Living Standards examines Canadians’ average and median income and wealth, distribution of income and wealth including poverty rates, income fluctuations and volatility. It considers economic security, including labour market security, and housing and food security.
Our living standards should reflect our capacity to transform economic growth into stable current and future income streams for everyone. Economic growth does not automatically translate into better living standards. A higher average income, for example, may be achieved at the cost of increased social inequality or greater economic insecurity. In contrast, achieving greater job quality, reducing poverty, and providing basic affordable housing and food security to individuals and families will raise wellbeing for everyone.
No recovery yet from the recession’s blow
Canadian Living Standards improved considerably between 1994 and 2008. Sadly, the recession sparked a steep decline from which we have yet to recover. More so than any other domain of wellbeing, this trend dramatically reveals how our standard of living is not necessarily tied to the improving performance of the economy overall.
Family incomes are higher
After-tax median family incomes rose by almost one-third (29.9%) from 1994 to 2014. In 1994, the median family income was $55,500. By 2014, it was up to $72,100.
Fewer Canadians are living in poverty…
Overall, the incidence of poverty declined by 44% between 1994 and 2014. The poorest Canadians benefited from the real increases in income over the time period, but these increases were not equally felt by all. Among those who are still most at risk from poverty are children, lone-parent families — especially those led by women — older adults, Indigenous people, and people with disabilities. In fact, despite changes in the tax system targeting seniors, the poverty rate among Canada’s seniors has risen since the 1990s, and again, is most pronounced among women.10
…But inequality has increased
Income inequality is up by almost 10% since 1994. Much of the increase occurred in the 10-year period from 1994 to 2004 and has since remained relatively unchanged. Even as incomes rise, the top 20% of Canadians have received the lion’s share. According to the Conference Board of Canada, the gap in real after-tax average income between the richest and the poorest grew by over 40% between 1994 and 2009.11
Access to affordable housing is worsening…
Canadians are devoting a greater proportion of their net income to meet their housing needs. Housing is becoming less affordable for Canadians as they devote a greater proportion of their net income (after covering other necessities such as food, clothing, and child care) to costs associated with their shelter needs. In 1994, Canadians devoted 36.7% of their net incomes to shelter costs, which fluctuated very little until 2003 when it rose to 37.7%. The percentage rose again after 2010 and by 2014, Canadians were putting 39.2% of their net incomes towards their shelter needs. Despite increases in family incomes, over the entire 21-year time period, shelter costs rose by 6.3%.
Nowhere were these increases felt more severely than by residents of Nova Scotia, New Brunswick, Prince Edward Island, and British Columbia. In these provinces, shelter costs exceeded 40% of net incomes. Alberta was the only province where its residents saw their shelter costs decline — from 36.6% in 1994 to 33.4% in 2014.12
…And food insecurity is on the rise
Over 2 million Canadians struggle with food insecurity. Reliable national data on food security have only been available since 2007, but even in that short time period, the percentage of Canadians who are experiencing moderate or severe food insecurity rose from 7.1% in 2007 to 7.7% in 2014. This increase means even more Canadians did not have access to enough affordable and nutritious foods.
Food insecurity is highest in Nunavut and among single parents of young children. In 2012, over one-third of the population of Nunavut (36.7%) was facing food insecurity — more than four times the national average. Also at risk are households led by a lone parent with children under 18 years of age. Almost one quarter of these households (22.6%) are food insecure.13 And even though children are at greater risk of living in poverty, Canadian adults 18 years of age and older were more likely to be food insecure than children.
Troubling signs for employment since the recession
Precarious employment on the rise? Even though the percentage of the working age population that is employed increased overall by 5% from 1994 to 2008, it dropped following the recession and has yet to recover to pre-recession levels. Employment reached 63.4% in 2008, up from 58.4% in 1994, but has dropped to 61.5% immediately following the recession and remains at 61.4% in 2014.
The return of long-term unemployment. While long-term unemployment has not returned to early 1990s levels when it hovered between 15% and 17%, by 2014, 12.4% of Canadians were in long-term unemployment. This percentage has almost doubled since 2008 when long-term unemployment sat at 6.9%. Men, older workers, and individuals with lower levels of education are at greater risk of long- term unemployment.
Employment quality is declining. The CIBC Job Quality Index peaked in 2001 and then has slowly declined, falling 2.4% overall from 1994 to 2014. After 2008, coincident with lower levels of employment, job quality fell by 2% in two years and has remained there since.
Conclusion
Looking over the years between 2008 and 2014, the recession and subsequent recovery have taken an enormous toll on the living standards of Canadians. Many dimensions of the Living Standards of Canadians worsened between 1994 and 2014, especially following the recession in 2008. Canadians experienced a widening of income inequalities, lower employment, much higher long-term unemployment, and lower security for both housing and food. Even though there have been notable poverty reductions over the period and increases in the median income of economic families, arguably the poorest Canadians are much worse off as the income gap widens and they fall further behind.
By failing to reduce income inequality, Canada is not using the skills and capabilities of its citizens to their fullest potential. Income inequality weakens social cohesion, thereby contributing to greater social tensions, especially in times of economic uncertainty.14 Perhaps even more importantly, higher levels of income inequality beg a moral question concerning fairness and equity, which are core Canadian values.
We see the impact of falling Living Standards on other domains of wellbeing. Canadians’ overall health and mental health have declined, engagement in many leisure and cultural opportunities has fallen, provision of support to others in need has decreased, and time spent with friends has dropped. These trends reflect the pervasive impact of the recession on many aspects of Canadians’ lives as they adjust to more difficult circumstances and face making more difficult choices.
Judging from the growth in GDP post-recession, which has increased by 8.1% between 2008 and 2014, our economy has rebounded. However, our living standards continue to be mired in a slump. Living Standards fell by 11.6% between 2008 and 2011, and rose only 0.7% since 2011. The stark contrast between economic recovery and our Living Standards underlines how our wellbeing and progress towards higher quality of life is not reflected in GDP.
Living Standards indicators tracked 1994 to 2014
- After-tax median income of economic family (2013$)
- Percentage of persons living in poverty based on low income cut-off (LICO)
- Gini coefficient (income gap)
- Percentage of households that are moderately or severely food insecure
- Housing affordability based on Shelter Consumption Affordability Ratio (SCAR)
- Percentage of labour force employed
- Percentage of labour force in long-term unemployment
- CIBC index of employment quality (1994 Q1=100)
10. Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. (2010). Federal poverty reduction plan: Working in partnership towards reducing poverty in Canada. Ottawa, ON: Communications Canada. Retrieved from http://www.parl.gc.ca/content/hoc/Committee/403/HUMA/Reports/RP4770921/humarp07/humarp07-e.pdf
11. Conference Board of Canada. (2011). Canadian income inequality. Is Canada becoming more unequal? Retrieved from http://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx
12. Smetanin, P., Moca, I., Yusuf, F., & Kobak, P. (2015). Understanding shelter affordability issues. Research Report Executive Summary. Toronto, ON: The Canadian Centre for Economic Analysis. Retrieved from: http://www.cancea.ca/?q=node/96
13. Roshanafshar, S., & Hawkins, E. (2015). Health at a glance: Food insecurity in Canada. Statistics Canada, Catalogue no. 82-624-X. Ottawa, ON: Ministry of Industry. Retrieved from http://www.statcan. gc.ca/pub/82-624-x/2015001/article/14138-eng.htm
14. Wilkinson, R., & Pickett, K. (2010). The spirit level: Why equality is better for everyone. London: Penguin.