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Focus on helping the truly poor

Appeared in the National Post
Authors:
Release Date: October 8, 2009

Most Canadians would never equate the plight of a 20-year-old student who has to scramble to find the money to go out for a beer with friends with the circumstances of a single mother earning the same income. As Anne Golden's column highlights, the Conference Board apparently does.

To most Canadians, poverty is not being able to afford basic necessities such as a nutritious diet, satisfactory housing, clothing, health care, public transportation, household supplies, telephone service, and a host of other goods and services that Canadians need to survive in our society.

The level of income needed to buy these necessities is naturally very different, depending on the makeup of the household (i. e. number of people and dependants) and community in which the household lives (i. e. it is more costly to live in Vancouver, British Columbia than Brandon, Manitoba). Chris Sarlo, a professor of economics at Nipissing University, estimates "basic needs" income levels for six different family types in over 50 different Canadian cities. By calculating over 300 different poverty lines (incomes needed to buy basic necessities), Sarlo's measurement of poverty is extremely accurate.

Unfortunately, the Conference Board makes none of these distinctions in estimating poverty. It simply defines poverty as those individuals with a disposable income of less than 50% of the median income in a country. The problem with this poverty measure is that it simply shows to what extent some Canadians are less well-off than others and has nothing to do with whether or not individuals can provide themselves with the basic necessities listed above.

Anne Golden and the Conference Board view poverty as a problem of inequality, not insufficiency. As she notes, poverty is an "issue of social exclusion."

Personally, we think that all Canadians should be able to go out for dinner, to the movies, and to buy tickets to watch their favourite NHL team. But if they cannot afford to do so, they should not be considered poor.

Blurring the line between actual poverty and those who can't afford the same level of "social engagement" as others prevents us from identifying those most in need. Not being able to afford basic necessities such as food, shelter, clothing, and health care can lead to malnutrition and many other life-threatening conditions. Real poverty is a serious issue that can have tragic consequences if not addressed.

But according to the Conference Board, relative poverty (being relatively worse off than others) does indeed have long-lasting social consequences. Specifically, they point to the OECD, which found "greater income inequality [i. e., relative poverty] stifles upward mobility between generations."

Interestingly, the Conference Board's own report finds the opposite. It gives Canada a "D" on "poverty" (really inequality) and an "A" on intergenerational income mobility. Put differently, Canada gets a "D" for being unequal but an "A" for upward income mobility between generations.

The discrepancy arises because the Conference Board's poverty measure captures many young Canadians who are starting out with significantly lower incomes than the median Canadian. It also captures many immigrant families who often earn significantly less than the median Canadian during their early days in Canada. Through hard work, saving, and investing, they move up the income ladder, just as students and others do.

Let's not confuse two completely different things: poverty and income inequality. Instead, through accurate measurement of poverty, we can focus on those who need our help the most.



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