The old normal: Good news and bad on poverty and incomes

Economic fallout from the pandemic may change things, but the latest Statistics Canada data on income and poverty levels in Nova Scotia run according to form, with one major exception. The Canadian Income Survey (CIS) for 2019 shows a further drop in the province’s child poverty rate – a steep one.

As described here, child poverty became a political embarrassment for the McNeil Liberals two years ago when the CIS revealed that while child poverty rates across the country were falling, they went up in Nova Scotia in 2017. The stigma eased a bit last year when the CIS reported a significant drop, although Nova Scotia still had the highest rates in the country in 2018. But no more.

According to survey findings released last month, Nova Scotia had only the sixth highest rate of child poverty in 2019, better than the three other Atlantic Provinces, Ontario and Saskatchewan. At 11.7 per cent the Nova Scotia rate was higher than the national average of 9.7 per cent. But the drop from 19.4 per cent two years ago is eye-catching, and the number of Nova Scotians under 18 living in poverty declined to 19,000 from 31,000 in 2017.[1]

If we haven’t already, we are soon likely to hear some version of this good news story as election time draws nearer. The McNeil-Rankin Liberals have rightly been criticized over their poor record on poverty, so the impressive looking drop in child poverty reduction is just what the spin doctor ordered. And the Trudeau Liberals can cite declining national numbers to show how well their anti-poverty strategy – primarily through enriched child benefits – is working since its introduction in 2016. Table 1 shows rates and numbers for Nova Scotia and Canada as a whole.

Table 1:Change in child poverty rates and numbers (Market Basket Measure)

Source: Table 11-10-0135-01

The numbers in Table 1 look quite encouraging. Hundreds of thousands of Canadian children – 435,000 from 2015 to 2019 including 14,000 Nova Scotian kids – lifted out of poverty. But beware.

As discussed here and here Stats Canada makes no claims to infallibility for the income and poverty numbers in the CIS, especially at the provincial level. While the data quality of the national numbers is rated “very good,” because of sample size, the provincial child poverty numbers for 2019 are rated E “use with caution.”

A more reliable set of income data comes from the T1 Family File (T1FF), compiled from tax returns, but the 2019 edition is not out until this summer. The T1FF uses different metrics – the Census Family Low Income Measure After Tax (CFLIM-AT) – producing poverty rates considerably higher than those reported through the Canada Income Survey. The latest Child and Family Poverty Report prepared by the Nova Scotia office of the Canadian Centre for Policy Alternatives (CCPA) found a slight increase in child poverty in Nova Scotia between 2017 and 2018 rather than the 4.6 percentage point drop – from 19.4 to 14.8 per cent – shown in Table 1. And rather than the 24,000 children in poverty in 2018, the CCPA reported 41,370.[2]

Contrary indicators

Another reason to “use with caution” the CIS data on child poverty is that the findings are inconsistent with other parts of the survey showing a continuation of high rates of poverty and low levels of income for the population at large. Nova Scotia’s overall poverty rate of 12.1 per cent was the second highest in Canada in 2019, an improvement following three straight years of having the country’s highest rate. The Nova Scotia rate, consistent with the national trend, has been going down since 2015. However, a couple of other of Nova Scotia’s poverty indicators move in the wrong direction.

• The poverty gap, which measures the average shortfall between the poverty line and the income of those living in poverty increased from 30.5 per cent in 2015 to 35.1 per cent. For non-elderly low-income individuals the gap was even greater in 2019 – 50.9 per cent, up from 46.7 per cent in 2015. The poverty line for a single person in Nova Scotia was about $23,000 in 2019, so a shortfall of 50.9 per cent means an average income that’s $11,700 below the poverty line.
• The low-income immobility rate, measuring the percentage of those living in low-income in consecutive years, rose from 75.9 per cent from 2015- 2016 to 77.1 per cent 2017-18. By contrast, the national rate fell from 72.4 to 71.9.

Perhaps the most telling political metric from the latest CIS can be found in the data on median incomes. Median is the level of income at which half the population had higher income and half had lower. For the third year in a row, Nova Scotia is the province with the lowest median income in several categories, and is falling further behind the national average.

Expressed in constant dollars, the CIS reports 2019 median after tax income for “families and unattached individuals” at $53,300. That’s up a mere $100 from the 2018 last-place position and only $1,100 above 2013. As Table 2 shows, median after tax income for Nova Scotia,  88.8 per cent of the national average in 2013, dropped to 84.7 per cent in 2019.

Table 2: NS median after tax income as percentage of national average (2019 constant $)

Source: Table 11-10-0190-01

Median market income – before government transfers and taxes – tells an even gloomier tale. Median market income  is by far the lowest in Canada: $45,500, down $600 from 2018 and $1,500 behind the next lowest province, New Brunswick. As Table 3 shows, median market income for families and unattached individuals actually declined by $2,600 in real terms between 2013 and 2019, falling below 80 per cent of the national average in 2019.

Table 3: NS median market income as percentage of national average (2019 constant $)

Source: Table 11-10-0190-01

The income data for 2019 as presented in the CIS is something of a watershed. It provides a measure of both the pre-pandemic normal and the provincial economy after years of Liberal government – six years in Nova Scotia and  four years in Ottawa. Modest progress in reducing poverty is part of a national trend, largely influenced by federal policies such as the Canada Child Benefit. But the deterioration of overall incomes relative to the rest of Canada indicates that neither federal or provincial policies are working for Nova Scotia’s economy as a whole. Despite all of the hoopla around the Ivany report and the Atlantic Growth Strategy the evidence suggests that aspect of the old normal was a dud.

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[1] The low-income numbers in this report should not be compared with those in any previous posts because Statistics Canada, in conjunction with the federal government, modified the Market Basket Measure used to determine the poverty line. The “rebasing” produced rates for prior years significantly higher than earlier reported. For example, the CIS released in February 2020 had Canada’s child poverty rate for 2018 at 8.2 per cent. The adjusted rate for 2018 is 10.8 per cent.

[2] The CFLIM-AT for 2018 also shows only a small reduction (two per cent) in the national child poverty rate between 2017 and 2018.