How Much Poverty Should a Rich Nation Allow?
Suppose you ran a government that staked its reputation on being a good economic manager. Should that claim be judged in part on reducing poverty? Or is an economy that raises living standards for some groups, but leaves others worse off, still a success?
In Canada today, that question is anything but academic. After weathering the recession better than most, Canada is beginning to grapple with what success should look like in the post-recession world. With the country's first Conservative majority government in a generation facing an election next year, and financial signals that are mixed at best, I've been writing about different ways of gauging the health of an economy.
The last installment looked at stagnant wages, at least for the median household, as well as rising debt levels driven mainly by mortgages. But looking at income also means figuring out how to measure poverty. That's harder than it might sound: There turns out to be plenty of room for manipulating the numbers, and missing trends among the most vulnerable groups.
Statistics Canada uses three distinct indicators for measuring poverty. One, the low-income cutoff, measures the number of families that spend more than a certain amount of their income on food, shelter and clothing. Another, the market-basket measure, is more complicated and more subjective: It's meant to reflect the cost of a broader set of basic goods, adjusted by region.
Those two indicators can present a complicated picture, not least because they contradict each other. Thankfully, Statistics Canada offers a third poverty indicator, one that allows comparisons across regions, over time and between countries.
That indicator, called the low-income measure, is simple: It tracks the portion of households making 50 percent or less of the median household income. That measure shows that relative poverty has ticked up slightly under the Conservatives, from 12.4 percent when they took office to 12.6 percent in 2011, after taxes.
But that overall rate masks worrisome changes among one of the most vulnerable groups: senior citizens. In 2006, the share of men 65 or older living in relative poverty was 6.8 percent, about the same as it had been since 2002. That rate increased with the recession -- and then, once the recession ended, it kept increasing, reaching 9.1 percent in 2011.
The number of women 65 and older in relative poverty also rose, from 11.8 percent in 2006 to 14.4 percent in 2011. That is one in seven elderly Canadian women, higher than at any point in almost two decades leading up to the recession.
(The market-basket measure shows a much greater increase in seniors' poverty rates during that period, rising 61 percent for men and 72 percent for women.)
Poverty's direst corollary is hunger. The data here are limited; Statistics Canada only presents figures for two periods, 2007-08 and 2011-12. But the change between those periods shows the share of Canadians not getting enough to eat increased, from 7.7 percent to 8.3 percent. If that seems like a small change, consider that an increase of that magnitude in the unemployment rate would be headline news. More worrisome, households with children saw an even sharper increase in hunger, to 7 percent from 6 percent.
Not all of that increase can be laid at the feet of the current government. But a campaign focused on the economy could, and should, include ideas for moving those figures in the opposite direction. The lesson from these numbers is that poverty and hunger aren't going away on their own, regardless of what's happening in the broader economy.
(Christopher Flavelle is a member of Bloomberg View's editorial board. Follow him on Twitter at @cflav. This post is adapted from an article published in the April edition of the Literary Review of Canada.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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