Montreal, September 24, 2015 – Contrary to popular belief, not only are the poor getting richer in Canada, but they are climbing out of poverty faster and faster, according to an Economic Note published today by the MEI.
Certain statements commonly heard can give the impression that there are a lot of low-income people in Canada, and that for the majority of them, poverty is a permanent state. The publication shows, by analyzing Statistics Canada databases, that this perception is contrary to the observed facts. Only 3.6% of all Canadians remained below the low income cut-off for the six years of the 1993-1998 period, and this proportion had fallen to 1.5% for the 2005-2010 period.
Canadians who find themselves at the bottom of the income ladder do not remain there for long. Following the same individuals, just 13% of those who were in the lowest income quintile in 1990—including students and young adults—were still in that same quintile in 2009, according to Statistics Canada data. Indeed, the average annual income of Canadians who found themselves in this quintile in 1990 went from $6,000 that year to $44,100 in 2009, an average increase of 635%.
“The alarmist statements sometimes heard regarding the fact that poverty is a permanent condition for a substantial part of the population, and that the rich are getting richer while the poor get poorer, are therefore baseless,” says Yanick Labrie, Economist at the MEI and co-author of the Note. “Those who were at the bottom of the ladder 20 years ago have experienced, on average, extraordinary income growth.”
What matters is not the numbers of rich and poor at a given moment, but rather that those who find themselves at the bottom of the income ladder are not prisoners of their status, and that their children are not condemned to remain there, adds Mr. Labrie. This is precisely the situation that prevails for just about all Canadians.
“In debates about inequalities, we often talk about the rich. But what we should focus on is the poor, and the improvement of their living standards,” says Youcef Msaid, Associate Researcher at the MEI and coauthor of the publication. “The question we should be asking is not whether the rich are getting richer, but whether the poor are getting richer—and the good news is that the answer to this question is a resounding ‘Yes!’”
The Economic Note entitled “Poverty Is Not a Permanent State of Affairs in Canada” was prepared by Yanick Labrie, Economist at the MEI, and Youcef Msaid, Associate Researcher at the MEI, in collaboration with Alexandre Moreau, Public Policy Analyst at the MEI. This publication is available on our website.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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