Low Income in Canada: 2000-2002 Using the Market Basket Measure - June 2006
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IV. A Focus on the "Working Poor"
There is growing interest in Canada in the situation of a group within the low income population commonly described as the "working poor." These are persons who live in families whose Main Income Recipient12 (MIR hereafter) had significant annual hours of paid work but were unable to amass enough income to rise above their family's low income threshold.
In this report, we use a recently proposed definition of the "working poor".13 This definition classifies as low income workers those persons aged 18-64 who are not full-time students, have worked for pay a minimum of 910 hours in the reference year and yet live in families whose total disposable income is below the MBM low income threshold in that year for their community or community size and family configuration. The standard of 910 annual hours of paid work or more was chosen to define "workers" as it is the equivalent of working for pay at least 35 hours a week for half the year (26 weeks), which is a significant attachment to paid work.
The MBM is well-suited to analysis of the "working poor" since its definition of disposable income takes into account expenses commonly incurred when the major income recipient in the family takes up paid work; including income taxes and the employee portion of payroll taxes, mandatory deductions for employer-sponsored benefits and out-of-pocket spending on child care and non-insured but medically recommended expenditures on prescription drugs, dental and vision care and aids, devices and supports for persons with disabilities.
To analyze low income by the work status of the MIR in working-age families, families are divided into four groups (See Chart 5). In 2002, in the vast majority of working-age families,14 the MIR had at least 910 hours of paid work. Families where the MIR did not work for pay, was a full-time student or worked for pay between 1 and 909 hours accounted for much smaller shares of the total.
1. Incidence
In 2002, 18.3% of all economic families where the MIR was aged 18-64 had a disposable income below their MBM low income threshold.(See Table 1a). But the incidence ranged from 7.0% for families where the MIR had 910 hours or more of paid work to 53.7% for economic families where the MIR did not work for pay.
| MIRs by paid work status | 2000 | 2001 | 2002 |
| All MIRs 18-64 | 19.8 | 18.7 | 18.3 |
| MIR Full-Time Student | 54.1 | 50.8 | 52.9 |
| MIR 0 Paid Hours | 56.7 | 56.0 | 53.7 |
| MIR 1-909 Paid Hours | 42.4 | 37.1 | 40.9 |
| MIR 910+ Paid Hours | 8.4 | 7.7 | 7.0 |
| Children <18 by MIR's paid work status | 2000 | 2001 | 2002 |
| All MIRs 18-64 | 18.2 | 16.8 | 16.7 |
| MIR Full-Time Student | 53.1 | 41.4 | 49.3 |
| MIR 0 Paid Hours | 73.1 | 80.2 | 74.4 |
| MIR 1-909 Paid Hours | 50.2 | 44.3 | 51.8 |
| MIR 910+ Paid Hours | 10.0 | 8.5 | 7.9 |
As can be seen from Tables 1a and 1b, the incidence of low income for families where the MIR had at least 910 hours of paid work (and for children in such families) was much lower than for the other groups. Moreover, there was a significant decline in the incidence of low income for such families and for their children between 2000 and 2002, while there was no statistically significant change in the incidence of low income for the other three groups.
While the risk of low income for economic families where the MIR had 910 hours or more of paid work was much lower than for the other three economic family types, they accounted for a substantial share (29.4%, or 479,000 families) of all low income working-age families.15 (See Chart 6). This was because (See Chart 5) they accounted for such an overwhelming majority of all working-age families.
A similar pattern held for children living in economic families where the MIR was 18-64. Even though the risk of low income in 2002 for children in economic families where the MIR had 910 hours or more of paid work was by far the lowest, (see Table 1b) there were 401,000 low income children in such families accounting for over 40% of all low income children in working-age families (See Chart 8). This is because almost 85% of children in working-age families with at least one child under age 18 (5,087,000 out of 6,016,000), had an MIR who worked for pay at least 910 hours. (See chart 7).16
2. Depth
As Table 2a reveals, the depth of low income for low income families where the MIR worked for pay 910 or more hours was also significantly lower than for the other groups - 30.3% in 2002 compared to 47.6% where the MIR was a full-time student; 37.5% where the MIR was a non-earner and 36.4% where the MIR worked for pay 1-909 paid hours. As Table 2b shows the same pattern prevailed (at much lower depths of low income) for children among the four groups.
| MIRs by paid work status | 2000 | 2001 | 2002 |
| All MIRs 18-64 | 37.7 | 36.9 | 37.0 |
| MIR Full-Time Student | 49.0 | 47.8 | 47.9 |
| MIR 0 Paid Hours | 39.1 | 36.9 | 37.8 |
| MIR 1-909 Paid Hours | 35.5 | 36.6 | 36.3 |
| MIR 910+ Paid Hours | 30.4 | 31.4 | 30.6 |
| Children <18 by MIR's paid work status | 2000 | 2001 | 2002 |
| All MIRs 18-64 | 25.9 | 26.9 | 25.6 |
| MIR Full-Time Student | 25.2 | 28.8 | 25.2 |
| MIR 0 Paid Hours | 29.3 | 32.8 | 31.6 |
| MIR 1-909 Paid Hours | 29.2 | 29.2 | 26.4 |
| MIR 910+ Paid Hours | 22.3 | 23.2 | 20.3 |
3. Persistence
Adults and children in low income, working-age families where the MIR had at least 910 hours of paid work in 2000 (i.e. those described as the "working poor") were also less likely to experience persistent low income17 over the 2000-2002 period than those where the MIR had no hours of paid work in 2000. Note from Table 3a that only 42% (4.9/11.8) of those who were working poor in 2000 and experienced low income at least one year during this period also experienced persistent low income, compared to 77% (50.6/65.6) of those who had 0 paid hours of work in 2000. The contrast was even sharper for children living in these families (See Table 3b).
The incidence of persistent low income between 2000 and 2002 was not significantly different statistically for those families where the MIR was a full-time student in 2000 or worked for pay between 1-909 hours in that year. This was also true for children living in these families.
| MIRs by work status | Low Income At least 1 Yr | Low Income All Years | Persistent Low Income |
| All MIRs 18-62 | 21.9 | 7.6 | 12.0 |
| MIR Full-Time Student | 57.3 | 19.7 | 31.6 |
| MIR 0 Paid Hours | 65.6 | 38.2 | 50.6 |
| MIR 1-909 Paid Hours | 50.3 | 17.0 | 25.2 |
| MIR 910+ Paid Hours | 11.8 | 2.3 | 4.9 |
| Children <16 in 2000 by MIRs' paid work status | Low Income At least 1 Yr | Low Income All Years | Persistent Low Income |
| All MIRs 18-62 | 22.8 | 7.8 | 12.5 |
| MIR Full-Time Student | 58.5 | 24.0 | 39.8 |
| MIR 0 Paid Hours | 90.6 | 57.2 | 78.7 |
| MIR 1-909 Paid Hours | 57.6 | 23.2 | 35.6 |
| MIR 910+ Paid Hours | 14.4 | 2.8 | 5.3 |
12 The Main Income Recipient in an economic family is the adult in that family who has the highest individual annual income.
13 See Dominique Fleury and Myriam Fortin, "Canada's Working Poor", Horizons, Volume 7 Number 2, (December 2004), pp.51-57.
14 This statement refers to those families where the MIR's hours of paid work and full-time student status were known in 2002. This applies to all other pie charts in this section.
15 This is the share of all working-age families whose hours of paid work were reported in the Survey of Labour and Income Dynamics for 2002. The same method was used to determine the share of low income children in "working" families in the next paragraph. The numerical estimates assume that working-age low income families where the work status of the MIR was unknown were divided in the same proportions as those whose MIR's work status could be identified.
16 The 6,016,000 number refers to the number of children where the work pattern of the MIR could be identified. In total there were 6,825,000 children under the age of 18 in the ten provinces in 2002.
17 When doing longitudinal analysis it is necessary to fix the status of the group being analyzed at the beginning of the period and then follow them for the remainder of the period even though their status may change in the later years of the period. For example when we follow what happened to persons who worked for pay 910 hours or more in 2000 and were the MIR in a specific economic family in that year it must be kept in mind that in subsequent years they may work for pay for less than 910 hours or may cease to be the MIR in their economic family.
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