Warning signs: Poverty in 2022
Posted on May 1, 2024 in Social Security Delivery System
Source: Maytree.com — Authors: Alexi White, Mohy-Dean Tabbara, Sam DiBellonia
Maytree.com – Publications
April 26, 2024. Alexi White, Sam DiBellonia, Mohy-Dean Tabbara
The latest poverty statistics for 2022 show rates are up for the second year in a row. Things are getting worse for low-income Canadians. We will continue to miss our poverty reduction targets unless steps are taken to strengthen Canada’s income security system.
[ See Graphs in the original posting: maytree.com/publications/warning-signs-poverty-in-2022/?mc_cid=4d87aff514&mc_eid=de33f0d3f7 ]
On April 26, 2024, Statistics Canada released data on poverty in Canada for the year 2022. It comes from the annual Canadian Income Survey (CIS), which looks at a rotating cross-sectional sample of Canadians and includes data on income and income sources, disability, food security, housing, and individual and household characteristics.
Along with welfare incomes, poverty rates are a key metric of Canada’s efforts to fulfill the human right to an adequate standard of living. So how is Canada doing? Spoiler alert – things are getting worse, fast. Here’s a first take at what the latest data reveals.
Poverty in 2022 got worse across the board
Canada’s official poverty rate, which relies on the Market Basket Measure (MBM), rose to 9.9 per cent in 2022, representing 3.8 million Canadians. This is up substantially from the rate of 7.4 per cent in 2021 and 6.4 per cent in 2020. The overall poverty rate has nearly matched the pre-pandemic level of 10.3 per cent in 2019 and is now above Canada’s 2020 poverty reduction target of 9.7 per cent.
Working-age people saw the highest level of poverty at 11.1 per cent in 2022, just shy of the 11.8 per cent seen in 2019 prior to the pandemic. Meanwhile, poverty among children and seniors has now surpassed pre-pandemic levels. The poverty rate for children increased 3.5 percentage points to 9.9 per cent in 2022, up from 6.4 per cent in 2021. It is now above the pre-pandemic level of 9.4 per cent in 2019. While the poverty rate for seniors remains well below that of other groups, at 6 per cent in 2022 it is up compared with 5.6 per cent in 2021 and the pre-pandemic level of 5.7 per cent in 2019.
Several marginalized groups are more likely to live in poverty, and the gaps are widening. Indigenous people, racialized groups, immigrants, and peoples with disabilities all experienced significantly higher rates of poverty, as shown in the chart below.
Poverty varies significantly by province
Nova Scotia reclaimed the title of having the highest poverty rate, leapfrogging several other provinces with its 13.1 per cent in 2022, up from 8.6 per cent in 2021. Meanwhile, Quebec continues to have the lowest poverty rate at just 6.6 per cent in 2022, yet still up from 5.2 per cent in 2021. The poverty rate has met or exceeded pre-pandemic levels in five provinces: Nova Scotia, New Brunswick, Ontario, Manitoba, and Alberta.
Poverty is highest among working-age unattached singles
For many years, single parents and their children experienced the highest rates of poverty in Canada. Thanks to significant investments in child benefits, particularly the 2016 reforms that led to the Canada Child Benefit, child poverty has decreased for all types of families, but remains unacceptably high. In 2022, 26.9 per cent of children in female lone-parent families lived in poverty, up sharply from 18.4 per cent in 2021.
Today it is working-age unattached singles (“non elderly persons not in an economic family” in Statistics Canada parlance) who have the highest rates of poverty at 31 per cent in 2022, up nearly five percentage points from 26.2 per cent in 2021. All levels of government provide very little income support for working-age unattached singles living in deep poverty. The federal government, for example, contributed between 2 and 9 per cent of the welfare income of unattached single social assistance recipients. In contrast, they contributed between 21 and 46 per cent of the welfare income of households with children.
Who’s living in deep poverty?
To measure the depth of poverty, we look at the gap ratio. It expresses the size of the gap between income and the poverty line as a percentage of the poverty line. Thus, a family with a gap ratio of 30 per cent has an income that reaches 70 per cent of the poverty line. The gap ratio decreases as income gets closer to reaching the poverty line.
The chart below shows average gap ratios for various age groups and household types. Once again, we see that working-age unattached singles have the highest gap ratios. Thus, they are not only more likely to live in poverty, but those in poverty have average incomes that reach just over half the poverty line.
Conversely, while the children of female lone parents also have a high poverty rate, their average gap ratio is much lower, suggesting these families are closer to escaping poverty on average.
Seniors in Canada have both low poverty rates and a low gap ratio, though both have increased recently. The relative security that seniors enjoy is thanks to the comparatively generous system of Old Age Security and the Guaranteed Income Supplement. However, it is worth noting that the MBM is not designed to measure seniors’ poverty as it is based on a reference family of two working-age adults and two children.
Why did poverty increase in 2022?
Like its predecessors, 2022 was a tumultuous year. In January, monthly inflation had just exceeded 5 per cent and showed no signs of slowing, while unemployment was dropping fast and would bottom out at 4.8 per cent in July. As 2022 dawned, young children were still getting their first dose of the COVID vaccine, the Omicron variant was taking the world by storm, and the Freedom Convoy dominated headlines. By the summer, mask mandates were mostly gone.
Meanwhile, the federal government had started to pull back on the unprecedented emergency benefits rolled out in 2020. The Canada Recovery Benefit (CRB), itself a successor to the Canada Emergency Response Benefit (CERB), had ended on October 21, 2021. Pandemic-related modifications to EI, the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit, all ended during 2022.
As seen in the graph below, the increases and subsequent reductions in government transfers follow the same path as the trends in poverty, only reversed. It should not come as a surprise that investments in our income security systems directly led to reduced poverty.
Related indicators: food security and housing need
The data released on April 26 also shows that food insecurity is on the rise. In 2022, 22.9 per cent of Canadians reported some form of food insecurity. This is an increase from 2021 when the rate was 18.4 per cent. Consistent with this data, food bank visits also spiked. Food Banks Canada’s annual HungerCount report showed that food bank visits in March 2022 were up 15 per cent compared to a year earlier and 35 per cent compared to pre-pandemic rates in 2019.
As for housing, data from the biennial Canadian Housing Survey is currently only available up to 2021 when 9.8 per cent of the population lived in core housing need, defined as living in unsuitable, inadequate, and/or unaffordable housing, where the household is not able to afford an acceptable alternative in their area. This was down from 11.3 per cent in 2018. When 2023 data is available later this year, it will undoubtedly show higher rates of core housing need and a similar pattern to poverty rates.
Looking ahead: It won’t get better unless governments invest in income security
With poverty rates trending back to or beyond their pre-pandemic levels, Canada is moving further away from its poverty reduction targets of 9.7 per cent by 2020 and 6.1 per cent by 2030. In fact, the 2022 numbers show for the first time that Canada has failed to keep poverty rates below the 9.7 per cent target for 2020.
Although we won’t have data on poverty in 2023 for another year, food bank visits rose a further 32 per cent in March 2023 compared to a year earlier. That suggests poverty was up again last year. Recent investments, such as the Canada Disability Benefit, may help when the money finally gets to those in need some time in 2025, but the size and reach of the benefit is too low to have a significant impact on poverty rates.
Maytree calls on all levels of government to re-commit to poverty reduction and offer credible plans to reach their targets. Significant investments in income security during the pandemic cut poverty nearly in half. We know how to address poverty; we simply need policy makers to decide to do it.
Given the high rate and depth of poverty among working-age unattached singles, Maytree calls on governments to prioritize this group. Currently, the only federal income supports available to working-age unattached single adults living in deep poverty are the GST/HST tax credit and the Canada Carbon Rebate. To better support this group, Maytree recommends that the federal government transform the singles portion of the Canada Workers Benefit (CWB) into the Canada Working-Age Supplement (CWAS). To implement the CWAS would require adding a floor amount to the CWB that is available to people with no income, and to increase the maximum amount of the CWB.
The CWAS would support all working-age unattached single adults in deep poverty who file their tax return. It would also support many unattached singles with disabilities who will not be eligible to receive the newly established Canada Disability Benefit.
https://maytree.com/publications/warning-signs-poverty-in-2022/?mc_cid=4d87aff514&mc_eid=de33f0d3f7
Tags: poverty, standard of living
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