Performance Indicator 22: Low Income Cut-Offs

	Why It's Important There are a number of negative outcomes for those experiencing low incomes. People with low income may experience more physical and mental health problems, rely more on charity, attain lower levels of education, or have higher secondary school drop out rates.

Performance Indicator Twenty-Two uses data on the number of people with incomes below a level identified by Statistics Canada as relatively low. The province with the lowest proportion earns the best rank.

In 2006, BC ranked second-last in Canada with 16.6 percent of families and unattached individuals with incomes below the after-tax low income cut-off (LICO).

All provinces saw decreases in the proportion of people with low income between 1997 and 2006. British Columbia had the third-smallest decrease at 25.2 percent and Alberta had the largest decrease at 45.4 percent. BC's rate fell by 4.0 percent between 2005 and 2006. This did not result in a rank improvement, however, because Saskatchewan, New Brunswick, Alberta and Manitoba had decreases in low income rates that were two or three times as large.

The Social Condition in British Columbia

The progress of a society is judged in many ways. But one of the most compelling considerations is its "social condition," and in particular the opportunities it creates for its most vulnerable citizens. On this dimension, British Columbia faces challenges.

The above is the introductory paragraph of the 2006 BC Progress Board Report The Social Condition in British Columbia by Dr. Keith Banting. The report offers insight into the challenges and offers possible solutions.

The most troubling social indicator is the proportion of British Columbians living below the low income threshold. The proportion of the BC population living in low income has been greater than in other provinces through much of this decade. More worrying, one in ten British Columbians lives in low income for extended periods. A Statistics Canada study, commissioned by the BC Progress Board, concluded that the level of employment is the most important factor explaining the BC-Canada gap.

The rate of economic growth in BC is now faster than in the country as a whole, and is likely narrowing the gap. However, even if the BC rate is converging on the Canadian level, the issue of low income remains compelling. The Canadian low income rate itself is high by international standards, and merely hoping to get down to the Canadian average will not meet the needs of British Columbians who live in low income.

To assess avenues for progress, the report tracks recent policy developments in two key areas: income transfers; and, education and training. Over the last decade, successive provincial governments and the federal government have sent a powerful message to low income families and individuals. By restructuring income transfer programs, they have told able-bodied, low income individuals to look to the labour market to ensure their economic well-being. Reductions in the federal Employment Insurance program and BC Income Assistance have been significant. However, this strategy in turn generates three powerful policy imperatives.

Work should pay. Governments need to extend supports to low wage workers to ensure they are better off in employment than on welfare, that they face reasonable marginal effective tax rates, and that they can meet the needs of their families through work. Educational equality should be a key priority. As governments shift people from income support to the labour force, they acquire an even greater responsibility to help low income individuals gain the education and skills needed to participate effectively in the economic mainstream.

Those who cannot be expected to work should be well supported. Even the most effective investments in education and skills will not meet the needs of those who, by reason of disabilities or other persistent barriers, cannot be expected to work. These people should receive the support needed to live in dignity.

The report presents a number of policy suggestions designed to help make progress on all three fronts. The recommendations focus on income transfers and education and skills development.

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