. However, as they gain relevant skills, work longer and become more productive, their incomes rise.

The Fraser Institute suggests the low income cut-off and U.S. poverty levels should be considered as "snapshots" in time -- useful, but limited tools in formulating anti-poverty policies.

Source: Niels Veldhuis and Jason Clemens, "A Rising Tide Lifts All Boats," Fraser Forum, The Fraser Institute, January 2004.


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