Making Sense of Poverty Measures

“If we don’t make sense of poverty measures, we will limit our ability as a society to make good decisions about poverty and related issues” (Cutting through the Fog, 2010, p. 20)

Every Fall, many in the anti-poverty movement in Canada report on poverty trends.

First with CPJ’s annual poverty report on October 17th,  the International Day for the Eradication of Poverty, and again when Campaign 2000 releases its National Report Card on November 24th, the anniversary of the all-party resolution to eliminate poverty among Canadian children by the year 2000, passed unanimously by the House of Commons in 1989.

And every Fall, there is a debate about the best poverty measure to use.

The Best Poverty Measure

Canada has no official poverty measure. Instead, Statistics Canada produces three main measures of low income: the Low Income Cut-Off (LICO), the Low Income Measure (LIM), and the Market Basket Measure (MBM). And so the discussion grinds on as to the best measure for credible and consistent reporting on poverty.

Each measure has its advantages and its limitations. But much public confusion and debate have resulted as individuals and groups have used the different measures in their work.   

Internationally, the trend is toward using a suite of indicators because any one poverty measure offers, at best, an incomplete picture of poverty. Using additional income-based indicators or measures that speak to deprivation can be helpful in determining the extent and character of poverty in a given community or country.

Using multiple poverty measures is good public policy – but it doesn’t make for a quick sound bite. And that’s a problem. Different measures … different stories.

In recent years, the anti-poverty community has begun to shift from using the LICO to the LIM. The LIM represents 50% of median household income, adjusted for family size. It’s easy to calculate and easy to explain. It also has the added benefit of being used in cross-country comparisons. Here at home, the government of Ontario has adopted the LIM as one of its markers to track the success of its poverty reduction strategy.

Poverty Measures

For more information on Canada’s three poverty measures, see CPJ’s Poverty Trends Highlights 2013​ report.

Different Poverty Measures Tell Different Stories

The poverty measures used in Canada (LICO, LIM, and MBM) do not lead to “dramatically different” poverty rates at the national level. But looking back over the fifteen years, we do see different trends.

From 1996 to 2009, the poverty rate for all of Canada declined under LICO (and later under MBM). However, the low income rate under LIM didn’t change much at all.

Looking at the LICO, the current low income thresholds are based on 1992 consumption patterns, adjusted over time for the rising cost of living. As such they operate as a fixed standard against which to measure change. When we use the LICO to generate poverty statistics, we are comparing the situation of those at the bottom of the income ladder today with those who were at the bottom back in 1992 (a recessionary year). And on this score, progress is being made – notably among seniors and families with children.

By contrast, the LIM thresholds are updated each year; when incomes increase (or decrease), the thresholds shift in lockstep. When we use the LIM, we are comparing the situation of those at the bottom with those who are in the middle in that same year. As said, not much has changed. Poverty levels continue to hover around the 13% mark, reflecting persistent and damaging consequences of income inequality. 

Poverty Lines

A Poverty of Data

On top of this, there is considerable concern about Statistics Canada and the impact of cutbacks over several years. This past March, yet another round of cuts was announced, totaling $21 million in the 2014-15 budget year. Approximately $15.6 million of the new cuts will be to Statistics Canada’s base funding. Through this process, whole programs have been cut and experienced staff let go.  

Canada’s statistical agency used to be a world leader but no more. The arbitrary cancellation of the long form census back in 2010 speaks volumes about the value placed on evidence-based decision-making in this government.  

Within this context, it is no wonder that anti-poverty advocates struggle to understand the scope of the challenge and to identify the most effective strategies for combating poverty’s devastating consequences.

Tracking Down the Data

This year has been particularly challenging in getting the statistical data for measuring poverty. Statistics Canada is in the process of replacing the Survey of Labour and Income Dynamics (SLID), with the new Canadian Income Survey (CIS).

There was already considerable time lag with the SLID as it usually takes at least 18 months to collect and report on low income statistics. And now the CIS is late. We are still waiting for 2012 figures, and it may be well into 2015 before we receive this information.

Moving On

Good information is essential to the task of combating poverty. It is important to question what is being measured, how it is being measured, and when it is being measured. We need to understand the assumptions underlying different measures and the ways in which these same measures take differences between communities and between families into account. We need to ask questions about who is generating the information and to what end.

That said, endless debate about the “best” poverty measure is counterproductive as it diverts our attention from the critical work at hand. No measure can ever capture the experience of actually living in poverty, which is a drain on dignity, potential, and hope. By any measure, we have much to do in the fight against poverty. It’s time to get on with it.

On the street

Katherine Scott is CPJ's Research Associate.

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