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Needs-based Poverty in Canada on the Decline Since 1996

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Release Date: July 8, 2005
The researcher who pioneered the influential Basic Needs Poverty Line has found that there has been a striking change in poverty rates in Canada. Professor Chris Sarlo, who changed the debate about poverty measurement with his 1992 book Poverty in Canada , today released his latest estimates of the poverty line and the number of Canadians living below it.

The results are a significant reduction in the extent of poverty, according to an article Estimating Poverty in Canada: An Update, published in the July 2005 issue of Fraser Forum, The Fraser Institute's monthly magazine.

Professor Sarlo finds that, after nearly two decades in which there was no apparent progress in reducing poverty, since 1996 there was a significant decline in the proportion of the population defined as poor. The poverty rate for individuals is now in the 5 percent range, after having been in the 8 to 10 percent range from 1977 to 1996.

While poverty researchers have disagreed in the past about the level of poverty, Professor Sarlo points out in his latest research brief that the decline in poverty is common to all of the measures, even the Statistics Canada low income cut-offs long used by poverty advocates.

He does point out that trying to explain the cause of the decline is a fairly complicated matter and that the drop is as yet unexplained.

"Whenever measured poverty declines, the hope is that the poor have actually moved up to better living standards, either by acquiring jobs, or by enjoying a change in family status or an improvement in entitlement benefits," Sarlo noted. "Explanations for the decline must be left until further evidence is available."

A decline in poverty could also result from reporting changes or even demographic changes. Sarlo also explains that those living in poverty in one year may not be the same individuals living in poverty in subsequent years. There is substantial evidence that poverty is dynamic as people move up and down the distribution of income and that the number of "permanently poor" is much smaller than any estimate of "point in time" poverty.

If future estimates bear out that Canadian "basic needs" poverty is now in the 5 percent range Sarlo points out that the danger is that we become complacent about poverty because it affects only about 1 in 20 Canadians. In absolute numbers, there are still 1.6 million poor Canadians, according to reported data on incomes.

"The challenge for policy makers will be to explain why we still have 5 percent of the population living in poverty and what can be done to reduce or eliminate the problem," he concluded.