There’s been no ‘extraordinary’ drop in poverty

MontrealGazette.com – opinion
July 24, 2013.   By Rick Goldman, Special To The Gazette

Andrew Coyne resorts to a statistical sleight of hand in attempting to portray Canada as a champion in reducing poverty (“‘Poverty’ drops; media ignore it,” Opinion, July 23).

To demonstrate a supposed trend, Coyne takes the lowest point of an economic downturn (1996), compares it to today and says: Voilà — amazing progress has been made! The percentage of people below the low-income cutoff has been nearly halved, from 15.5 per cent to 8.8 per cent!

A less selective use of statistics might have noted that the percentage of those below the low-income cutoff stood at 10.2 in 1989, revealing a much less impressive rate of progress than Coyne’s figures would lead us to believe. At this rate, it will take us another 150 years to eliminate poverty in Canada.

In fairness, Coyne also acknowledges that the low-income cutoff measure is not a “poverty line” and is virtually incomprehensible.

He also concedes that, according to the Low-Income Measurement (the most widely used international poverty metric), the results in Canada have been “less impressive.” How much less? Well, the poverty rate is 20 per cent higher today than it was in 1989 (12.6 per cent vs. 10.5 per cent), according to that yardstick.

Conservatives don’t generally like that measure, because it sets the low-income bar at half the median income, which can move over time. They ask: “What good is a poverty line if it keeps moving?” According to this view, we should be measuring poverty in absolute terms, based on a fixed basket of goods. If more Canadians can afford that basket, we’re making progress — and it’s of no importance if the rich are pulling even farther away from the pack.

In fact, Statistics Canada started producing such an index, known as the Market Basket Measure, a few years back. How are we doing with that one? Well, not so hot there either. By that measure, 12 per cent of Canadians could not afford the basket in 2011, up from 10.2 per cent in 2007.

Coyne asks why we are not talking about the “extraordinary” drop in poverty. The reason is simple: there hasn’t been one.

The dismal picture at the bottom of the income scale is but one symptom of an economic model that has not been working for low- and middle-income Canadians. This year Statistics Canada reported that the median income of Canadians (excluding the top 1 per cent) rose by just $400 — from $28,000 in 1982 to $28,400 in 2010 (with dollar figures for both years expressed in 2010 constant dollars). And this despite the fact that the per-capita gross domestic product increased by more than 50 per cent during that time. The top 1 per cent did a tad better, however. Their median income rose by more than $90,000 (from $191,000 to $283,400, again in 2010 constant dollars) during that period.

Business columnists often tell us that increases in labour productivity are essential for higher living standards. Maybe so, but things have not worked out too well there either for working stiffs. Labour productivity increased by some 37 per cent over roughly the above period, yet corrected for inflation, the median earnings of full-time workers barely budged.

In the final analysis, questions of income distribution, including how much poverty a society will tolerate, are basically political choices. Other countries, while facing the same supposedly unstoppable forces of globalization, have done much better than Canada in terms of poverty and inequality, without sacrificing productivity or international competitiveness. To take one example, Denmark’s poverty level (using the Low-Income Measure) is barely half of Canada’s, and its level of income inequality is well below ours as well. Yet according to the Conference Board of Canada, it enjoys higher labour productivity than Canada. It also ranks ahead of Canada in the World Economic Forum’s Global Competitiveness Report.

The bottom line is that a more fair and inclusive society is no less affordable than a meaner and more unequal one – in fact, it’s more affordable.

Rick Goldman is a Montreal lawyer and part-time lecturer at the McGill University School of Social Work.

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