Applied Research Bulletin - Volume 6, Number 1 (Winter/Spring 2000)

High Risk Factors Behind Poverty and Exclusion

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Several researchers have recently pointed out that poverty in Canada is by nature dynamic. The poor move in and out of poverty according to changes in family structure and labour market conditions. Some members of the press have seized on these findings to call for abandonment of the notion that the poor tend to get stuck in poverty and dependence.

But the Applied Research Branch (ARB) in ongoing research and Ross Finnie of Queen's University in a forthcoming ARB working paper find two distinct groups among the poor in Canada. One group does experience poverty as a short-term condition. However, a second group experiences poverty as a much longer-term situation and they constitute a growing proportion of the poor.

At High Risk

Three high-risk groups—lone parents, immigrants landed in Canada less than 10 years ago and persons with disabilities—are those most likely to head poor families in any given year. Families headed by members of these groups had an average poverty rate of 43.3 percent in 1997 compared to 8.7 percent for all other families.

Heads of families under age 30 who belong to one of the high-risk groups are even more likely to be poor. They had a poverty rate of 66.4 percent in 1997 whereas "other family heads" under 30 had a poverty rate of just 14.7 percent.

Data for aboriginal people who lived off reserves at the time of the 1996 census show that this group also had a high poverty rate (44 percent in 1995). Aboriginal Canadians on reserves are not surveyed in Statistics Canada income surveys.

High-risk groups make up a growing proportion of the poor. By 1997, the three groups—lone parents, recent immigrants and persons with disabilities—accounted for 53.9 percent of non-elderly poor families, up from 41 percent in 1985. Demographic changes account for most of this increase: these high-risk groups represent larger proportions of the entire population of Canada as well as of the poor population. Recent immigrants have also suffered a large increase in their poverty rate.

The research demonstrated that the poverty and dependency of the high-risk groups were much more longer-term. The probability of being in a household with an income less than Statistics Canada's 1992-base Low Income Cut-off lines (LICOs) for each and every year from 1993 to 1996 was 7.0 percent for all non-elderly persons. The figure rises to 23.5 percent for the high-risk groups.

In addition, the likelihood of receiving Social Assistance at least one year between 1993 and 1996 was 5.1 percent for non-elderly Canadian residents not in high-risk groups. This figure rises to 27 percent for the high-risk groups. The probability of receiving social assistance all four years was 12.4 percent for high-risk families but only 0.9 percent for others.

However, not all the high-risk are poor. In fact, over half the high-risk individuals avoided poverty entirely during the 1993-1996 period. But their probability of at least one year of poverty was much higher than for all other persons, 49.2 percent versus 19.7 percent.

Jobless spells and low skills are major factors behind long spells of poverty

Being a member of a high-risk group is the greatest factor identified with long-term poverty spells. But since most of the high-risk are never poor, other factors must also be important. What other factors are associated with long spells of poverty?

The most important factor is the inability to stay employed. Members of disadvantaged groups who had no jobless spells over the four years were no more likely to be poor all four years than other people residing in Canada.

But what factors make it difficult to earn enough money to escape poverty? To identify these barriers, the researchers shifted the focus of analysis from total money income poverty to market poverty. The probability of four years of market income poverty (i.e., market income below the LICOs) was calculated as 24.8 percentage points for the high-risk as a whole. Then the researchers looked at the added risk associated with a number of factors of experiencing low market income all four years. The most significant factor, not surprisingly, was the lack of a high school diploma. Not having a high school diploma added 21.9 percentage points to the risk of being poor. A high-risk individual without a high school diploma had a 47 percent risk of being poor in all four years from 1993 to 1996. Having visible minority status or a child under 5 also added significantly to the risk of being market poor.

As the Century Turns

Significant portions of the poor population remain poor for long periods of time. Those groups most likely to experience long spells of poverty are growing as a share of the non-elderly population and becoming significantly disadvntaged in the labour market compared to other people in Canada. These developments indicate that the problem of poverty will continue to loom large on the Canadian horizon unless the employment prospects of high-risk groups improve.

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