Low-income status of economic family
Status: This standard was approved as a departmental standard on November 29, 2021.
Low-income status refers to the income situation of the statistical unit in relation to a specific low-income line in a reference year. Statistical units with income that is below the low-income line are considered to be in low income.
Economic family refers to a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common-law union, adoption or a foster relationship.
By definition, all persons who are members of a census family are also members of an economic family. Examples of the broader concept of economic family include the following: two co-resident census families who are related to one another are considered one economic family; co-resident siblings who are not members of a census family are considered as one economic family; and, nieces or nephews living with aunts or uncles are considered one economic family.
The prevalence of low income is the number or percentage of economic families in low income.
Beyond the prevalence of low income, various low-income indicators can be derived and used to capture the depth of low income.
The low-income gap measures by how many dollars an income falls below a low-income line. The low-income gap ratio expresses the low-income gap as a proportion of the applicable low-income line.
Statistics such as average and median of the gap and gap ratio provide measures of depth of low income for the low-income population.
For those who are not in low income, the gap and gap ratio would have a value of zero. For those who are in low income with no or negative income, the gap is set to be the amount specified by the applicable low-income line. The gap ratio indicator would thus be equal to 1.
Low-income status for economic families is typically measured using three low-income concepts. For more information on these concepts, refer to the Measurements section.
Conformity to relevant internationally recognized standards
There are no relevant internationally recognized standards.
- 'Market Basket Measure (MBM)' refers to Canada's official measure of poverty based on the cost of a specific basket of goods and services representing a modest, basic standard of living. The threshold represents the costs of specified qualities and quantities of food, clothing, footwear, shelter, transportation and other necessities for a reference family of two adults and two children. The square root of economic family size is the equivalence scale used to adjust the MBM thresholds for other family sizes. This adjustment for different economic sizes reflects the fact that an economic family's needs increase, but at a decreasing rate, as the number of members increases. November 29, 2021 to current
- 'Low-income cut-offs, after-tax (LICO-AT)' refers to income thresholds, defined using 1992 expenditure data, below which economic families or persons not in economic families would likely have devoted a larger share of their after-tax income than average to the necessities of food, shelter and clothing. More specifically, the thresholds represented income levels at which these families or persons were expected to spend 20 percentage points or more of their after-tax income than average on food, shelter and clothing. These thresholds have been adjusted to current dollars using the all-items Consumer Price Index (CPI). March 21, 2016 to current
- 'Low-income cut-offs, before-tax (LICO-BT)' refers to income thresholds, defined using 1992 expenditure data, below which economic families or persons not in economic families would likely have devoted a larger share of their total income than average to the necessities of food, shelter and clothing. More specifically, the thresholds represented income levels at which these families or persons were expected to spend 20 percentage points or more of their total income than average on food, shelter and clothing. These thresholds have been adjusted to current dollars using the all-items Consumer Price Index (CPI). March 21, 2016 to current
- Classification of low-income status March 21, 2016 to current
Statistics Canada publishes several low-income lines with which low-income status can be computed. See "Low Income Lines: What they are and how they are created" and "Low Income in Canada - A Multi-line and Multi-index Perspective" from the Income Research Paper Series for detailed definitions and discussions of each line.
In 2018, the Government of Canada released "Opportunity for All - Canada's First Poverty Reduction Strategy". Based on the recommendation of this strategy, the government designated the Market Basket Measure of low income as Canada's official poverty line under the Poverty Reduction Act in 2019, and set poverty reduction targets for 2020 and 2030 that aligned with the United Nations Sustainable Development Goals to end poverty.
Statistics Canada defines income in the same way on and off reserve, which provides a common conceptual base upon which income comparisons can be made. However, income statistics explicitly exclude certain sources of income, such as the value of food produced for own consumption, and the value of subsidized housing. The importance of these exclusions can differ from region to region, and they may be more important to the on-reserve (and territorial) than the off-reserve populations. Likewise, although tax-exempt income earned on reserve is included in the income concept, and captured through the T1, T4 and other government-provided slips, Statistics Canada is unable to measure all tax-exempt income on reserve.
Relation to previous version
- Low-income status of economic family November 29, 2021 to current
The Market Basket Measure has been designated as Canada's official poverty line.
- Low-income status of economic family March 21, 2016 to November 28, 2021
This was the departmental standard from March 21, 2016 to November 28 2021.
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