Welfare in Canada, 2016

Posted on November 1, 2017 in Social Security Delivery System

CaledonInst.org – Publications
November 1, 2017.    ANNE TWEDDLE, KEN BATTLE AND SHERRI TORJMAN

This report focuses on the incomes of four different households living on social assistance, commonly known as “welfare.”  It is a continuation of the welfare incomes series published regularly by the former National Council of Welfare.

Total welfare incomes consist of the sum of the following components:

Social assistance is the program of last resort.  It is intended for persons who have exhausted all other means of financial support.  Every province and territory has its own social assistance program, so no two are exactly the same.

Each program has different administrative rules, eligibility criteria, benefit levels and provisions regarding special assistance.  However, the basic structure of social assistance is much the same across the country, even though the specifics vary.

The most common way of assessing the adequacy of any income program is to compare it to a recognized standard and then determine how far it diverts from that indicator.  There is no single or commonly accepted baseline, but rather several measures that typically are used for comparative purposes.  They fall into one of two groups: poverty measures and income measures.

Poverty measures are considered to be the baseline level below which households are deemed to live in poverty.  Two poverty measures are employed in this report: the after-tax low income cut-offs (LICOs) and the Market Basket Measure (MBM).

In 2016, welfare incomes for single employable households ranged from 37.7 percent of the after-tax poverty line in Alberta to a ‘high’ of 65.3 percent in Newfoundland and Labrador.  Most of the other jurisdictions cluster around the lower rate.

Welfare incomes for single persons with disabilities, while low, were slightly higher, ranging from 48.4 percent of the poverty line in Alberta to 69.8 percent in Ontario.  Alberta provides a separate program (AISH, or Assured Income for the Severely Handicapped) for persons with disabilities, which pays higher rates than the standard welfare program.  In 2016, incomes of single persons on AISH came to 94.2 percent of the after-tax LICO, nearly double that for persons with disabilities on standard welfare. The Saskatchewan Assured Income for Disability (SAID) program also pays higher rates than the standard welfare program.  For 2016, the income of single persons on SAID was 88.6 percent of the after-tax LICO, compared to 63.9 percent for those receiving Saskatchewan Assistance Plan benefits.

For single-parent households with one child age 2, welfare incomes represented 73.2 percent of the poverty line in Alberta and a surprising 107.6 percent of the after-tax LICO in Newfoundland and Labrador.  For two-parent families with two children ages 10 and 15, welfare incomes as a percentage of the poverty line ranged from 62.9 percent in British Columbia to 94.4 percent in Prince Edward Island.

The report also compares total welfare incomes in 2016 with the Market Basket Measure. As in the case of after-tax poverty lines, welfare incomes fall well below the designated baseline for all household types and in all jurisdictions, with the exception of persons on Alberta’s AISH program, at 95.0 percent of the MBM.

Income measures comprise the second group of comparators.  This set of measures assesses the adequacy of welfare relative to the level of income of other households in the population.  There are several different indicators that can be used for comparative purposes.  Two have been selected for this analysis: after-tax average and median incomes.  Since 2014, these data are drawn from the Canadian Income Survey (CIS).  Because the CIS uses a different methodology than the Survey of Labour and Income Dynamics (SLID), income data from 2014 onward should not be compared to data for earlier years.

After-tax average incomes represent the amounts that households actually can use in their daily lives – their so-called ‘disposable income’ after they have paid federal and provincial/territorial income taxes.  After-tax amounts represent a good basis for comparison to welfare, which is not subject to income taxation and is therefore effectively a de factodisposable income.

Welfare incomes for the four illustrative households typically range between 20 and 40 percent of after-tax average incomes.  Only in Newfoundland and Labrador do welfare incomes exceed 50 percent, at 59.8 percent of average incomes of single parents.

When compared to after-tax median incomes, the adequacy picture comes out slightly better. However, all are below 50 percent with the exception of the single parent with one child in Prince Edward Island, Manitoba and Newfoundland and Labrador, where welfare incomes reach 50.4, 54.7 and 67.4 percent, respectively, of the after-tax median incomes.

Regardless of which measure is used, the figures tell a powerful story about the adequacy of welfare incomes of Canadians.

http://www.caledoninst.org/Publications/Detail/?ID=1119

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