Income and Social Status

Overview

Higher socio-economic status is associated with better health — in fact, income and social status seem to be the most important determinants of health. People at each level of the income scale are healthier and live longer than those at the level below. Countries in which incomes are more evenly distributed have a healthier population in terms of life expectancy, quality of life and mortality rates.

In addition to enabling people to cover basic needs, a higher income provides people with more choices and a feeling of greater control over decisions. This feeling of control is basic to good health.

Family income influences children's outcomes — children are dependent on their parents or guardians for food, shelter, clothing and recreational and social activities. For children, inadequate income can be harmful. Physical and mental health, cognitive and social development, and academic achievement can all be negatively affected by low income.

While average family income has been relatively stable through the 1990s, lower income families experienced decreases in income, while upper income families experienced increases. In particular, lone-parent families headed by women have persistently experienced low incomes.

Most children in Canada have access to adequate food and live in adequate housing. However, in 1995, close to 1 million children received food from a food bank.

While the causal relationship between income and health status is not clearly understood yet, it is widely accepted that raising family incomes is critical to raising child health outcomes.

Relationship to Healthy Child Development

Income affects all aspects of child health.

Socio-economic status does not only determine how children do during the preschool years, but it also appears to set the stage for health and well-being throughout life (Bertrand, 1998, p. 6).

A child's socio-economic status — determined by parents' income, occupation and education level (the latter two are the focus of other chapters in this report) — strongly influences development. For example, both infant mortality and low birth weight rates improve with each income level (CICH, 1994, p. 123).

Poverty is strongly correlated with increased risks of illness. The detrimental impacts of poverty on children are clear and show up across a wide range of child outcomes. Poor children face a greater risk of death, hospitalization and disability. They are more likely to have mental health disorders (CICH, 1994, p. 113), and to die as a result of injuries than their wealthier counterparts (Wilkins, Adams and Brancker, 1994, as cited in CICH, 1994, p. 122).

Conditions and Trends

The relationship of socio-economic status and health has been the focus of extensive research in Canada and other countries. In this section, three key issues are examined: family income, child and family poverty, and food and housing security.

Family Income

The average Canadian family needs 77 weeks' worth of work to cover basic annual expenses — meaning that most families must have two wage-earners (Vanier Institute of the Family, 1998, p. 25).

Average family income has been relatively stable in the 1990s; the 1996 figure of $56,629 is up $1,500 from 1993. However, despite little change in average income overall, between 1995 and 1996, average family income for families with the lowest income declined 3%. Conversely, average family income for those with the highest income increased almost 2%. The longer term picture shows that average family income has decreased $2,300 (3.9%) since 1989 (Statistics Canada, 1997a). See Exhibit 1.1.

Source: Adapted from Statistics Canada (1997). The Daly, (Catalogue No. 11-001, December 22, 1997.

Generally speaking, changes in family income can be attributed to labour market conditions, as almost 80% of total family income comes from employment. Canada's Labour Force Survey indicates that employment grew 1.3% in 1996, contrasting with the more robust growth of 2.1% in 1994, the most recent year of significant improvement in income (Statistics Canada, 1997a).

Government transfers are declining.

In 1996, government transfers declined, particularly Employment Insurance and social assistance payments (Statistics Canada, 1997a). Government transfers are an important source of income (Vanier Institute of the Family, 1998, p. 47). This made 1996 the third straight year that the proportion of family income from transfers decreased; in 1996, transfers accounted for 11.7% of total income, down from the peak of 12.9% in 1993. For the 20% of Canadians with the lowest income, 59% of their 1996 income was in the form of government transfers (Statistics Canada, 1997a).

Child and Family Poverty

Child poverty rates (using low income cut-off, or LICO, as the measure of poverty) are a reflection of parental poverty rates and tend to rise and fall as economic conditions deteriorate or improve. Low-income families live on incomes substantially below the average. In 1991, the average income of low-income couples with children under 18 years was $18,800 —just 32% of the $58,761 average income for all couples with children under 18 years. This proportion was relatively unchanged five years later. In 1996, the average income of low-income couples with children was $19,915 — more than 30% of the $63,981 average income for all couples with children (Statistics Canada, 1998a).

The depth of poverty for working age one-parent families has declined. In 1980, the average gap between "poverty line" income and "average" income of poor, working age lone parents was $10,284, declining to $9,604 by 1996. For working age two-parent families, the gap increased slightly from $8,474 to $8,866 (National Council of Welfare, 1998, p. 53). The benefits of the decreasing risk of poverty for children has been more than offset by the growth in the proportion of children under age 7 in lone-parent families. In 1975, 8.7% of children lived in lone-parent families; by 1992, nearly 1 million children (14.7%) lived in lone-parent families (HRDC, 1996, p. 2).

"Deep" poverty rates are high.

However, during this same period (between 1975 and 1992), there was virtually no improvement in deep poverty rates for children under age 18. (The "deep" poverty line is defined here as 75% of the 1986 LICOs). In fact, during that time, deep poverty rates for young children (under age 7) increased 1.6%. The incidence of deep poverty among children in lone-parent families declined significantly during the 18-year period (from 51.3% to 41.6%); however, the incidence is still very high (Zyblock, 1996, pp. 9-10).

Of Canadians who identify with an Aboriginal (First Nations, Inuit and Metis) group, 54% reported income of less than $10,000 in 1991, compared with 35% of all Canadian adults (Statistics Canada, 1993, p. xiv).

Government transfers appear to have played a major role in reducing the poverty gaps (i.e. between average income and poverty line) for all families — most strikingly for lone-parent families (Zyblock, 1996, p. 14). See Exhibit 1.3.

The overall decline in government transfer payments is of particular significance for lower income families since more than half of their income (59% in 1996) comes from this source. Overall, average family income for this group declined 3% in 1996, the result of both lower earnings and lower transfer payments. Female lone-parent families account for one in four families in this group (Statistics Canada, 1997a).

Number of poor children on the rise.

In fact, the number of poor children is increasing — it grew from 1.1 million in 1990 to 1.5 million in 1996 (National Council of Welfare, 1998, p. 12). This means that the proportion of children living in low-income families was 21.1% in 1996, little changed from 21.0% in 1995, but substantially above the low of 15.3% in 1989. The 1996 estimate was 47% more than in 1989. See Exhibit 1.4. During the same period, the total number of children increased 7% (Statistics Canada, 1997a).

"Young" families are hard.

Between 1986 and 1996, the incidence of low in come among "young" families (i.e. those headed by a person aged 25 to 34 years) increased from 16% to 21.2%. During the same period, the incidence of low in come among "older" families (i.e. those headed by a person over the age of 34 years) increased at a much slower rate and remained substantially lower (Statistics Canada, 1997b, pp. 182-183).

Many female-headed lone-parent families experience long-term poverty.

In 1994-95, one-quarter (24.6%) of children in Canada aged 0 to 11 years lived in households considered poor (Ross, Scott and Kelly, 1996a, p. 33). hunger children (ages 0 to 11) living in lone-parent families were much more likely to be poor than children living in two-parent families (68% compared with 16.5%). See Exhibit 1.5. Very young children are more likely to live in poverty than older children — in 1994-95, infants (under 2 years) were 20% more likely to be poor than 11-year-olds (Ross, Scott and Kelly, 1996a, p. 34).

More than two-thirds (69.5%) of families headed by female lone parents in 1982, and who remained lone parents from 1982 until 1987, had market incomes below the LICOs in every year during that time span. Persistent low market incomes were also experienced by 11.7% of two-parent families (whose structure stayed the same) with dependent children. Between 1988 and 1993, these percentages dropped to 66.9% for female lone parents and to 11.5% for couples with children (Finnic, 1997, p. 42). See Exhibit 1.6.

Many Aboriginal families are poor.

In 1995, among Aboriginal children aged 6 to 14, the incidence of low income was 48%, more than double the national rate of 22% (Statistics Canada, 1998b).

In 1995, average employment income of Aboriginal people ($17,382) was 34% below the national average of $26,474. One out of every four Aboriginal earners lived on a reserve. Aboriginal people who lived on a reserve reported average employment income of $14,055, which was 24% below the $18,463 reported by those who lived off reserve (Statistics Canada, 1998b).

Among urban Aboriginal families headed by lone females, between 40% and 76% (depending on the city) lived below the poverty line in 1991. Rates were as high as 90% in some western cities — Winnipeg, Regina and Saskatoon (Clatworthy 1994, as cited in Frankel, 1997, p. 6).

Source: Adapted from D.P. Ross, K Scott and MA Kelly (1996). "Overview: Children in Canada in the 1990s." In Growing up in Canada: National longitudinal Survey of Children and Youth. Catalogue No. 89-550-MPE— No. 1. Ottawa: Hunan Resources Development Canada and Statistics Canada, p. 34.

Source: R Finnie (1997). "Earnings Dynamics in Canada: A Dynamic Analysis of Low Market Incomes (Market Poverty) of families With Children, 1982-1993." Applied Research Bulletin, W. 4, No. 1. Catalogue No. W97-3Ed Ottawa: Human Resources Development Canada, Applied Research Ranch, p. 30. Reproduced -with the permission of the Minister of Hunan Resources Development Canada, 1999.

Food and Housing Security

Elements of food and housing security are closely related to income. In broad terms, households spent 17 cents of every dollar in their 1996 budgets on shelter, and 12 cents on food (Statistics Canada, 1998c). Expenditures on both food and housing as a percentage of total expenditures are significantly higher for low-income families than for high-income families.

Food costs are stable.

Expenditure on food remained relatively stable between 1992 and 1996, with the average household spending $112.09 a week on food purchased in grocery stores or restaurants in 1996 — an increase of $1.65 from 1992 (Statistics Canada, 1998d).

In 1996, households in the lowest income quintile spent 32% of their budgets on shelter and 19% on food, while households in the highest income quintile spent 13% and 10%, respectively. In dollar terms, households with the lowest incomes reported spending an average of $5,200 on shelter, compared with $12,800 for households with the largest incomes (Statistics Canada, 1998c).

In 1996-97, 6.4% of Canadian households, including families with children, reported running out of money to buy food on at least one occasion in the previous 12 months (Health Canada, 1998). In 1995, some 900,000 children received food from one of approximately 460 food banks across the country (Canadian Dietetic Association, 1996, p. 4).

There is a high level of food insecurity in northern communities (primarily Inuit) due to the very high cost of food and inconsistent supply of good quality, nutritious foods (Lawn and Langner, 1994).

Housing is not secure for all.

Most Canadian families live in housing that meets or exceeds all of today's standards for suitability (including number of bedrooms), adequacy (e.g. plumbing facilities) and affordability (costs less than 30% of the household's income).

In 1991, 68% of family households met these national standards. Of the 32% of families whose housing was substandard, more than one half (54%) spent at least 30% of their income on housing. Research conducted by Canada Mortgage and

Housing Corporation and Statistics Canada shows that low income is a major contributing factor behind substandard housing for Canadians (CMHC, 1993).

That year, one in 10 households — which included 548,000 children under age 16 — were unable to obtain housing that met or exceeded housing standards. These families are defined as being in "core housing need." We also know that in 1991:

• Lone-parent households were 11 times more susceptible to core housing need than two-parent households (CMHC, 1993, p. 2). Sixty-two percent of Aboriginal lone-parent families (CMHC, 1997a, p. 1) and 40% of Inuit lone-parent families are in core housing need (CMHC, 1997b, p. 1).
• Families that rent housing are six times more likely to have core housing need than families that own their housing (CMHC, 1993, p. 2).
• One out of every two lone-parent families that rent experienced core housing need (CMHC, 1993, p. 2).
• Household income for families with core housing need was only a quarter of the income of families not in need (CMHC, 1993, p. 3).

Aboriginal housing is improving.

On-reserve Aboriginal families do not fare as well. In 1996-97, 48% of on-reserve dwellings required renovations or replacement (DIAND, 1998, p. 47). Crowded living conditions are more frequent for on-reserve Aboriginal families as well; in 1991, 21% of on-reserve dwellings housed more than one person per room compared with only 1% of dwellings for the general population (DIAND, 1997). Crowding is particularly problematic for Canada's Inuit people; in 1991, 26% of Inuit households were in core housing need and were crowded (CMHC, 1997b).

Housing conditions for Aboriginal people are improving, with fewer on-reserve dwellings without water delivery systems (3.9% in 1996-97, down from 17.7% in 1987-88), and fewer dwellings without sewage disposal systems (8.5% in 1995-96, down from 27.8% in 1987-88) (DIAND, 1998, p. 48).

Urban-dwelling Native households are much more likely to live in below-standard housing (26.9% in 1991) than non-Native urban-dwellers (17.1% in 1991) (CMHC, 1995).

Income and Social Status and Other Determinants

Education

Literacy is a determinant of income. Close to 50% of adults at the lowest level of literacy live in households with low income, compared with only 8% of those at the highest level of literacy. Over half (55%) of those at the lowest scale of literacy were unemployed in 1994 and, if they did work, they earned less than $15,000 (Shalla and Schellenberg, 1998, p. 14).

People with fewer than nine years of education are more likely to have unrewarding, low-paying jobs. Moreover, growing up in persistent or concentrated poverty is related to school failure, truancy, dropping out of school, behaviour problems and delinquency (Evans, 1995, pp. 19,24). Income also affects school readiness and academic performance — children who live in poverty are more likely to experience lower levels of educational attainment (CCSD, 1997, p. 20).

Income Plays a Pervasive Role Children in low-income families have poorer health, lower levels of educational attainment, live in riskier environments (e.g. no household smoke detector, poor housing conditions), and partake in riskier behaviours (e.g. smoking, alcohol use, disregard for contraceptives). Compared with non-poor teens, twice as many poor teens aged 16 and 17 drop out before they complete high school (Ross, Scott and Kelly, 1996b, pp. 8, 13).

Social Environment

Poverty is strongly associated with family or neighborhood violence and aggressive behaviour patterns. As well, child abuse and neglect can be attributed to a number of factors including "inadequate monetary support, unemployment or underemployment and a lack of social services" (Advisory Committee on Children's Services, 1990, p. 22).

Personal Health Practices

Children and youth living in the poorest neighbourhoods of urban Canada are more likely than those in richer neighbourhoods to die as a result of injuries (Wilkins, Adams and Brancker, as cited in CICH, 1994, p. 122). High rates of teen pregnancy are also associated with low income —rates are almost five times higher in the lowest income neighbourhoods than in the highest income neighbourhoods (Health Canada, 1999, p. 4).

Individual Capacity and Coping Skills

There is growing evidence that competence and resiliency are undermined by the combined effects of multiple environmental stresses and the psychological deprivations that often co-exist with poverty (e.g. maternal depression, parental substance abuse and violence, and paternal criminality, rather than just low income (Steinhauer, 1998).

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