Poverty was in retreat pre-Covid, and relief efforts likely prevented its revival

By James Langton | March 23, 2021 | Last updated on March 23, 2021
2 min read
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Heading into the Covid-19 pandemic, the poverty rate in Canada was declining and income inequality was falling too. While the pandemic caused large drops in income for many, government support programs offset these losses, according to new data from Statistics Canada.

StatsCan reported that the share of Canadians living below the official poverty line dropped from 11.0% in 2018 to 10.1% in 2019, representing 3.7 million people. This continued a trend that has prevailed since 2012, with the exception of a blip in 2015 that was attributed to an oil price shock.

Last year saw a much more disruptive crisis with the onset of the Covid-19 pandemic, but early evidence indicates that government support measures largely mitigated declines in employment and earnings.

StatsCan said that its experimental measure of weekly family incomes indicated that between February and June 2020, “a surge in the share of families with low-weekly earnings was more than offset by government pandemic relief benefits.”

StatsCan noted that the experimental low-weekly income rate rose during the second half of 2020, but was still below its pre-pandemic level at the end of the year.

It remains to be seen just how the pandemic has impacted poverty in Canada, but the report said that the most vulnerable households — singles and single-parent families, which suffered the largest drops in weekly earnings due to the onset of the Covid crisis — received government transfers that offset the decline in income.

Prior to the pandemic, singles and single-parent families were much more likely to be living in poverty. For instance, almost a third (29.8%) of children in families headed by a single mother were in poverty, compared with 7.2% of children living in two-parent families, the report said.

Single seniors also struggled. Overall, 5.4% of seniors lived in poverty in 2019, but the poverty rate was 11.7% among single seniors, compared with just 2.8% for those living in families.

Before the pandemic, income equality had been improving in Canada, StatsCan reported.

In 2019, the bottom 40% of income earners accounted for 21% of total after-tax income and the top 10% of earners represented 22.7% of total income.

“The share for the lowest four deciles has been slightly increasing since the beginning of the decade, while the share of the highest decile has been edging down, suggesting a decrease in inequality,” StatsCan said.

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.