Welfare in Canada

About Welfare in Canada

Welfare in Canada is a series that presents the welfare incomes of four example households living on social assistance in a given year.

Last updated: November 2020

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 value varies in every province and territory because each jurisdiction has distinct social assistance programs.

Welfare in Canada, 2019 looks at the maximum total amount that a household would have received over the course of the 2019 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:

  • The eligibility criteria for social assistance;
  • 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 low-income thresholds.

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:

  1. Single person considered employable;
  2. Single person with a disability;
  3. Single parent with one child aged two; and
  4. Couple with two children ages 10 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

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 were eligible to receive the maximum rate of assistance.
  • The heads of all households were deemed fully employable, with the exception of the single person 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.

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 2019 using the 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 increased after accounting for changes to the costs of living.

To demonstrate the adequacy of welfare incomes, we compare total welfare incomes in 2019 to the three measures of low income commonly used in Canada. These are:

  • The official poverty measure, 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 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.

In 2020, Statistics Canada published updated thresholds for the MBM (referred to as the 2018 base MBM). This was the result of a comprehensive review and revision of the measure to more accurately reflect costs of living in Canada. This is the first edition of Welfare in Canada to use the 2018 base; previous editions used the 2008 base.

Deep poverty is defined as having a disposable income of less than 75 per cent of the MBM. Throughout this report, we highlight which example households had a total welfare income below the deep poverty threshold.

The exact levels of the low-income thresholds change every year (in response to changes in costs, in the case of MBM and LICO, and in response to changing average income in the case of LIM) and are produced by Statistics Canada. At the time of publication, the MBM and LIM levels for 2019 were not available. As a result, we have estimated the LIM and MBM thresholds for 2019. To estimate the MBM threshold, which varies by community, we increased the 2018 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 2018 levels in line with the national consumer price index.

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

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.

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 Welfare in Canada when they become available.

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