Shocking headlines tell us that the incomes of the poorest families are down by a double-digit amount in the past few years, while the richest gained significantly over the same period.
Then, too, an important segment of Canadian children theoretically are living in poverty, and, “We should be ashamed of that.”
It is true that the gap between the incomes of the rich and poor has widened a lot recently, but the headline statistics are creating a false – in some cases dangerous – impression.
Many of those who appear to be trapped in poverty are not as badly off as it may first appear. On the other hand, the current official data overlook the needs of some vulnerable groups who do indeed need additional support, notably pensioners and single parents.
Headline figures are misleading for the following reasons.
First, poverty is defined as being below half of average income. When that definition is used, people can fall into “poverty” even when their income rises if average incomes rise faster.
Children now may be living below the poverty line, but it is the 2009 poverty line, and that is much higher than that for the previous decade.
Second, there is evidence suggesting the very poor are richer in absolute terms than the poor in the preceding decade, despite their fall in reported income. For example, many poor people now own automobiles.
Then, too, the average expenditure of the poorest section is actually higher than that of the next group above it.
It is difficult to believe, but statistics reveal that some people in the bottom group spend as much as those in higher earnings categories.
Some of the “poor” are self-employed who notoriously show up in statistics as spending more than their reported incomes.
People in low-income categories may be living off capital or borrowing.
They may not report black-market income, or may be temporarily between jobs. More than half of those in the lowest income groups’ ownership of consumer durables is much closer to the average than was the case in the previous decade.
Also, today’s higher housing costs partly represent improved housing quality, so the poor may experience improved housing conditions, both absolutely and relatively to the rest of the population.
Also, “poverty” must be adjusted for the number of persons in a family, and whether or not the household lives in a rural or more expensive location.
Needless to say, one should not turn a blind eye to those in need, but official statistics often fail to present an accurate picture of poverty in Canada.