Relative or absolute?

Is poverty absolute; are all people with an income below a certain level poor? Or is poverty relative; do the individual circumstances of someone determine whether or not they are poor?

In Canada, we turn to Statistics Canada for a definition.

In official jargon, it's called the "low-income cut-off," or LICO; to the rest of us it's known as the poverty line. Most people think that the poverty line is an annual income figure that determines whether or not you are living in poverty. If your income is below the LICO you are officially living in poverty. It isn't that simple.

The LICO actually doesn't measure poverty at all. It measures the inequality of incomes. As such it is a relative measure of poverty; a person's poverty is measured in relation to the society in which he or she lives.

In the 1950s, statisticians found that the average Canadian family spent 50% of its income on the necessities of food, clothing, and shelter. Then, they decided that any family spending 70% of its income on the basics was living in poverty. By 1986, Canadians in general had become wealthier and were only spending 36% of their incomes on food, shelter, and clothing. So, the poverty line was changed; now, anyone spending 56% of their income on the essentials is said to be living in poverty. According to Statistics Canada, this includes four million Canadians.

Some experts believe this way of setting the poverty line by relating it to average incomes is wrong. They suggest a better way would be to calculate the actual costs of providing necessities. This would then be the poverty line. The House of Commons Subcommittee on Poverty recommended adopting this "basic needs" approach in 1993. Under a basic needs approach, the poverty line for a family of four living in a major city in 1993 would have been between $19,000 and $23,000. However, the Statistics Canada LICO approach gave a poverty line for the same family of $31,100.

The Fraser Institute believes this level of income is too generous. The Vancouver-based think tank says that using relative measures overstates the extent of poverty in Canada. The result is that public policy is skewed to deal with a bigger problem than exists in reality. The Fraser Institute uses an absolute approach to defining the poverty line and says that a family of four needs an income of between $13,848 (Quebec) and $17,560 (British Columbia).

Using the Fraser Institute's basic needs approach to defining poverty, there are about one million Canadians living below the poverty line. The Institute goes on to develop the idea of a "social comfort line." This is arbitrarily set at twice the poverty line and, say researchers at the Fraser Institute, allows for a sharper definition of the term "near poor." These are people who are near the poverty line and are in danger of falling below it. It's said that 3.7 million Canadians are in this category.

Meanwhile, other agencies vary widely in defining poverty. For a family of four in a major city the Canadian Council on Social Development says the income requirement is $32,130, the Senate Committee on Poverty says $31,050, and the Metro Toronto Social Planning Council picks $40,560.

The provincial governments weigh in with their estimates which determine what they are prepared to pay in social assistance benefits. New Brunswick thinks that a family of four can get by with an income of $11,932, while Ontario thinks that $22,010 is enough.

The wide variation in these figures illustrates one important point about poverty -- it is political. The left wing uses poverty statistics as a stick with which to beat the right wing. Those from the left say that the huge numbers of people living in poverty prove how cold, heartless and unfair the capitalist system is. The right wing counters by saying poverty is nowhere near as common as the leftists would have us believe, and that the only way to bring the numbers down further is by giving business free reign to create surplus wealth for all to share.

There will probably never be a definition of poverty that all Canadians can agree on. The lack of such a definition will make the eradication of poverty that much more difficult.

SUGGESTED ACTIVITIES:

1. Donald Eastman, a member of the National Statistics Council, was quoted in 1990 as saying: "I suspect 80% of the people alive in this world right now would love to live at Canada's poverty level." Discuss.

2. Draw up a budget for the absolute minimum you think you could live on. Compare budgets with other members of class.

3. According to a Fraser Institute study of poverty: "The great majority of [social assistance] recipients in 1992, and almost all of those classified as unemployable, are not living `in poverty.' Those on social assistance are `relatively' poor and experience some `social deprivation' but, in general, they have sufficient income to cover all basic physical needs ... This is a crucial distinction." Use this quotation as a basis for discussion.

FACT FILE

The maximum government pension benefit for a couple in Canada is $18,139 while the poverty line for a couple living in a medium-sized city is $18,068.

People immigrating to Canada before 1981 have sharply lower poverty rates than either Canadian-born persons or recent immigrants.