The soaring cost of living, of course, but also the end of special aid programs deployed to cushion the economic shock of COVID-19, is erasing the gains against poverty that had recently been made. .
This is one of the unexpected effects that the pandemic had. Anxious to cushion the economic shock of the COVID pandemic, governments have expanded their social safety nets so much that household finances have generally improved despite the crisis in Canada.
In Quebec, the median after-tax income of families thus jumped — rather than fell — from $61,100 in 2019 to $65,900 the following year (in constant 2022 dollars), thanks in particular to an increase in transfers (from $11,100 to $18,500) and despite a decrease in their market income (from $55,200 to $52,400), Statistics Canada reported last week.
Situation reversal
This dynamic would, however, quickly reverse itself thereafter, with the real level of wages starting to rise again in 2021 ($58,000) before stagnating in 2022 ($57,500) due to inflation as governments gradually closed down the tap of their transfers (between $18,500 in 2020 and $13,300 in 2022). In total, the median real after-tax household income fell in Quebec, going from $65,900 in 2020 to $64,600 in 2022.
This phenomenon has not spared the most modest families. Gradually decreasing since at least the beginning of the 2000s – with the exception of the surges experienced in the aftermath of the 2008-2009 financial crisis as well as in the mid-2010s – the proportion of Quebecers living below the official threshold of poverty in Canada fell suddenly with the pandemic (8.9% in 2019 compared to 4.8% the following year), before rising again (to 5.2% in 2021, then to 6.6% in 2022 ).
However, this was still better than in any other Canadian province, particularly in Ontario (10.9%). But this general average also hid much higher proportions among young people under 18 who grew up in a single-parent family (14.5%), in particular, and among single people (19.3%).
As for the proportion of Quebecers living in moderate or severe food insecurity, it has only increased from 2019 (7.1%) to 2022 (10.8%), and is particularly strong among single people. (15.8%) and in single-parent families (26.4%).
This yo-yo movement of poverty during the pandemic illustrates the power that a more or less generous social safety net can have in this area.
However, this is not the only factor involved. If we go back in time as far as the latest edition of this measure allows, we see that the proportion of Quebec families below the official poverty threshold had decreased from 13.5% to 8.9% during the four years preceding COVID, at particularly favored by the strength of the economy and employment.
Another measure of poverty
The calculation of this famous “official poverty line in Canada” is not perfect, experts argue. Based on “the cost of a specific basket of goods and services corresponding to a modest and basic standard of living”, this “market basket measure” (MBM) developed by the federal government sticks so closely to the strict minimum needs that it should be accompanied by another measure, which would better take into account the options available and the real cost on the ground with regard to food, housing or transport, has been supporting for around ten years years the Institute for Socioeconomic Research and Information (IRIS). This measure, argues IRIS, should also cover a slightly broader set of equally essential expenses, such as unreimbursed health care and childcare costs, a small financial cushion in the event of an unforeseen event and an occasional outing to the restaurant.
As federal statisticians do from time to time for the MPC, the IRIS has just updated the method of calculating its “viable income”. Unsurprisingly, its threshold remains higher than that of the MPC and has increased over the last year at approximately the same rate as inflation. One of the main new features this year is that instead of basing ourselves on the average rental price, we calculated the cost of housing based on what someone looking for somewhere to stay would have to pay today. house.
IRIS thus comes to the conclusion that, to be viable, the annual after-tax income of a single person should be $38,500 in Montreal (compared to $27,300 according to the MPC), $30,700 in Trois-Rivières ($25,800) and $43,600 in Sept-Îles ($25,500). For a family of two adults and two children, the minimum necessary income should be close to $82,000 in Montreal (compared to $54,500 according to the MBM), $72,800 in Trois-Rivières ($51,500) and $86,600 in Sept-Îles ($51,000).
Beyond the minimum wage
In light of these figures, it is not the 50¢ increase in the minimum hourly wage which came into force this week which will fundamentally change things for the 200,700 employees directly concerned. Now at $15.75 an hour, it would barely allow a single person working 35 hours a week and living in Montreal to exceed the MBM, but it would only take them two-thirds of the way to a viable income, says the IRIS. To pass this last threshold, one would have to work more than 50 hours per week or a minimum wage of $27 per hour.
The basic social assistance benefit ($11,800) covers less than half of the MBM and less than a third of the viable income.
“We tend to believe that working is enough to escape poverty, but our economy creates a category of poor workers who, even if they work 50 hours a week, struggle to meet their needs,” lamented the researcher and author of the IRIS study, Eve-Lyne Couturier.