Current Debate About Measuring Poverty and Wealth in Canada Essay

  • Length: 5 pages
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  • Subject: Economics
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  • Paper: #20445221

Excerpt from Essay :

Straightened Circumstances": A Review and Analysis of the Current Debate about Measuring Poverty and Wealth in Canada

Although there is no official definition of poverty in Canada, recent estimates place the percentage as high as 14% overall, with significantly higher levels for vulnerable populations such as single elderly females, indigenous peoples, and single females with children. These levels of poverty indicate that the problem is severe and it is important to ensure that the steps that are taken to address poverty in Canada are timely and effective. In order to ensure that the scarce resources that are used to assist impoverished Canadians are applied effectively, though, there must also be some reliable ways of determining whether progress is being made or not. To this end, this paper provides a review and analysis of the relevant literature concerning the current debate about measuring poverty and wealth in Canada, followed by a summary of the research and important findings in the conclusion.

Review and Analysis

By most economic and social measures, Canada is a wealthy nation that enjoys high standards of living and longevity. In this regard, analysts with the U.S. government characterize Canada as "an affluent, high-tech industrial society in the trillion-dollar class [which] resembles the U.S. In its market-oriented economic system, pattern of production, and affluent living standards" (Canada, 2012, para. 3). In addition, Canada has a gross domestic product (GDP) of about $38,000, ranking it 22nd in the world's 220 or so countries (Canada GDP, 2012). This rank, though, is in sharp contrast to Canada's position just 40 years ago when it was ranked third in the world (Canada GDP, 2012). Moreover, this average national GDP does not accurately reflect the tens of thousands of Canadians who live below an ill-defined poverty line, an issue that has become especially important to many observers in recent years. In this regard, the chief statistician for Statistics Canada emphasizes that, "Many individuals and organizations both in Canada and abroad understandably want to know how many people and families live in 'poverty,' and how these levels change. Reflecting this need, different groups have at different times developed various measures which purported to divide the population into those who were poor and those who were not" (Fellegi, 1997, para. 1).

Given this importance, it is not surprising that these issues have assumed new relevance and importance in recent years but there remains a lack of an "official" definition of poverty that is used by all Canadian governmental agencies (Ross, Scott & Smith, 2000). Despite this lack, Reutter, Veenstra and Stewart (2006) estimate that around 14% of Canadians currently live in poverty; moreover, estimates of poverty are much higher rates for some other groups in Canada, including single-parent mother families, female seniors without partners, urban Aboriginals and immigrants who arrived in Canada recently (Reutter et al. 2006).

While the overall rate of poverty has declined modestly during the period from 2001 to 2005, the depth of poverty during this same period increased for many Canadians (Reutter et al., 2006). Indeed, Hicks (2007) emphasizes that, "Most Canadians would be shocked if they knew how a large number of their fellow Canadians survive" (p. 205). Interestingly, Hicks does not say "live" but rather "survive," indicating the dire conditions in which many Canadians find themselves in the 21st century. In reality, though, economic conditions have been tougher in recent years for all Canadians. Given its close geographic proximity to the U.S., it is not surprising that Canada has experienced its fair share of the global economic downturn that originated in the subprime mortgage meltdown in 2007. As a result, the Canadian economy experienced a severe recession by late 2008, and the national government was forced to concede a fiscal deficit in 2009, the first such fiscal deficit after 12 years of budget surpluses (Canada, 2012). Despite this fiscal setback, Canada's major banks were strengthened by the Great Recession and the country has resumed marginal growth and expects to balance the national budge by 2015 (Canada, 2012). It remains unclear, though, whether this rising economic tide will raise all boats.

Despite its close geographic proximity, Canada does not share an "official" or single definition for poverty with the U.S. (Hick, 2007); rather, different definitions are used by various organizations and agencies in Canada which all measure poverty differently (Ross et al., 2000). Indeed, as Ross and his colleagues, "Given the immense complexity of the problem -- the fact that what constitutes poverty varies from place to place, from decade to decade and even from household to household -- it can be argued that the only alternative to an inadequate definition is no definition at all" (p. 13). It is axiomatic, though, that in order to improve something it must first be measured and while Canada does not have official measure of poverty in place, the most widely used approach is the Statistics Canada measure. According to Ross et al., "Virtually all of the statistics used by other national measures of poverty in Canada come from Statistics Canada's annual survey of incomes. Statistics Canada itself does not claim to measure poverty; rather, it defines a set of income cut-offs below which people may be said to live in straitened circumstances" (2000, p. 14). These income cut-off points are widely used throughout Canada as demarking poverty levels (Ross et al., 2000), and Hick reports that, "One in six Canadians live in 'straightened circumstances'" (2007, p. 205).

While the Statistics Canada income cut-off levels provide a basis for measurement, they do not provide any guidance concerning what social programs are best suited for addressing these disparities. Moreover, there remains a lack of consensus among Canadian policymakers and social welfare agencies concerning what should be done, as well as mixed emotions on the part of mainstream Canadians regarding the relative importance of these efforts (Hick, 2007). This point is also made by Armitage (2005) who reports, "Social welfare policy appears now to be stable, with change in policy no longer a government priority. Instead, there are new priorities: particularly, the 'war on terrorism,' and the security and trade relationship with the United States occupy the federal government agenda" (pp. 96-97).

It is also axiomatic that in order for something to improve, it must first be made a priority. Unfortunately, these recent trends suggest that the issue of measuring poverty in Canada has stagnated to the point where many consumers may feel that their tax dollars are being wasted on ineffective initiatives that fail to make any substantive progress in addressing the fundamental social problems that contribute to inordinately high levels of poverty among certain Canadian groups. Complicating the problem even further are the shifting social aspects of poverty and wealth that change over time and place. In this regard, Fellegi (1997) stresses that, "The underlying difficulty is due to the fact that poverty is intrinsically a question of social consensus, at a given point in time and in the context of a given country" (para. 4).

In fact, in highly affluent modern nations, it is entirely possible for people to be relatively well-off in terms of their basic living needs such as shelter, food and clothes and still be viewed as impoverished while these same people might be viewed as affluent in a highly impoverished country where survival is questionable for many (Fellegi, 1997). As Fellegi points out, "Someone acceptably well off in terms of the standards in a developing country might well be considered desperately poor in Canada. And even within the same country, the outlook changes over time. A standard of living considered as acceptable in the previous century might well be viewed with abhorrence today" (para. 4). The essential problem, Fellegi (1997) suggests, involves this highly subjective nature of definitions of poverty as well as a lack of…

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