NCPA - National Center for Policy Analysis

Poverty In Canada Overstated

August 24, 2001

About 8 percent of Canadians live in poverty, rather than the frequently quoted number of 17 percent, says a new study.

Claims about the number of poor in Canada are usually based on Statistics Canada's Low Income Cutoff lines (LICO), but LICO was not designed as a poverty measure.

Professor Christopher Sarlo, the study's author, has developed a Basic Needs Index as a more accurate measurement of poverty. He calculated how much income individuals or families require to buy -- in adequate quantity and quality -- all the necessities of modern day life. According to this approach, someone is impoverished if he or she lacks any items required to maintain long-term physical well-being.

  • The estimated annual cost of this standard of living for a single person in 2000 is about C$ 8,900 but varies from city to city.
  • The rate of poverty in Canada fell solidly from about 40 percent in 1951 to about 8 percent in 1981 where it more or less stayed through 1996, the latest year for which data are available.

Additionally, the study found:

  • Measured by consumption, poverty is consistently lower, by roughly 2 to 3 percentage points, than income poverty over the same time period.
  • About 10 percent of children live in poverty compared to the 1 in 5 figure often quoted.
  • The rate of income poverty for seniors has fallen dramatically to the point that the current poverty rate for those over age 65 is consistently below 1 percent.

Most of the poor live in families and the fastest growing type of family is the single parent family -- a group at high risk for poverty.

Source: Christopher A. Sarlo, "Measuring Poverty in Canada," Critical Issues Bulletin, July 2001, Fraser Institute, 4th Floor 1770 Burrard Street, Vancouver, B.C. V6J 3G7, Canada, (604) 688-0221.


Browse more articles on Tax and Spending Issues