Nine percent of Canadian tax filers aged 15 and older experienced persistent low income from 2016 to 2022, falling below the low-income threshold for at least four of the seven years studied.
A Statistics Canada study released today examined patterns of low-income persistence across different demographic groups using data from the 2016 Census and the Longitudinal Administrative Databank. The study tracked approximately 1.1 million records of individuals who filed taxes for all seven years in the period.
The low-income measure after tax is defined as one-half of the median adjusted income of all tax filers and their family members. Unlike the Market Basket Measure, Canada’s official poverty measure, it does not account for geography or regional price variations.
Vulnerable groups face higher rates
People in female lone-parent families had the highest rate of persistent low income at 23 percent, followed by people without a high school diploma at 21 percent and people who reported always having limitations in their daily activities at 18 percent.
Recent immigrants were more than twice as likely to experience persistent low income at 17 percent compared with non-immigrants at eight percent. Tax filers in racialized groups had a 14 percent rate, double that of non-racialized, non-Indigenous tax filers at seven percent.
Education linked to lower persistence rates
Tax filers without a high school diploma were three times more likely to have low income in 2016 than those with a university degree, and five times more likely to experience persistent low income during the study period.
Higher education levels reduced gaps in low-income persistence across different groups. The difference in low-income persistence between female lone-parent families and couples with children was 24 percentage points among those without a high school diploma, but only seven percentage points among those with a university degree.
Challenges exiting and staying out of low income
Among tax filers in low income in 2016, 30 percent exited in 2017. However, people without a high school diploma had a 21 percent exit rate, compared with 38 percent for university degree holders. People who always had limitations in their daily activities had a 21 percent exit rate, compared with 34 percent for those without such limitations.
Of those who exited low income in 2017, 20 percent re-entered in 2018. One in five of those who re-entered remained in low income for the rest of the study period. The same vulnerable groups were more likely to re-enter low income and less likely to exit again.
