1. Poverty and Affluence in Canada

2. Measuring Poverty What does it mean to be poor?
What characteristics does poverty involve?
Economists disagree as to how they should determine who is poor, why people become poor and what needs to be done to reduce poverty

3. Absolute Poverty A state of utter destitution
Due to Canada’s social welfare system, the incidence of this extreme form of poverty is rare in Canada

4. Relative Poverty
Not necessarily a Canadian that lacks food, safe water, shelter, or clothing
A Canadian that feels poor and that other Canadians see as poor compared to (relative to) others

5. Low-Income Cut-Off Developed by Stats Canada in 1968
Below LICO, household classified as being in a limited income situation

6. Low-Income Cut-Off
Average Canadian household spends about 35% of its before-tax income on food, clothing, and shelter
A household that is “relatively worse off” spends more than 55% on these three necessities

7. Let’s Calculate
Tom makes $40,000 / year. Tax owed $ CPP approx. $1980, IEP approx. $1980 Net Income $30,247
Net Income $30,247
35% of Gross Income $14,000 OR
For food, shelter and
clothes each month $1,167
Is that realistic?

8. Before/After Tax Income
LICO’s calculated using both before-tax income and after-tax income
Before-tax income is easier, but after-tax income is used more…why?

9. Before/After Tax Income
…truer picture. WHY?

10. Poverty Line LICO’s used by analysts as indications of poverty
Media often refers to LICO’s as “poverty lines”

11. The Poor Working poor – people who work, but still poor
WHY?sence of unions, temporary work etc)
The welfare poor – people who do not work and are experiencing poverty (elderly, poor health, single parents, job loss)

12. Welfare State
Early in the 20th century, Canada established a “welfare state”
Philosophy – that governments should use social programs and transfers financed out of taxation to help people who are poor, suffer illness, or are otherwise disadvantaged.

13. Progressive Tax System
First step of the welfare state was to allow low-income earners to keep most of the money they make
Progressive Tax System – taxes higher-income at a higher percentage. The more you make the more tax you pay.

14. Why does this imbalance in income
Statistics
In Canada, there are drastic income inequalities based on gender and race
Two parent families - highest incomes
Single mothers - lowest incomes (45% live in poverty)
Uneducated single mothers – 90% live in poverty
Visible minorities have lower average incomes than the rest of society
Why does this imbalance in income
distribution exist?

15. Attacking Poverty
Programs to combat poverty can be divided into two broad but overlapping categories:
Structural Strategies
Relief Strategies

16. Attacking Poverty
Structural Strategies – attempt to eliminate the causes of poverty (long term)
Relief Strategies – immediate support (food banks, government transfers). Often criticized as “band-aid solutions”

17. Key Questions
Does society have an obligation to individuals/families in poverty – to introduce social change/programs to assist those in need?
OR…
Should this be a matter for the individuals/ families themselves to deal with?

18. The Employment Equity Act (1986)
Purpose: to tackle systematic discrimination
Act identifies four main groups: minorities, Aboriginals, people with mental and physical disabilities
Requires employers to provide these groups with equity by setting hiring goals for each group (reflective of these groups in Canadian workforce)

19. Welfare in Ontario
Easiest short-term tool for raising income level of the poor = $
Money required for survival
Some people unable to earn money for various reasons
- i.e. severely disabled, mentally ill, woman with children who has left an abuse husband, single parent attending school, etc.

20. How much do you give? To whom?
Problems with Welfare
How much do you give? To whom?
Disincentives: Discourages some recipients from finding employment
Functional Repercussions: Logical outcome of “high” payments – people receiving welfare didn’t feel a need to look for work

21. What are some alternatives to welfare?

22. Competing Perspectives
Does welfare discourage people from looking for work? Or, is it a myth put forward by people unfamiliar with the reality of life on welfare?