Job is not ticket out of poverty.

"Having a worker in the family is not a ticket out of poverty," say researchers at the Policy Research Group, Human Resources and Social Development. Contrary to the thinking behind the welfare reforms of the 1990s, poverty is more likely to end for the working poor when family circumstances change.

A report, When Working is not Enough to Escape Poverty: An Analysis of Canada's Working Poor, shows that a significant proportion of low-income families included at least one worker. The study looks at working poor individuals, aged 18 to 64, who have worked at least 910 hours in a year for pay, and have a low family income, according to the Market Basket Measure of low income.

Most anti-poverty activists use Statistics Canada's Low Income Cut Offs as their measure of poverty. The LICO yields higher numbers of low-income people than the Market Basket Measure.

The study reports that 653,300 working poor persons were found in Canada in 2001. They supported a total of 1.5 million persons, about 40% of all low-income Canadians in 2001. One third were children under 18.

Over a six-year period (1996-2001), about one in ten working-age adults experienced at least one year of working poverty.

How much do the working poor in this study actually work? The report says that in 2001, working poor Canadians worked, on average, as many hours as other workers (around 2,000 hours). However, fewer of them worked full time, year round and the number of hours that they worked was more volatile over the longer term.

Salaried working poor Canadians earned on average $12 per hour. Fewer than 50% of them were low-paid (earning less than $10 per hour) and less than 7% earned the minimum wage. In 2001, 88% of low-paid salaried workers (i.e. those who earned less than 10$/h) were not poor.

More than 40% of the working poor were self-employed, and the incidence of poverty was four times higher among the self-employed than among salaried workers.

Family characteristics, not "bad jobs," are the most important determinants of poverty for workers. Those who are the sole breadwinner in their families are much more vulnerable to low income.

Working poverty is not a short transition between welfare and 'decent' work for most of the working poor. They are more likely than other workers to be social assistance recipients. Most of them never relied on welfare.

The working poor are more likely to escape poverty in the longer run than the "welfare" poor. However, between 1996 and 2001, the working poor spent on average three years in low income and 40% of them experienced persistent poverty.

Furthermore, many of those who exited poverty over the same period did so mainly because of a change in their family circumstances, not because of their progression in the labour market. For example, a second family member enters the labour market or children find employment and leave the home.

Nevertheless, close to 50% of those who were working poor in 1996 still had low earnings in 2001 and would not have been able to provide for themselves had they lived alone.

policyresearch.gc.ca