INCOME FOR LIVING?

• Why this report now?
  
• What do the poverty lines tell us about low-income people?
  
• What are low income and poverty?
  
• How did we do it?

• Welfare
  
• Minimum wage
  
• Low wage
  
• Average wage
  

• Welfare
  
• Minimum wage
  
• Low wage
  
• Average wage
  

• Welfare
  
• Minimum wage
  
• Low wage
  
• Average wage
  

• Welfare
  
• Minimum wage
  
• Low wage
  
• Average wage
  

RECOMMENDATIONS

CONCLUSION

APPENDIX A - METHODOLOGY

APPENDIX B - FEDERAL AND PROVINCIAL PROGRAMS

APPENDIX C - MINIMUM-WAGE RATES

APPENDIX D - MARKET BASKET MEASURE

APPENDIX E - LOW INCOME CUT-OFFS

APPENDIX F - AFFORDABILITY OF RENT

APPENDIX G - AFFORDABILITY OF CHILD CARE

THE NATIONAL COUNCIL OF WELFARE

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INTRODUCTION

In May 2003, Human Resources Development Canada released the details of the Market Basket Measure or MBM for 2000. When the Council took its first look at the details, we thought that the MBM was a promising tool that would likely add a valuable dimension to the poverty debate. The Council believes that a fair market basket measure could add a helpful perspective to assessing the adequacy of Canada's income support programs, particularly welfare. A major drawback to the MBM is the fact that we only have data for 2000. Without several years of information to look at, we cannot assess whether and how the new measure will help us to understand trends over time. It will take several years, therefore, before the Council will have a clearer picture of the MBM.

The release of a new poverty measurement led the Council to revisit the poverty line debate and what it means for low-income Canadians. This report looks at what the new MBM and the existing commonly-used poverty line, the low income cut-offs or LICO, tell us about the situation of low-income people in four provinces. We look at four types of low-income families in the largest city in each of Quebec, Ontario, Alberta and British Columbia and look at what their incomes would be if they were on welfare and if they had paid work. In doing our calculations, we looked at the effects on take-home pay of taxes and income support programs in each of the four provinces.

The Council has been following welfare rates for many years in our annual publication Welfare Incomes. We have become increasingly concerned with many provincial policies to push welfare recipients into the paid labour force. The release of the MBM has provided the Council with an opportunity to see if this measure can shed any light on the effectiveness of welfare-to-work incentives.

WHAT DO POVERTY LINES TELL US ABOUT LOW-INCOME PEOPLE?

LOW INCOME CUT-OFFS

Statistics produced using the LICO methodology are readily available to researchers inside and outside government year after year at a modest cost. Coincidentally or not, the income levels of the LICOs are in the mid-range of the alternative poverty lines that appear from time to time. The Council looks at a number of these poverty lines in our annual report Poverty Profile.

Very roughly speaking, the low income cut-offs or LICOs mark income levels where people have to spend disproportionate amounts of their incomes on food, shelter and clothing. For example, according to the LICO, a family is considered to be in straitened circumstances if it spends 20 percent more of its income on food, shelter, and clothing than the average family of similar size. The cut-offs are created for seven family sizes and five community sizes. We used 2000 LICOs in this report because 2000 is the only year for which we have information from the MBM.

The table below shows the LICOs for 2000 for the largest cities in each of the four provinces and four family types in our study. These are the LICOs that would be used for Montreal, Toronto, Calgary and Vancouver. A table of the complete set of LICOs is in Appendix E at the back of the report.

According to the table below a single person in a city larger than 500,000 people would need $15,172 to reach the LICO poverty line in 2000. A family of two in a city of the same size would need $18,513 to reach the poverty line. Finally, a family of four in a large city would need $29,163.

MARKET BASKET MEASURE

In May 2003, Human Resources Development Canada (HRDC) released the report Understanding the 2000 Low Income Statistics Based on the Market Basket Measure. The MBM estimates the cost of a specific basket of goods and services for 2000 assuming that all items in the basket were entirely provided for out of the spending of the household. The goods and services in the basket are required for a minimum standard of living.

The basket on which the MBM is based includes five types of expenditures for a reference family. The reference family consists of two adults and two children. The expenditures calculated are food, clothing and footwear, shelter, transportation, and other goods and services. The transportation component includes public transit where it exists plus one round trip taxi ride a month for emergencies, or a used vehicle where there is no public transit. The other goods and services includes expenditures on personal care, household needs, furniture, basic telephone service, postage stamps, religious and charitable donations, school supplies and modest levels of reading material, recreation and entertainment.

The HRDC researchers who prepared the MBM included the work of other research organizations to determine the minimum standard of living in certain areas. For example, the transportation component of the MBM largely follows the recommendation of the National Council of Welfare in our 1998 report, A New Poverty Line: Yes, No, or Maybe? The Council recommended different basic costs of transportation in large urban areas than in smaller communities or rural Canada.

The clothing and footwear component of the MBM came from the Winnipeg Harvest and the Winnipeg Social Planning Council's Acceptable Level of Living (A.L.L.). The A.L.L. is a type of market basket that was created by low-income people. The objective of A.L.L. is to determine through low-income people an adequate disposable income level on a market basket of goods and services that can sustain a fair and acceptable living level. The A.L.L. is a particularly valuable tool in measuring poverty as it was done by and in consultation with people who live in poverty and understand it first hand.

The content of the food component of the MBM basket comes from the Health Canada publication, National Nutritious Food Basket 1998.The food component is not intended to be "an ideal diet," and neither is it the cheapest diet which meets nutritional requirements. It represents a nutritious diet which is consistent with the food purchases of ordinary Canadian households.

The Council believes that MBM reflects a reasoned and reasonable definition of a minimum standard of living with acceptable living standards based on acceptable methods. The MBM is by no means a perfect measure, but in the Council's opinion, it is a fair measure of basic needs.

The components of the basket are not to everyone's liking. There are neoconservative groups that believe that the cost of the basket is far too high. For these groups, there are different definitions of a minimum standard of living. For example, Christopher Sarlo of Nipissing University in North Bay, Ontario developed poverty lines for all provinces and all major cities with the support of the Fraser Institute, a neoconservative think tank based in Vancouver. According to his poverty lines, a minimum standard of living refers to items needed strictly to stay alive. For example, the Sarlo basket contains no coffee or tea or children's books and toys. There are no health care items in the basket on the grounds that poor people should be able to get charity dental services from dentists in the community and they should be able to pick up free eyeglasses from the local Lions Club.

The Council views the poverty lines developed by Sarlo as a mean-spirited view of life that regards people as poor only if they can be shown to be visibly and strikingly different from the rest of society.

On the other hand, some anti-poverty groups believe that the cost of the MBM is too low. For example, the National Anti Poverty Organization or NAPO spoke about the MBM at the House of Commons Committee on Human Resources and Development in 2003. NAPO pointed out that the MBM does not include transportation costs for the children, as there are only two adult bus passes. NAPO also criticised the MBM because it believed some of the prices of clothing components such as shoes are unrealistically low, for example, $12 for a pair of running shoes. NAPO also pointed out that no matter how poverty is measured, it will not change the situation of poor people in Canada.

Other critics object to the fact that the MBM measures absolute poverty, that is, the absolute minimum items it would take for a person or a family to survive. These critics believe no market basket measure can illuminate the problems of how our society shares its wealth. The National Council of Welfare believes that each poverty measurement lends something to the poverty debate. Absolute measures such as the MBM, relative measures such as the low-income measure or LIM, and measures such as the LICO all add dimensions to understanding poverty.

Critics also point out that updating the basket will be extremely difficult. As society changes and people need different items, the items that go into the basket must change, too. Depending on how the MBM is updated, the measure could become inconsistent over time, and could cease to reflect the realities of the basic costs of living. The MBM has only been released for one year, and the federal government department responsible for the MBM has not specified how it will update the measure.

No method of updating the report can be perfect and all updates risk being unfair and unrealistic. The National Council of Welfare believes that the MBM should be updated in consultation with low-income people, with representatives of the organizations that work in communities and with researchers. The Council believes that updates must be conducted in as open and objective a manner as possible based on real changes in society and the changes in the market, and without the interference of the political interests of federal, provincial or territorial governments and politicians.

The MBM is calculated for 19 specific communities and 29 community sizes in the 10 provinces. The MBM is calculated for a reference family of one male and one female adult aged 25 to 49 with two children, a girl aged nine and a boy aged 13. The MBM for other household types must be calculated using the Low Income Measure or LIM equivalence scale. The Low Income Measure is another common poverty measurement that is equal to one-half median income adjusted for family size, but there is only one set of LIMs for all of Canada.

The table below shows the MBM threshold for the reference family of two adults and two children in the largest cities in the four provinces in this study: Montreal, Toronto, Calgary and Vancouver. The complete list of MBMs by geography is in Appendix D at the back of the report.

According to the table above, a couple with two children in Montreal needed $22,441 to reach the 2000 MBM threshold. In Toronto, the same family of four needed $27,343. In Calgary, that family needed $24,180 and in Vancouver, $27,791 to reach the threshold.

WHAT ARE LOW INCOME AND POVERTY?

Every year, the National Council of Welfare calculates welfare incomes in every province and territory and we publish the results in our regular report, Welfare Incomes. At no time have we ever seen welfare incomes even approach the poverty line, whether the poverty line is the LICO or the new Market Basket Measure.

Another group of people who are often poor are those who are employed, but have jobs at low wages. In this report, we look at workers with minimum-wage jobs and workers with low-wage jobs. Over the last decade, all levels of government have made numerous policy changes aimed at encouraging people on welfare to move into the work force, even into poorly paid work. The Council decided to look at how these incentives have affected the actual income of the so-called working poor using both the LICO and the MBM.

For the purpose of comparison, we also decided to look at how the same family types rank according to the two poverty lines when the adult earners in the families had average earnings.

The welfare amounts were taken from our regular publication Welfare Incomes. A detailed methodology of this calculation can be found in that report. We calculated wages based on full-time work from January 1, 2000 to the end of the year. Minimum-wage earnings are based on the provincial minimum wage including any increases during the year. The low-wage was calculated at ten dollars an hour which was approximately two thirds of the median hourly wage of all full-time employees in 2000. Average wages are based on data from Statistics Canada that the Council uses in our annual Poverty Profile.

HOW DID WE DO IT?

This section gives an overview of the way we calculated take-home incomes and expenses. The detailed methodology can be found in the methodology section at the end of the paper.

This report looks at what the new MBM and LICO tell us about the situation of low-income Canadians. To do this we looked at the situation of low-income Canadians using British Columbia, Alberta, Ontario and Quebec as examples of how public programs affect the incomes of poor people. These four provinces each have significantly different approaches to welfare, taxes and other provincial programs such as minimum wages and family benefits. The four provinces represent a significant proportion of the Canadian population, approximately 85 percent.

This project looks at the incomes for the four family types in our regular publication Welfare Incomes. The four family types are a single employable person; a single person with a disability; a single parent with one child two years old; and a couple with two children ages 10 and 15.

We looked at four different types of income: welfare, minimum wage, low wage and average wage. The take-home pay was calculated for each family type and each income. The Council calculated only the actual "take-home" amount welfare recipients receive in each province or territory, so this paper shows the "take-home" amounts in each of the following sections of the paper.

The take-home pay took into account all standard pay benefits and deductions. For example, all workers in Canada must contribute to the Canada or Quebec Pension Plan (CPP/QPP) and Employment Insurance (EI). These amounts were deducted from our workers' earnings. The Council also calculated federal and provincial income taxes and deducted them from our workers' wages.

Many low-income and modest-income Canadians are eligible for federal and provincial benefit programs. For the purposes of this project we calculated the amount the families received from programs that provide benefits automatically based on an individual's income tax return. Programs for which a family or individual have to apply separately are not included.

The federal benefit programs included are the Canada Child Tax Benefit (CCTB), National Child Benefit Supplement (NCBS) and the Goods and Services Tax (GST) credit. The provincial benefits programs included for Quebec are the Quebec Sales Tax Credit (QST), the Real Estate Tax Refund, the Family Allowance, the Shelter Allowance, Parental Wage Assistance and five-dollar-a-day childcare. The provincial benefits program included for Ontario is the Ontario Child Care Supplement for Working Families. The Alberta provincial benefits program we included is the Alberta Family Employment Tax Credit. For British Columbia, we included the BC Benefits, including the BC Family Bonus and the BC Earned Income Benefit. Detailed information about all of these programs is located in Appendix B at the back of this report.

After we determined take-home pay, the Council compared that number to the two poverty lines. We also determined how much take-home pay each family type required for rent and, in the case of the single parent, for child care as well. We determined the cost of child care in Ontario, Alberta and British Columbia by using the University of Toronto's Childcare Resource and Research Unit report Early Childhood Education and Care in Canada 2001. We calculated the child-care amount in Quebec differently due to that province's unique five-dollar-a-day policy. Although not every family in Quebec has access to five-dollar-a-day child care, it is the type of care used by the majority of families.

The rents were taken from Canada Mortgage and Housing Corporation's (CMHC) Rental Market Report for October 2000 and October 2001 for these four cities. For the purposes of this project, we assumed that the single employable and disabled employable workers lived in one-bedroom apartments. We assumed the single parent with one child lived in a two-bedroom apartment and the couple with two children lived in a three-bedroom apartment. The average rental amounts are provided in the table below.

The Council calculates total welfare incomes across the country for four sample situations. These are published in our regular report, Welfare Incomes. These calculations include all the benefits a person or family would receive if they started on welfare January 1 ^st; and had no earned income all year. The calculations in this section assume that each family type lives in Quebec's largest city: Montreal. This report shows welfare incomes for 2000 only since the market basket measure is for 2000.

The welfare rates for the four family types are provided in the table above. In 2000, a single employable person in Quebec on welfare received $6,282. A single disabled person received a slightly higher income of $9,089. A single parent with one child two years old received $12,950. A couple with two children ages 10 and 15 years received $16,285.

The table on the bottom of the previous page provides the percentage of the poverty line earned by each family type. None of the family types had an income that reached either poverty line, but the situation was far worse for some than for others. The single employable person received only 56 percent of the MBM and 41 percent of the LICO. The single disabled worker received far more adequate support, yet worth just 81 percent of the MBM and only 60 percent of the LICO. The single parent with one child received 82 percent of the MBM and 70 percent of the LICO. The couple with two children received 73 percent of the MBM and only 56 percent of the LICO.

Such inadequate welfare payments resulted in a significant portion of income spent on rent for each family type, even though rental rates in Montreal are some of the lowest in Canada. The average monthly rents for 2000 were $458 for a one-bedroom apartment, $509;for two bedrooms and $630 for a three-bedroom apartment.

The single employable person living in an average one-bedroom apartment needed 87 percent of his or her income from welfare for rent. The single disabled person also in a one-bedroom apartment spent 60 percent of income on rent and the single parent with one child living in a two-bedroom apartment spent 47 percent of income on rent. The couple with two children living in an average three-bedroom apartment needed almost the same amount: 46 percent of the family income was spent on rent.

Many community organizations and researchers use a rough guideline of up to 30 percent of a family's income as the measure of whether housing is affordable. The federal government agency that deals with housing is Canada Mortgage and Housing Corporation or CMHC. CMHC recommends that monthly housing costs should be no more than 32 percent of gross monthly income.

For the purpose of this paper, the Council has used 30 percent of take-home income as the marker of affordable housing. We noticed that minimum and low-wage workers sometimes had take-home incomes higher or lower than actual wages. Comparing rent to these take-home incomes, therefore, gives us a more accurate picture of what renters actually have in their pockets after they pay rent.

Each family type on welfare in Montreal spent significantly more than the recommended 30 percent, and in the case of the single employable person, spent almost three times as much.

MINIMUM WAGE

The minimum wage in Quebec throughout 2000 was $6.90 an hour. The gross incomes are provided in the second column in the above table. A person who worked full-time, that is, 40 hours a week for 50 weeks a year, earned just $14,352. This is the gross pay of the single employable person, the single disabled person and the single parent with one child two years old. A couple with two children ages 10 and 15 years would have earned $28,704 since the family had two full-time workers. All of these wages included a mandatory four percent vacation pay.

In the same table above, the second column from the right shows take-home pay. A single employable person had $12,533 of take-home pay, with deductions of 12.7 percent of the wages, or about $2,000 less than actual earnings. A single disabled person had slightly more take-home pay with $13,641, losing five percent to deductions. Despite having the same wages, individuals who are disabled can pay lower income taxes, thereby giving them a slightly higher disposable income. A single parent with one child had a significantly larger take-home pay of $20,812, 45 percent more than the wages due to a number of benefits and tax credits for parents. A couple with two children had a take-home pay of $28,393, just 1.1 percent less than the parents' wages.

Take-home income was different from the gross wage income because of deductions and benefits. Contributions to the Quebec Pension Plan (QPP) and Employment Insurance (EI) were deducted from each worker. We also deducted federal and provincial income taxes. Each family earning a minimum wage owed income taxes with the exception of the single parent with one child. This is because after claiming child care costs the single parent had a net income too low to pay income taxes. Quebec's provincial tax system also provides single parents with generous tax credits.

In addition, we calculated the various federal and provincial benefits received by each family type. The single employable person and the single disabled person each received a Goods and Services Tax (GST) and Quebec Sales Tax (QST) credit. The single parent with one child received the GST and QST credit, the Canada Child Tax Benefit and Supplement, the Quebec Family Allowance, the Parental Wage Assistance Program and assistance from the Shelter Allowance Program. The couple with two children received the GST and QST credit, Canada Child Tax Benefit and Supplement and Quebec Family Allowance.

There is a very large difference between the take-home income for the single employable person and the single parent with one child. A single parent, despite having the same wage as the single employable person, had almost $10,000 more disposable income. This is due largely to generous provincial programs and benefits available to families with children in Quebec. Quebec provides a large amount of financial aid to low-income families and in particular low-income single-parent families.

Perhaps the most significant program offered by the Quebec government is the five-dollar-a-day child care. For the minimum-wage single parent, this meant that child care only took approximately six percent of the family's income. The cost of child care was further reduced for this parent with benefits from the Parental Wage Assistance Program. Accessible and affordable child care makes entry to the work force for parents on welfare a far more realistic and viable prospect. Single parents could afford safe and reliable child care while they built labour force attachment. In addition, a single parent would have had enough disposable income remaining for other household expenses.

As the table above demonstrates, the single employable person working full time at minimum wage earned just 112 percent of the MBM and only 83 percent of the LICO. The single disabled person earned 122 percent of the MBM and 90 percent of the LICO. The single parent with one child was the only family type to earn above both poverty lines. This parent earned 132 percent of the MBM and 112 percent of the LICO. The couple with two children earned 127 percent of the MBM and 97 percent of the LICO.

In the cases where the family types earned more than the poverty line, the difference was small. People with incomes 125 percent of the poverty line are considered to be the "near poor" because - though they are out of poverty - their incomes are still very low. As a group, they are at very high risk of facing severe hardship if any crisis affects them. A reduction of hours at work, a sick child, a problem with the family car, and even a short illness can easily send the near poor into poverty.

The portion of income that each family type had to spend on average-priced rental accommodation was more reasonable for minimum-wage workers than it was for welfare recipients. The Council made the calculations based on take-home incomes. The single and disabled earners spent 44 percent and 40 percent respectively of their take-home income on shelter. The single parent with one child spent approximately 29 percent of income on rent. The couple with two children spent approximately 27 percent of its income on rent. The single employable person and the single disabled person were the only two family types to spend more than the recommended 30 percent of income on rent.

LOW WAGE

The gross pay for the low-wage or $10-an-hour worker in 2000 was significantly higher than minimum wage. The gross incomes are provided in the second column of the above table. A single person who worked full-time for 40 hours a week for 50 weeks a year earned $20,800. This is the gross pay of the single employable person, the single disabled person and single parent with one child two years old. A couple with two children ages 10 and 15 years earned $41,600. All of these wages included a mandatory four percent vacation pay.

The second column from the right shows take-home pay. The single employable person had a take-home pay of $16,386. Due to differences in the income tax system, the single disabled worker had a slightly higher take-home pay of $17,118. The single parent with one child earned $22,771. The couple with two children had a take-home pay of $34,187. For the single employable, single disabled and two-parent examples, take-home pay was about 20 percent lower than earnings. For the single parent, however, take-home pay was 9.5 percent higher than earnings.

The take-home income was different from the gross wage income because of deductions and benefits. QPP and EI contributions were deducted from each worker. We also deducted the amount each worker paid in federal and provincial income taxes. Each family type paid federal and provincial income tax.

The single employable worker and the single disabled worker both received GST and QST credits. The single parent with one child received GST and QST credits, the Canada Child Tax Benefit and Supplement and the Quebec Family Allowance. The couple with two children received GST and QST credits, the Canada Child Tax Benefit and Supplement and the Quebec Family Allowance.

The above table gives the percentage of the poverty line earned by each family type. In all cases, low-wage workers earned more than either poverty line. However, every family type earned less than 125 percent of the LICO putting all these workers and their families in the "near poor" category under LICO. Using the MBM, these workers and their families were slightly out of the "near poor" category, but still living very modestly.

The single employable worker earned 146 percent of the MBM and 108 percent of the LICO. The single disabled worker earned 153 percent of the MBM and 113 percent of the LICO. The single parent with one child earned 145 percent of the MBM and 123 percent of the LICO. The couple with two children earned 152 percent of MBM and 117 percent of the MBM.

Three of the four family types in the low-wage category spent close to the recommended 30 percent of their income on shelter. Using the take-home income amounts and the same rents as we did for the other income types, we found that the single and disabled earners each spent approximately 33 percent of their income on rent. The single parent with one child spent approximately 27 percent of income on rent. The couple with two children spent 22 percent of its income on rent.

In Quebec the single parent earning minimum wage had a similar take-home income to that of the single parent with a low-wage income due mostly to the large amount of provincial benefits received by the minimum-wage worker. The minimum-wage single parent of one earned a take-home income of $20,812 while the low-wage single parent took home $22,771. These benefits decreased drastically with a slight wage increase. For example, a single parent with a minimum-wage income received $1,675 from the Quebec Family Allowance. The same parent but with a low-wage income received only $110. The minimum-wage parent also received benefits from the Shelter Allowance Program and the Parental Wage Assistance Program while the low-wage parent did not.

The average wages for workers in Quebec for 2000 are in the second column in the above table. These are averages based on data from Statistics Canada's Survey of Labour and Income Dynamics. For the single employable person and the single disabled person, we used average incomes for unattached people under 65. For the single parent, we used the average income of single parents under 65 with children under 18. For the two-parent family, we used the average incomes of couples under 65 with children under 18.

While unattached single people earned $28,865 on average, single parents earned slightly less at $28,519. We cannot be sure of the reason for the difference in incomes for single individuals with and without children. However, it is likely due to workforce attachment and availability for employment. The average wages in 2000 for Quebec couples with children were $60,532.

The middle column shows take-home pay. The take-home pay for the average wage single employable person was $20,385. The single disabled person had a slightly higher take-home pay of $21,529. The single parent had an even higher take-home pay of $26,821. The couple with two children had a take-home pay of $42,466. For the single employable person and the couple with two children this was about 30 percent lower than earnings. The single disabled worker was deducted 25 percent of earnings. The single parent with one child was deducted only six percent of earnings.

The Council calculated this amount using the average wages for each family type less deductions. Each family type paid QPP and EI benefits, and federal and provincial income taxes. The single employable person and the single disabled person received GST and QST credits. The single parent with one child received GST and QST refunds, Canada Child Tax Benefit and Supplement, and Quebec Family Allowance. The couple with two children received just the Canada Child Tax Benefit.

As the above table demonstrates every average-wage family type earned well above both poverty lines. The single employable person earned 182 percent of the MBM and 134 percent of the LICO. The single disabled person earned 192 percent of the MBM and 142 percent of the LICO. The single parent with one child earned 171 percent of the MBM and 145 percent of the LICO. The couple with two children earned 189 percent of the MBM and 146 percent of the LICO.

Each family type spent well below the recommended 30 percent of their income on average shelter costs. The single employable and single disabled person each spent approximately 25 percent of income on rent. The single parent with one child spent almost 23 percent. The couple with two children paid the smallest amount with approximately 18 percent of their income on rent.

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WHAT DOES IT MEAN FOR ONTARIO?

The welfare rates for the four family types are provided in the table above. The calculations assume that each family type lives in Ontario's largest city, Toronto. In 2000, a single employable person in Ontario on welfare received $6,825. A single disabled person received a much higher amount of $11,761. A single parent with one child two years old received $13,758. A couple with two children ages 10 and 15 years received $18,214.

The table above gives the percentage of the poverty line received by each family type. Not one of the family types even approached either poverty line with these incomes. The worst situation of all was that of single employable people. In Ontario - just as we saw in the last chapter with welfare recipients in Quebec - single employable people have by far the least adequate incomes, no matter which poverty line we look at. The single employable person received just 50 percent of the MBM and 45 percent of the LICO. The single disabled person came much closer to the poverty lines receiving 86 percent of the MBM and 78 percent of LICO. Welfare for a single parent with one child brought the family to 72 percent of the MBM and 74 percent of LICO. The couple with two children received 67 percent of the MBM and just 62 percent of LICO.

Rents in Toronto are some of the highest in the country. The average monthly rents in Toronto for 2000 were $830 per month for a one-bedroom apartment, $979 per month for a two-bedroom apartment and $1,165 per month for a three-bedroom apartment. The high rates made rent payments for an average apartment a near impossibility for many people on welfare.

A single person living in a one-bedroom apartment needed $9,960 to pay the rent for one year. A single person considered employable by welfare officials had only $6,825, making it impossible to rent an average one bedroom apartment. The single disabled person on welfare in a one-bedroom apartment spent 85 percent of the income on rent. The single parent with one child living on welfare and in a two-bedroom apartment also spent nearly 85 percent of income on rent. The couple with two children living in a three-bedroom apartment spent the least, but still used nearly 77 percent of the family's income for rent.

Each family type with a welfare income spent significantly more than 30 percent of their income on housing. Single employable people simply could not afford an apartment on their own. Affording shelter for these families undoubtedly meant cutting out other important expenses such as food, clothing and medical expenses.

MINIMUM WAGE

The minimum wage rate in Ontario stagnated at $6.85 an hour until it was finally raised to $7.15 an hour in February 2004. The gross incomes for minimum wage workers are provided in the second column of the table above. A single person who worked full-time, that is, 40 hours a week for 50 weeks a year, earned just $14,248. This is the gross pay of the single employable person, single disabled person and single parent with one child two years old. A couple with two children ages 10 and 15 years earned $28,496. All of these wages included a mandatory four percent vacation pay.

In the same table above the second column from the right shows take-home pay. A single employable person earned $12,518 in take-home pay, with deductions of 12.1 percent of wages, or nearly $2,000 less than actual earnings. A single person with a disability had $13,676 in take-home pay, losing 4 percent of wage to deductions. Despite starting with the same wages, individuals who are disabled can pay lower income taxes, thereby giving them a slightly higher disposable income. A single parent with one child took home $17,536, which was 23.1 percent more than wages due to tax credits and benefits for parents. A couple with two children took home $27,237, just 4.4 percent less than the parents' wages.

Take-home income was different from the gross income because of deductions and benefits. Each worker contributed to the Canadian Pension Plan (CPP) and Employment Insurance (EI). Each family paid federal and provincial income taxes with the exception of the single parent. This was because after claiming child care costs, this parent had a net income too low to pay income taxes. Every family type received a GST credit. The single parent with one child and the couple with two children each received the Canada Child Tax Benefit and Supplement. The single parent also received the Ontario Child Care Supplement for Working Families.

In most cases, the take-home pay of minimum-wage workers was simply not enough to bring them over either poverty line. The table above shows that the single employable person earned just 92 percent of the MBM and 83 percent of the LICO. The single disabled person reached the MBM poverty line and 90 percent of LICO. The single parent with one child earned 92 percent of the MBM and 95 percent of LICO. The couple with two children reached the MBM and 93 percent of LICO. In every case, each family type was poor even though all the adults worked full time all year.

High rental rates in Toronto made the cost of living stressful even for individuals working year round. The percentage of income spent on rent is based on take-home income. The single employable person and the single disabled person would have spent 80 percent and 73 percent respectively of income on rent to live in an average one-bedroom apartment. The single parent with one child paid a little less with 67 percent of income going to rent. The couple with two children paid the lowest percentage but still spent just over 50 percent of their income on rent.

Three of the family types spent two times the recommended 30 percent of their income on rent. The financial situation for the single parent was much more difficult as their child care fees represented almost 42 percent of take-home income. This parent simply could not afford both child care and rent on a minimum-wage salary. This situation undermines the financial incentives parents to enter the workforce at minimum wage.

For a single disabled person who wanted to move from welfare into the workforce at minimum wage, the financial incentive is very low. A disabled individual on welfare received $11,761. Working full time at minimum wage would provide this individual with only an extra $1,914 a year. In many cases, by leaving welfare for a minimum-wage job, a person would also lose medical and other benefits.

LOW WAGE

The gross wage incomes for the low-wage or $10-an-hour worker are provided in the second column of the table above. At a wage of $10 an hour, each of the single family types working full-time earned $20,800. The couple with two children earned twice this amount with $41,600.

The single employable person had a take-home pay of $17,067. Due to the income tax system, the single disabled person had a slightly higher take-home pay of $18,071. The single parent with one child two years old had a take-home pay of $22,591. The couple with two children ages 10 and 15 had the highest take-home pay at $35,484. For the single employable, single disabled and two-parent examples, take-home pay was about 15 percent lower than earnings. For the single parent, however, take-home pay was 8.6 percent higher than earnings.

The take-home pay was different from gross pay because of deductions and benefits. All workers made contributions to CPP and EI. Each family type paid federal and provincial income tax. Every family type qualified for a GST credit. The single parent with one child received the Canada Child Tax Benefit and Supplement and the Ontario Child Care Supplement for Working Families. The couple with two children also received the Canada Child Tax Benefit but did not qualify for the Supplement.

The table above provides the percentage of the poverty line earned by each family type. In every case we looked at, low-wage jobs with full-time hours put all workers and their families above both poverty lines. In most cases, though, low-wage workers and their families still lived in straitened situations. The single employable person, for example, lived in "near poverty" at 125 percent of the MBM and 112 percent of the LICO. The single disabled person earned 132 percent of the MBM, but fell into the category of "near poverty" at just 119 percent of the LICO. The single parent with one child lived in near poverty under both measures: 118 percent of the MBM and 122 percent of the LICO. The couple with two children earned 130 percent of the MBM but was in near poverty at just 122 percent of the LICO.

All four family types spent more than the recommended 30 percent of their income on rent if they lived in average-priced rental accommodation. Using take-home income amounts and the same rents, we found that the single employable person spent close to 60 percent of take-home income on rent while the single disabled person spent nearly 55 percent. The single parent with one child spent slightly less with 52 percent of take-home income on rent. The couple with two children spent the smallest amount, with almost 40 percent of the family's take-home income going towards rent.

Child care expenses accounted for almost 33 percent of the single parent's take-home income. This means that rent and child care accounted for nearly 85 percent of this family's income. A single parent with one child could pay for both rent and child care on this salary, however, but the family would have merely 15 percent of the family income or almost $3,400 for other expenses such as food, clothing, transportation and household expenses. According to the MBM, this household needed $11,160 to cover the costs of these basics. The question these families are forced to ask themselves is which of the carefully-calculated necessities of life in MBM do they have to do without?

AVERAGE WAGE

The average wages are in the second column in the above table. These are averages based on data from Statistics Canada's Survey of Labour and Income Dynamics. For the single employable person and the single disabled person, we used average incomes for unattached people under 65. For the single parent, we used the average income of single parents under 65 with children under 18. For the two-parent family, we used the average incomes of couples under 65 with children under 18.

The average wages in Ontario for 2000 were the highest in the four provinces in this study. Single people under 65 in Ontario earned on average $35,027. Single parents had a smaller average gross pay of $33,573. Two-parent families earned on average $74,645.

The second column from the right shows take-home pay. A single employable person had a take-home pay of $25,738. A single disabled person had a slightly higher take-home pay of $26,713. A single parent with one child took home $29,370. A couple with two children had a take-home pay of $54,230. For the single employable person, single disabled person and the couple with two children deductions represented about 25 percent of wages. The single parent with one child was deducted almost 12.5 percent of the wages.

Take-home incomes were different due to benefits and deductions. Each family type contributed to CPP, EI, and paid federal and provincial income taxes. The single employable person and single disabled person did not qualify for a GST credit and therefore did not receive any benefits.

The single parent with one child with an average wage received the Canada Child Tax Benefit but only received the National Child Benefit Supplement beginning in July 2000 when the income rates changed. The single parent also received a GST credit and the Ontario Child Care Supplement for Working Families. The couple with two children received some Canada Child Tax Benefits in July 2000 when the rates changed but they did not qualify for the Supplement or for a GST credit.

When families had average wage incomes, ever family type earned an income significantly higher than the MBM or LICO poverty lines. The table above shows that the single employable person earned 188 percent of the MBM and 170 percent of the LICO. The single disabled person earned 195 percent of the MBM and 176 percent of the LICO. The single parent with one child earned 153 percent of the MBM and 159 percent of the LICO. The couple with two children earned almost twice the value of either poverty line, 198 percent of the MBM and 186 percent of the LICO.

Despite a higher income, Toronto rents would have been an obstacle for the single employable person, single disabled person and the single parent with one child. The single employable person and the single parent would each have spent nearly 40 percent of their take-home incomes on rent if they wanted average-priced rental accommodation. The single disabled person spent 37 percent of income on rent. The only family type to spend less than the recommended 30 percent of their income on rent was the couple with two children. Nearly 26 percent of their take-home income was spent on rent.

The single parent with one child spent an extra 25 percent of take-home income on child care. Combined with rent this worker needed 65 percent of his or her family income for these two basic necessities leaving only 35 percent for other expenses. Thirty-five percent of the take-home income is approximately $10,000, slightly short of the $11,160 the MBM researchers identified as the cost for other basic needs. Even with average wages, single parents in Toronto face hard times trying to make ends meet.

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WHAT DOES IT MEAN FOR ALBERTA?

The welfare rates for the four family types are provided in the table above. The calculations assume that each family type lives in Alberta's largest city: Calgary. In 2000, a single employable person in Alberta on welfare for the full year received $5,026. A single disabled person received slightly more with an amount of $7,587. A single parent with one child two years old received $11,527 and a couple with two children ages 10 and 15 years received $18,268.

The table above provides the percentage of the MBM and LICO poverty lines that each family type received from welfare. The table shows that not one family type even approached either poverty line with these incomes. As we saw with welfare in the other provinces, single employable people have by far the least adequate incomes, regardless of the poverty line used: 42 percent of the MBM and only 33 percent of the LICO. The single disabled person received a much higher percentage of 63 percent of the MBM and 50 percent of the LICO, but even so, this was grossly inadequate. The single parent with one child received 68 percent of the MBM and 62 percent of the LICO. The couple with two children received 76 percent of the MBM and 63 percent of the LICO.

Such low welfare payments resulted in a significant portion of income spent on rent for each family type. The average rental rates in Calgary for 2000 were $611 per month for a one-bedroom apartment, $740 per month for two bedrooms, and $713 per month for a three-bedroom apartment.

At these rates, the cost of an average one-bedroom apartment was beyond unaffordable. A single employable person simply did not have enough money to pay for an average one-bedroom apartment. A one-bedroom apartment cost $7,332 for the year and this individual received only $5,026 to cover everything, $2,306 less than needed for the average rent alone.

The single disabled person needed nearly 97 percent of his or her entire welfare income for the same one-bedroom apartment, making this type of shelter impossible. The single parent with one child needed 77 percent of income from welfare for a two-bedroom apartment. The couple with two children was in the best position to pay rent on average accommodation, but still needed 47 percent of its income for a three-bedroom apartment. In every case, average-priced accommodation was simply impossible.

In all four cases, the cost of average housing was far beyond affordability, which is measured as 30 percent of a household's income. Affording shelter for anyone on welfare meant cutting out other important expenses and accepting substandard housing.

MINIMUM WAGE

The minimum wage rate in Alberta throughout 2000 was $5.90 an hour, the lowest minimum wage in the country. The gross incomes are shown in the second column of the table above. One worker who worked full-time, that is, 40 hours a week for 50 weeks a year at this wage earned a gross income of $12,272. This is the gross pay of the single employable person, single disabled person and single parent with one child two years old. The couple with two children ages 10 and 15 years earned exactly twice that amount: $24,544. These gross wages include a mandatory four percent vacation pay.

In the same table above, the second column from the right shows take-home pay. A single employable worker had a take-home pay of $11,026, with deductions of 10.2 percent of wages. A single disabled worker had a slightly higher take-home pay of $11,894, with deductions of only 3.1 percent. Individuals who were disabled could pay lower income taxes, so the single disabled worker had fewer deductions than the single employable worker. A single parent with one child had a take-home income of $13,937, 13.6 percent higher than wages alone due to tax credits and benefits for parents. A couple with two children had a take-home income of $26,599, 8.4 percent more than wages also due to tax credits and benefits for parents.

Gross pay is different than a worker's take-home pay due to deductions and benefits. Each worker contributed to the Canada Pension Plan (CPP) and Employment Insurance (EI). Not all of the family types had an income high enough to contribute to federal and provincial income taxes. The single disabled person and single parent with one child were both exempt from paying taxes. For the single disabled person this was because after claiming a disability tax credit this individual had a net income too low to pay income taxes. For the single parent this was because after claiming child care this parent had a net income too low to pay taxes. Each family type received a GST credit. The two family types with children received the Canada Child Tax Benefit and Supplement. The families with children also benefited from the Alberta Family Employment Tax Credit.

The table above provides the percentage of the MBM and LICO poverty lines earned by each family type. Despite full-time employment, in most cases, minimum workers did not earn enough to bring them and their families over either of the poverty lines. The single employable worker earned 91 percent of the MBM and just 73 percent of LICO. The single disabled worker earned 98 percent of the MBM but just 78 percent of LICO. The single parent with one child earned 82 percent of the MBM and 75 percent of LICO. The couple with two children was the only family to earn above a poverty line earning 110 percent of the MBM but still only 91 percent of LICO.

A low minimum wage forced most of these workers to use a disproportionate amount of their income for rent. The percentages were calculated using take-home incomes. The single employable worker would have spent 66 percent of income on rent to pay for average-priced rental accommodation. The single disabled worker spent a little less with nearly 62 percent of income going to rent. The single parent with one child spent approximately 64 percent of their take-home income on rent. The couple with two children was the only family type to come near the recommended "affordable" 30 percent of income on rent, spending 32 percent of their income.

The financial situation for the single parent was more difficult due to child care costs to make it possible for the parent to work. Child care accounted for almost 40 percent of this parent's take-home income. Child care combined with average rent totaled an amount higher than the total take-home income. This means that paying for both rent and child care is impossible for this worker.

For a single parent with a child, the income difference between welfare and full-time work at minimum wage is shockingly small. In 2000, a single parent received $11,526 in welfare, just $2,411 less than an income while working full time at minimum wage. If it is not possible for parents to pay for rent and child care with their minimum wage income, then there is little financial incentive for them to leave welfare to enter the work force at this wage.

LOW WAGE

The gross wage incomes for the low-wage or $10-an-hour worker are provided in the second column labeled gross pay. At a wage of $10 an hour the single family types working full-time earned $20,800. The couple with two children earned twice this amount with $41,600.

The next column shows take-home pay. The single employable person had a take-home income of $16,665, with deductions of 19.9 percent of wages. After taxes, the single disabled person had a slightly higher take-home income of $17,757, which is 14.6 percent less than wages. The single parent with one child had a take-home income of $20,713, with deductions of only 0.4 percent. The couple with two children had a take-home income of $34,590, with deductions of 16.9 percent.

The take-home income was different from gross pay as it included CPP and EI deductions. As well, each family type paid federal and provincial income taxes. Each family type received a GST credit. The single parent with one child received the Canada Child Tax Benefit and Supplement. The couple with two children received the Canada Child Tax Benefit but did not qualify for the Supplement because its income was too high. The two family types with children also received the Alberta Family Employment Tax Credit.

The table above provides the percentage of the MBM and LICO poverty lines earned by each family type. At low wage, every family type had earnings above the MBM and LICO. According to the LICO, however, the four family types would still be considered "near poor" because their incomes were between 100% and 125% of the poverty line. The single employable person earned 138 percent of the MBM - above near poverty - but only 110 percent of the LICO. The single disabled person earned 147 percent of the MBM - again, above near poverty according to the MBM - but 117 percent of the LICO, leaving them in near poverty.

The single parent with one child is the only family type who still falls into "near poor" category for both poverty lines. This worker earned just 122 percent of the MBM and 112 percent of the LICO. The couple with two children earned 143 percent of the MBM and 119 percent of the LICO, in near poverty according to LICO.

Low-wage workers spent a disproportionate amount of their income on rent for average accommodation. Using take-home income amounts and the same rents as we did for the other income types, the single employable person spent an unaffordable 44 percent of income on rent for average accommodation. The single disabled person spent a little less with 41 percent of income going towards rent - still a disproportionate and unaffordable amount. The single parent with one child spent slightly more with 43 percent of income spent on rent, again unaffordable. Only the couple with two children spent less than the recommended 30 percent of its income on rent - nearly 25 percent of its take-home income.

The single parent also paid for child care using a further 27 percent of income. This cost combined with average rent, accounted for nearly 70 percent of income. This means only 30 percent remained for food, clothing, transportation and other household expenses. Thirty percent of this family's income is approximately $6,200. According to the MBM, this family needed over $10,000 for expenses other than housing. This family could not afford all the components of the basket once child care was paid for - even though the family income exceeded the MBM poverty line. This is because the MBM does not account for the cost of child care upfront.

AVERAGE WAGE

The average wages for workers in Alberta for 2000 are in the second column in the above table. These are averages based on data from Statistics Canada's Survey of Labour and Income Dynamics. For the single employable person and the single disabled person, we used average incomes for unattached people under 65. For the single parent, we used the average income of single parents under 65 with children under 18. For the two-parent family, we used the average incomes of couples under 65 with children under 18.

Unattached workers earned $30,354 while single parents earned slightly more with $35,382. The average wage for a two-parent family was $68,334. All of these wages include a mandatory four percent vacation pay.

The second column from the right shows take-home pay. The single employable person had a take-home pay of $22,891 while the single disabled person had a slightly higher take-home pay of $23,927. The single parent with one child took home $28,730. The couple with two children had a take-home pay of $50,001. For the single employable worker and the couple with two children deductions represented about 25 percent of the wages. Take-home pay of the single disabled worker and the single parent with one child was about 20 percent lower.

Take-home incomes were different due to various benefits and deductions. Each family type contributed to CPP, EI and federal and provincial income taxes. The single employable person and the single disabled worker received a GST credit. The single parent with one child received the Canada Child Tax Benefit but did not qualify for the Supplement. The single parent also received a GST credit. The couple with two children received a Canada Child Tax Benefit but did not qualify for the Supplement. The couple did not qualify for GST. Neither family type with children qualified for the Alberta Family Employment Tax Credit.

The table above provides the percentage of the poverty line earned by each family type. Each family type had a take-home income significantly higher than the MBM and LICO poverty lines. The single employable worker earned 189 percent of the MBM and 151 percent of the LICO. The single disabled worker earned 198 percent of the MBM and 158 of the LICO. The single parent with one child earned 170 percent of the MBM and 155 of the LICO. The couple with two children earned 207 percent of the MBM and 171 of the LICO.

Higher wages made a significant difference to the families' expenses - in particular to the affordability of their housing. Each family type spent near or below 30 percent of their incomes on rent in average-priced accommodation making average-priced housing an affordable option for them all. Using the same rents as for the other income types, the single employable worker spent 32 percent of take-home income on rent. The single disabled worker and the single parent with one child both spent close to 30 percent of take-home income on rent. The couple with two children spent the least with 17 percent of their take-home income going towards rent.

At an average wage, child care also was more affordable for the single parent with one child accounting for almost 20 percent of the take-home income. Combined with rent, this left 50 percent of take-home income available for other household expenses. Fifty percent of this family's take-home income is approximately $14,000. According to the MBM, this amount is more than sufficient for the remaining household costs.

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WHAT DOES IT MEAN FOR BRITISH COLUMBIA?

The 2000 welfare rates for the four family types are provided in the table above. The calculations assume that each family type lives in British Columbia's largest city: Vancouver. In 2000, a single employable person in British Columbia received a welfare income of $6,383 and a single disabled person received $9,672. The single parent with one child two years old received $12,823 and the couple with two children ages 10 and 15 years received $18,051.

The table above provides the percentage of the MBM and LICO poverty lines earned by each family type. Not one family type received an income near either poverty line, but the situation was far worse for some than for others. The single employable person received less than half of both the MBM and LICO: only 46 percent of the MBM and 42 percent of the LICO. The single disabled person received a much higher - but still grossly inadequate - percentage of 70 percent of the MBM and 64 percent of the LICO. The single parent with one child received 71 percent of the MBM and 75 percent of the LICO. The couple with two children received 65 percent of the MBM and 62 percent of the LICO.

Average rental rates in Vancouver are quite high. In every case, the cost of average rents far exceeded the 30-percent threshold for affordability. In 2000, a one-bedroom apartment cost $695 per month, two bedrooms cost $891 and three bedrooms cost $1,022. With such high rents, it is not surprising that welfare recipients had a hard time paying average rent costs

At these rates, the cost of an average-priced one-bedroom apartment exceeded the entire income of a single employable person on welfare: one bedroom cost $8,340 for the year but the entire annual welfare income was just $6,383 or $1,957 less than rent. An average-rent apartment was also unaffordable for the single disabled person at 86 percent of income. Similarly, the single parent with one child in a two-bedroom apartment needed 83 percent of income for a two-bedroom unit and the couple with two children needed 68 percent of the family income for a three-bedroom apartment.

At $7.15 an hour until November 2000 when the rate rose to $7.60, British Columbia had the highest minimum wage rate in the country for the year. Our calculations take into consideration the increase in pay. The gross incomes are provided in the second column of the table above. The family types with a single wage earner working full-time, that is, 40 hours at week for 50 weeks a year, had a gross pay of $15,028. The couple with two children earned $30,056. These calculations include a mandatory four percent vacation pay.

A single employable person had a take-home income of $12,707, with deductions of 15.4 percent of wages. After taxes, a single disabled person had a slightly higher take-home income than the single employable person at $13,728, with deductions of 8.3 percent of wages. A single parent with one child had a take-home income of $16,264, 8.2 percent more than wages alone due to benefits and tax credits for parents. A couple with two children had a significantly higher take-home income of $27,167, with a 9.6 percent deduction of wages.

Take-home pay for the family types was calculated by deducting their contributions to the Canadian Pension Plan (CPP) and Employment Insurance (EI). Each family type with the exception of the single parent with one child paid federal and provincial income taxes. The single parent was exempted from income tax due to the low net income after claiming child care costs. Also, each family type qualified for a GST credit.

The single parent with one child and the couple with two children both received the Canada Child Tax Benefit. These two family types also qualified for the Supplement; however, in British Columbia the Supplement is clawed back and reinvested in other programs. The single parent with one child received benefits from the BC Family Bonus and the BC Earned Income Benefit. The couple with two children did not qualify for these provincial programs.

The table above provides the percentage of the MBM and LICO poverty lines earned by each family type. Despite full-time employment, not one of these workers and their families rose over either poverty line. The single employable worker earned 91 percent of the MBM and only 84 percent of the LICO. The single disabled worker came very close - earning 99 percent of the MBM and 91 percent of the LICO. The single parent with one child earned 84 percent of the MBM and 88 percent of the LICO. The couple with two children also came close - earning 98 percent of the MBM and 93 percent of the LICO.

High rents and low wages caused each family type to spend a disproportionate amount of their income on rent for average accommodation. In every case, average rents in appropriate sizes of apartments were too expensive for these families to afford. The single employable person and the single parent with one child would have spent 66 percent of income on rent for average price apartments. The single disabled person spent slightly less with 61 percent of income going towards rent. The couple with two children spent 45 percent of their income on rent. In every case, the rent was significantly more than 30 percent of their incomes on rent and in most cases, at least double the recommended 30 percent.

Child care costs for the single parent family accounted for 41 percent of income. Combined with rent, a working single parent with a minimum wage job did not have the money to pay both the rent and child care. There is very little financial incentive for this worker to remain in the work force at this wage as, despite working full-time year round, basic living expenses exceed the money coming into the home.

The gross wage incomes for the low-wage or $10-an-hour worker are provided in the second column of the table above. At a wage of $10 an hour the single family types working full time earned $20,800. The couple with two children ages 10 and 15 years earned twice this amount with $41,600.

The single employable person had a take-home pay of $16,649 with deductions of 20 percent of wages. The single disabled person had a higher take-home pay of $17,725. The single parent with one child had a take-home pay of $20,297, with deductions totalling only 2.4 percent. The couple with two children had a take-home pay of $35,435. The single disabled worker and the couple with two children both had deductions of 14.8 percent of wages.

Take-home pay differed from gross pay as it included deductions and benefits. All the workers made contributions to CPP and EI and each family type paid federal and provincial income taxes. The single employable and single disabled workers received a GST credit. The single parent with one child received a GST credit, the Canada Child Tax Benefit, the BC Family Bonus and the BC Earned Income Benefit. The couple received a GST credit and the Canada Child Tax Benefit but did not qualify for the BC Family Benefits.