Welfare in Canada
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About Welfare in Canada
Welfare in Canada is a series that presents the total incomes of four example households who qualify for social assistance benefits in each of Canada’s provinces and territories in a given year.
Last updated: December 2021
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 the total income that these households receive from all government transfers. Individuals and families who receive basic social assistance benefits will also be eligible for financial support through refundable tax credits, child benefits for households with children, and, where applicable, additional social assistance payments. Together these form the total welfare income of a household. The value varies in every province and territory because each jurisdiction has distinct social assistance programs, and because each has its own refundable tax credit and benefit programs.
Welfare in Canada, 2020 looks at the maximum total amount that a household would have received over the course of the 2020 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:
- Social assistance program eligibility tests for assets and earned income;
- 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; and
- The adequacy of welfare incomes in each province compared to poverty and low-income thresholds.
In addition, this year the report includes a new section that looks at the adequacy of welfare incomes in each province over time, an analysis that hearkens back to past reports prepared by the National Council of Welfare. Also, please note that this report measures the adequacy of welfare incomes relative to both the Market Basket Measure (MBM) – Canada’s Official Poverty Line – and the Deep Income Poverty threshold (MBM-DIP), which is equivalent to 75 per cent of the MBM. This analysis will replace the low-income threshold comparisons in future reports. We hope these additions will be helpful for those using the report.
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:
- Unattached single considered employable;
- Unattached single with a disability;
- Single parent with one child, age two; and
- 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.
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 from employment so were eligible to receive the maximum rate of assistance.
- The heads of all households, except the unattached single with a disability, were deemed fully employable. This means the adults in the single parent with one child and the couple with two children households were also deemed employable, in addition to the unattached single.
- 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.
In 2020, a number of additional financial supports were made available to households in response to the COVID-19 pandemic. To continue to present the total welfare income of a “typical” social assistance recipient, we have made the following assumptions:
- 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 benefited from them.
- Automatic top-ups to existing federal benefits (the Canada Child Benefit and the GST/HST credit) have been included. None of the households received the one-time payment of $600 to persons with disabilities as this was provided to recipients of existing federal programs which our example households did not receive. The treatment of these benefits aligns with the methodology used in previous editions.
- Our households did not qualify for the Canada Emergency Response Benefit (CERB) because they lost employment prior to the pandemic. They did not qualify for the Canada Recovery Benefit (CRB) as they had no employment income. In keeping with previous editions, they did not qualify for Employment Insurance (EI).
2020 is also the first year that the example households in some jurisdictions received the federal climate benefit. These amounts are outlined in the components of income section for each jurisdiction and are included under “federal tax credits” in the tables.
To compare how total welfare incomes have changed over time within each jurisdiction, we convert the total welfare incomes from earlier years to their equivalent value in 2020 using the national consumer price index. As prices increase, the same amount of money is able to buy less. Adjusting for inflation means that the trends over time in this report represent how the value of welfare incomes has changed after accounting for changes to the costs of living.
To demonstrate the adequacy of welfare incomes, we compare total welfare incomes in 2020 to the four measures of poverty and low income commonly used in Canada. These are:
- Canada’s Official Poverty Line, the Market Basket Measure (MBM), which identifies households whose disposable income is less than the cost of a basket of goods and services that represent a basic standard of living;
- The Deep Income Poverty threshold (MBM-DIP), which identifies households whose disposable income is less than 75 per cent of the MBM;
- The Low Income Measure (LIM), 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), which identifies households that are likely to spend a disproportionately large share of their income on the necessities of food, clothing, and shelter.
The exact levels of the poverty and low-income thresholds change every year (in response to changes in costs, in the case of MBM and LICO, and in response to changing median income in the case of LIM) and are produced by Statistics Canada. At the time of publication, the MBM and LIM levels for 2020 were not available. As a result, we have estimated the LIM and MBM thresholds for 2020. To estimate the MBM threshold, which varies by province and community, we increased the 2019 levels in line with the consumer price index for each applicable city. To estimate the LIM threshold, which is the same across the provinces, we increased the 2019 levels in line with the national consumer price index.
All poverty and low-income thresholds used are for after-tax income because welfare incomes are not subject to income taxation.
This year’s report includes a new section that provides an analysis of changes in the adequacy of welfare incomes over time relative to Canada’s Official Poverty Line, the MBM. Note that the MBM was rebased twice since its introduction, in 2008 and 2018. Rebasing of the MBM is undertaken periodically by Statistics Canada to update the measure by more accurately reflecting the cost of living as it changes over time. The report uses the 2000-base MBM in the years 2002 through 2007, the 2008-base in years 2008 through 2017, and the 2018-base in years 2018 forward. The figures and narrative both highlight the rebased MBMs in use. More information about rebasing and its implications is available in the following publications:
- Hatfield, M. et al. (2010). First Comprehensive Review of the Market Basket Measure of Low Income. Human Resources and Skills Development
- Djidel, S. et al. (2020). Report on the second comprehensive review of the Market Basket Measure. Statistics Canada.
The territories are not included in the adequacy analysis because Statistics Canada does not produce poverty thresholds for the territories. Statistics Canada is working with the Northwest Territories, Nunavut, and Yukon to develop territory-specific MBM thresholds for these regions. These thresholds will be incorporated into future Welfare in Canada reports as they become available.
Persons with disabilities face a higher cost of living that is not accounted for in the report’s 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 disabilities appear to be “more adequate,” but this does not account for the higher costs of living that they face. 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.