Welfare in Canada

This resource is not intended to help individuals identify what government transfers they could receive. Individuals seeking advice on their eligibility for welfare or financial assistance should contact their local social assistance provider (their province, territory or municipality).

Welfare income refers to a household’s total income from all government transfers, and not just social assistance payments. Individuals and families who are in receipt of basic rates of social assistance will also be eligible for financial support through tax credits, child benefits for households with children, and, where applicable, additional social assistance payments that are automatic and recurring (for example, an annual back-to-school allowance). Together these form the total welfare income of a household. The amount varies in every province and territory because each jurisdiction has a distinct social assistance program, and each has its own refundable tax credit and benefit programs.

Welfare in Canada, 2021 looks at the maximum total amount that a household would have received over the course of the 2021 calendar year, assuming they had no other source of income and no assets. Some households may have received less if they had income from other sources, while some households may have received more if they had special health- or disability-related needs.

The report looks at:

How welfare incomes vary across Canada;
The components of welfare incomes in each province and territory;
Long-term changes in welfare incomes in each province and territory;
The adequacy of welfare incomes in each province compared to poverty and low-income thresholds;
The adequacy of welfare incomes in two territories compared to newly-finalized northern poverty thresholds;
Long-term changes in the adequacy of welfare incomes in each province; and
Asset and earned income levels as they relate to eligibility for social assistance.

In each jurisdiction, the total welfare income for which a household is eligible depends on its specific composition. For illustrative purposes, this resource focuses on the welfare incomes of four example household types:

An unattached single who is considered employable;
An unattached single with a disability;
A single parent with one child, age two; and
A couple with two children, ages ten and 15.

Welfare in Canada was established by the Caledon Institute of Social Policy to maintain data previously published by the National Council of Welfare. In 2018, Maytree assumed responsibility for updating the series.

Methodology

Assumptions

The methodology replicates the approach used by the National Council of Welfare. To calculate the welfare income for each household type, we made the following assumptions:

The households started to receive assistance on January 1 and remained on assistance for the entire year.
The households had no earnings, so they were eligible to receive the maximum rate of assistance.
The heads of all households were deemed fully employable, with the exception of the unattached single with a disability.
The households lived in the largest city in their province or territory.
The households lived in private market housing and utility costs were included in the rent.
The households filed an income tax return at the end of the previous tax year.
Changes to welfare rates or other program rates over the course of the year were accounted for.
Basic rates and additional items (for example, a Christmas allowance or a back-to-school allowance) were included where applicable. Special needs amounts were not included.

COVID-19

The COVID-19 pandemic persisted through 2021; therefore, any additional financial supports made available in response to the pandemic are included, given the need to present the total welfare income of a “typical” social assistance recipient. Of note:

Additional provincial or territorial supports have been included if they were paid automatically to social assistance recipients or, in the case of discretionary supports, if over half of recipients benefitted from them.
Any new federal benefits or automatic top-ups to existing federal benefits have been included.
Households did not qualify for any federal or provincial/territorial benefits that were provided to replace lost employment income, because they are assumed to have had no earnings. And, in keeping with previous editions, they did not qualify for Employment Insurance (EI).

Change in welfare income over time

To compare how total welfare incomes have changed over time within each jurisdiction, we converted the total welfare incomes from earlier years to their equivalent value in 2021 using the national Consumer Price Index (CPI). As prices increase, the same amount of money is able to buy less. Adjusting for inflation means the trends over time in this report represent how the value — and not the nominal amount — of welfare incomes has changed over time after accounting for changes to the costs of living.

Adequacy of welfare income

To evaluate the adequacy of welfare incomes, we compare total welfare incomes in 2021 to the two measures of poverty and two measures of low income that are commonly used in Canada.

The two measures of poverty are:

The Market Basket Measure (MBM) for the provinces or the Northern Market Basket Measure (MBM-N) for the Northwest Territories and Yukon. These measures represent Canada’s Official Poverty Line and identify households whose disposable income is less than the cost of a “basket” of goods and services that represent a basic standard of living.
Deep Income Poverty (MBM-DIP) for the provinces or Northern Deep Income Poverty (MBM-N-DIP) for the Northwest Territories and Yukon. These measures are defined as having a disposable income of less than 75 per cent of the MBM or MBM-N as applicable.

The MBM-N thresholds for the Northwest Territories and Yukon are newly released by Statistics Canada this year and thus the analysis of adequacy of the welfare incomes in those territories is a new addition to this year’s report. Statistics Canada is in the process of creating an MBM for Nunavut and our analysis of adequacy in that territory will be added to future reports after the threshold is finalized.

The two measures of low income are:

The Low Income Measure (LIM), for the provinces, which identifies households whose income is substantially below what is typical in society (less than half of the median income); and
The Low Income Cut-Off (LICO), for the provinces, which identifies households that are likely to spend a disproportionately large share of their income on the necessities of food, clothing, and shelter.

The low-income thresholds used are for after-tax income because welfare incomes are not subject to income taxation.

The exact levels of the poverty and low-income thresholds change every year and are produced by Statistics Canada. The MBM, MBM-N, and LICO change in response to changes in costs and the LIM changes in response to changes in average income.

At the time of publication, the MBM, MBM-N, and LIM levels for 2021 were not available. As a result, we have estimated the MBM, MBM-N, and LIM thresholds for 2021. To estimate the MBM and MBM-N thresholds, which vary by community, we increased the 2020 levels in line with the CPI for each applicable city. To estimate the LIM threshold, which is the same across the provinces, we increased the 2020 levels in line with the national CPI.

To compare how total welfare incomes in the provinces have fared in relation to measures of poverty over time, we compare real total welfare incomes from earlier years to the real value of the MBM in those same years. The MBM thresholds used reflect the base in use in each year in question (i.e., the 2000, 2008, and 2018 bases). Rebasing creates a sufficiently higher threshold than using a previous base, which typically results in a worsening of poverty in the year in which the new base is used.

Important considerations

Persons with disabilities face a higher cost of living that is not accounted for in our analysis of the adequacy of welfare incomes. Social assistance rates and some other payments are typically higher for persons with a disability than for those without, but the poverty threshold for a person considered employable is the same as that for a person with a disability. As a result, the total welfare incomes of persons with a disability appear to be “more adequate,” but this does not account for the higher costs of living faced by persons with a disability. These costs can include additional health care or food needs, or the additional expense of assistive devices, rehabilitation, personal assistance, or house adaptation.

Maytree thanks all jurisdictions for their cooperation in the production of the welfare incomes data presented in this report.