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Lesson Two - Social Inequality in Canada

2.2 Social Inequality and Mobility in Canada

Making Connections: Sociological Research

Measuring Levels of Poverty

Statistics Canada produces two relative measures of poverty: the low income measure (LIM) and the low income cut-off (LICO) measure. Human Resources and Skills Development Canada has developed an absolute measure: the market basket measure (MBM).

Low income measure: The LIM is defined as half the median family income. A person whose income is below that level is said to be in low income. The LIM is adjusted for family size.

Low income cut-off: The LICO is the income level below which a family would devote at least 20 percentage points more of their income to food, clothing, and shelter than an average family would. People are said to be in the low-income group if their income falls below this threshold. The threshold varies by family size and community size, as well as if income is calculated before or after taxes. For example, a single individual in Toronto would be said to be living in low income if his or her 2009 after-tax income was below $18,421.

Market basket measure: The MBM is a measure of the disposable income a family would need to be able to purchase a basket of goods that includes food, clothing, shelter, transportation, and other basic needs. The dollar value of the MBM varies by family size and composition, as well as community size and location. MBM data are available since 2000 only.

The three measures produce different results. In 2009, according to each measure, the following numbers of Canadians were living in low income:

  • LICO—3.2 million (9.6 per cent of the population)
  • MBM—3.5 million (10.6 per cent)
  • LIM—4.4 million (13.3 per cent)

Table 9.1 shows how the three measures also produce different results over time. Using the LICO measure results in a decreasing share of people in low income from 1996 to 2007, followed by a slight upturn in 2008 and 2009. The LIM measure results in a share of people in low income that has increased since 1990. The MBM, which has data starting only in 2000, shows results similar to the LICO but with a sharper upturn in 2008 and 2009.