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Income Inequality in Canada

Academic Discipline: Social Sciences
Course Name: Social Stratification
Assignment Subject: Income Inequality in Canada
Academic Level: Undergraduate
Referencing Style: APA
Word Count: 1,805

In 1989, when Canada’s child poverty rate climbed to over 1 million, the Federal government passed a landmark bill, called Campaign 2000. With unanimous support by Federal politicians, it formalized a plan to eliminate child poverty by the year 2000 and for all Canadians by 2015 (Family Service Association, 2017). As the new millennium came and went, these goals were far from actualized. In fact, poverty in Canada has not only escalated since this pledge, but it has also become more pronounced and divisive. On the world stage, Canadian rankings reflect these disparities, suggesting that Canada’s reputation as the land of the free is nothing more than rhetoric. Within Canada, this rhetoric is also evident when it comes to inclusivity and diversity as a myriad of publications and reports consistently show that poverty is deeply marked along lines such as gender, immigrant status, race, ethnicity and other marginalized identities. And, while various government strategies have been implemented during these last few decades, it is increasingly evident these strategies are, for the most part, band aid solutions to more deeply systemic problems. As such, this paper will illustrate the systemic nature of poverty in Canada, tracing its trajectory since Campaign 2000 hitherto. Some of the central government efforts to address poverty will also be outlined as will evidence of growing chasms between Canada’s rich and poor. Particular attention will be paid to the disproportionate effects of poverty on Canada’s marginalized groups generally, and in their intersectionality in order to point to the need for more multifaceted and concerted responses so that Canada does not become the land of the poor.

From Pre to Post Campaign 2000: The Rise of Poverty and Inequality in Canada
Despite the Federal government’s 1989 pledge to eliminate poverty in Canada, child and family poverty rates have increasingly become more pronounced. When Campaign 2000 was first introduced, 1 million of Canada’s children living in poverty were calculated to be 15.8% (Family Service Toronto, 2017). However, several reports pointed out that this percentage was much closer to 17% of Canadian children, a rate more than double for Canada’s Indigenous children at almost 40% at that time (Macdonald & Wilson, 2013). Since that time, the number of Canada’s children living in poverty has continued to rise; according to the 2017 National Child Poverty Report Card on poverty in Canada, poverty now affects over 1.3 million children, comprising 18.5% of all Canadian children (Family Service Toronto, 2017). Similar patterns are evident with respect to family poverty which has risen from 33% in 1989 to 37% in 2017 (Family Service Toronto, 2017). As of 2015, this meant that 1 in 7, or 4.9 million Canadians were struggling to meet their basic needs (Canada without Poverty, 2015).

These alarming patterns are also evident on the world stage, with Canada increasingly faring as one of the weakest among developed countries. For example, in 2011, the Organization for Economic Coordination and Development (OECD) ranked Canada 19th of 30 countries when it comes to poverty rates (defined as having less than 50% of disposable income than the average (Raphael, 2011). Perhaps not surprisingly, in 2012, Canada came under international fire for its lack of ability to honor its commitments to tackling poverty as evidenced in a United Nations report outlining Canada’s lack of efforts to maintain for an adequate standard of living (Kumar. 2017). Despite such warranted criticism, Canada’s OECD ranking plummeted to 24th out of 35 OECD countries in 2015, a position that has been called shameful in lieu of Canada’s wealth and relative economic stability (Canada without Poverty, 2015). These rates are also evident in terms of child poverty rates; in 2011 Canada placed 21st of 30 OECD nations (Raphael, 2011) falling to a shocking position in 2016 to 25th among the 30 countries (OECD, 2016).

Several explanations have been offered with regards to these dismal rankings and the growth of already alarming poverty rates. Some have argued that Canada’s lack an official definition of poverty creates inconsistencies in how it should be measured, and hence addressed. Currently, three main metrics are used: the Low Income Measure (LIM) or the LIM After Tax (LIM-AT), the Low Income Cut Off (LICO), and more recently, the Market Basket Measure (MBM), namely the amount a family would need to cover basic living necessities, such as food and shelter (Kumar, 2017). Others trace Canada’s poverty problem back to the federal government’s cutbacks to social programs, such as affordable housing and income supports beginning in the 1980s (Klein & Yalnizyan, 2016). The effects of globalization have also been cited as one of the causal factors underlying rising poverty rates. More specifically, what were once middle class manufacturing jobs have been increasingly outsourced to low wage countries, thereby leaving a considerable gap in Canada’s labour force (Jackson, 2015). Moreover, because Canada’s social programs tend to rely on a market oriented approach, Canada’s position in the global marketplace leaves much to uncertainty and external forces, a pattern that was evident in the 2008 global financial crisis (Raphael, 2011).

Reducing social and income supports during times of broader economic downturns and recessions may seem understandable, if not inevitable. However, redistribution patterns indicate that such reductions have largely occurred on the transfer side, becoming more pronounced from the mid-1990s onward with cutbacks to the most important sources of income supports among Canada’s poor: Employment Insurance (EI) and social assistance (Green, Riddell & St-Hilaire, 2016). More specifically, as documented in a 2011 OECD report, Canada’s tax-benefit system offset more than 70% of market inequality in the mid-1990s compared to more current levels at less than 40% (Canada Without Poverty, 2015).

With Canada’s changing redistributive policies over time, income disparities between Canada’s rich and poor have become much more pronounced. For example, from 1981 to 2011, Canadian real GDP per person rose by 50%, but the median hourly wage increased by a mere 10% during this period (Jackson, 2015). During the period from 1998 to 2013, massive growths were also evident, with Canadian CEOs earning 105 times the average wage to that of 189 times (Jackson, 2015). Moreover, in 2005, the median net worth of the top 10% of Canadians was $620,600, or 41.9% of all wealth; in 2012, it skyrocketed to more than triple this rate to $2,103,200 (Broadbent Institute, 2014). However, these estimates appear to be conservative as in 2013, it was noted that the top 10% of Canadians owned closer to half of all wealth, comprising a collective net worth of $230 Billion (Jackson, 2015). Thus, substantive increases in earnings and income have occurred over time, but they have been met with commensurate increases in inequality measures.

Income Inequality to Social Inequality: The Marginality of Poverty in Canada
On the basis of income measures alone, it is evident that poverty in Canada disproportionately impacts particular groups, such as immigrants, non-permanent residents, women and those deemed as visible minorities. Currently, the most comprehensive measure to attain poverty rates in Canada is the National Household Survey (NHS) which is conducted every 5 years. While the Survey is representative of those who complete it, results from the 2011 Survey point to substantial evidence of social inequality. Using the Low Income Measure – After Tax to measure poverty, some of the disparities include: Immigrants at 18.3% versus non-immigrants at 13.6%; those deemed ‘visible minorities’ at 21.5% versus non-visible minorities at 13.3%; Non-permanent Canadian residents at 38.1%; those with Aboriginal identity at 25.3% versus non Aboriginal identity at 14.5%; and women at 13.3% versus men at 11.9% (Klein & Yalnizyan, 2016). Racialized patterns also emerge with 1 in 5 racialized families living in poverty versus 1 in 20 for non-racialized families (Canada without Poverty, 2015). In addition, data collected by Employment and Social Development Canada (ESDC) (2016) also points to some striking rates for recent immigrants with a 20.3% poverty rate, more than double the Canadian population rate at 8.8%.

While it may appear that women and men are now relatively close in their experiences of poverty, gender in combination with other marginalized identities present a much different picture. For example, poverty rates for single parent families are much higher than those for two parent families at 34% poverty rate, which is almost 7 times higher than two parent families at 5.1% (Canadian Centre for Policy Alternatives, 2017). But, when these families are headed by women, there is a three times greater likelihood of living in poverty at 21% for single mothers and 7% for single fathers (Canada without Poverty, 2015). And, a shocking 49% of children growing up in female led lone parent families experience poverty (ESDC, 2016). When it comes to people living with disabilities, similar patterns are evident. While poverty rates for individuals living with disabilities are almost double the national average at 15%, 59% are women (Canada without Poverty, 2015).

With income being the main determinant of poverty, gendered discrepancies point to various problematic trends, especially as gender intersects with other forms of marginality. Based on gender alone, there is widespread documentation that women’s earnings at 72 cents on the male dollar have remained stagnant for almost a decade (Family Service Toronto, 2017). This discrepancy was noted in a 2013 report by the Canadian Centre for Policy Alternatives, this disparity in income was represented the fifth largest among the 34 OECD countries (Strumm, 2015). Women are also far more likely than men to be in precarious employment positions, representing approximately 71% of part-time (ESDC, 2016), and comprise almost two-thirds of all minimum-wage Canadian workers (Galarneau & Fecteau, 2014). Income levels for racialized women highlight the impacts of double marginality with racialized women earning 32% less than non-racialized women at work (Canada without Poverty, 2015). Most concerning are the income disparities for racialized immigrant women who earn a mere 48.7% of what non-racialized immigrant men earn (Canadian Centre for Policy Alternatives, 2017).

It has been the aim of this paper to provide a snapshot of child and family poverty in Canada before and after the federal government’s pledge for eradication in Campaign 2000. Through pointing to a myriad of reports and publications, it is evident that poverty rates have only risen, as have income discrepancies between Canada’s rich and poor. These discrepancies as they relate to marginalized identities were also documented in order to illustrate that when it comes to poverty and income levels, Canada has grown more unequal than inclusive. Indeed, the current liberal government has begun taking important steps to address the escalation of poverty in Canada, such as an expanded Canada Child Benefit and a forthcoming National Housing Strategy (Wellesley Institute, 2017). However, the statistics in this paper suggest these changes are the tip of a massive iceberg. Eliminating poverty requires systemic and broader changes far beyond income levels to address equality of opportunity and its lack thereof within Canada’s social, political and economic infrastructure.

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