Centre for the Study of Living Standards
Centre d’étude des niveaux de vie
Andrew Sharpe (Executive Director/Directeur exécutif)
Don Drummond (Chair/Président)
Board of Directors/Conseil d’administration
Jock Finlayson
Maureen O’Neil
Michael Horgan
Pierre Fortin
Lars Osberg
Richard Van Loon
Helen Heslop
Craig Riddell
Frances Woolley604-170 Laurier Ave. W
Ottawa, Ontario
K1P 5V5
Telephone: 613-233-8891
csls@csls.ca
www.csls.ca

Addressing Holes in Canada’s Social Safety Net
Press Release - Ottawa, August 13, 2020
The Centre for the Study of Living Standards (CSLS) today released a study entitled “​Holes inthe Safety Net: Poverty, Inequality and Social Assistance in Canada”​ .
The report by Inez Hillel provides a comprehensive analysis of trends in poverty, inequality andsocial assistance dependence in Canada and by province and puts forward policies to close
holes in the social safety net.
Attention is understandably currently focused on the short-to-medium run income support issues
arising from the pandemic. As the world returns to some sense of normalcy in coming years,
more long-term approaches to poverty reduction for the working age population will be needed.
The report argues that enhanced wage subsidies is at the top of the list. Below is a narrative of
the report focusing on the rationale for such a program.
●Canada has done a good job in addressing this issue for children and seniors. According
to the Market Basket Measure, Canada’s official poverty metric, the poverty rate for
persons under 18 has fallen from 19.2 per cent in 2006 to 8.2 per cent in 2018. The
poverty rate for persons 65 and over has also fallen significantly, from 7.6 per cent to 3.5per cent.

●In contrast, the poverty rate for the working age population (18-64), at 10.3 per cent in
2018, is higher than that of the other two groups and has experienced a much smaller
per cent fall. This group accounted for 75 per cent of persons in poverty in Canada in2018, up from 67 per cent in 2006.

●The working age population is even more important in terms of the poverty gap, that is
the total amount of income Canadians in aggregate fall below the poverty line. Statistics

Canada estimates this figure at $18.5 billion in 2018 and that 82 per cent of this total
would need to go to the working age population, up from 74 per cent in 2006. Thismeans that, with perfect targeting, $15.2 billion would be needed to eliminate poverty for
the working age population, $3.1 billion for children and $700 million for seniors.
●A poverty-reduction strategy for the working age population needs a number ofcomponents, including higher welfare incomes and better skills upgrading programs.
Such a strategy should focus on the principle of making work pay and that the best way
to do this is through an earnings supplementation or wage subsidy scheme forlow-wage workers.

●Canada already has a national wage subsidy program, the Canada Workers Benefit(CWB). But it is not particularly generous. The maximum annual benefit for a single
person is $1,355 and for a family $2,335. The report proposes that the CWB beexpanded to a maximum of $5,460 per year through an enhanced wage subsidy of up to$3 per hour based on hours worked up to a maximum of 1,820 hours per year (full-time,full-year employment at 35 hours per week).

●This enhanced wage subsidy seems the logical next step in Canada’s poverty-reduction
strategy now that the focus of attention has shifted to the working age population. Sucha program has many advantages in addition to its obvious appeal of making work pay.
Through the additional income it provides parents, child poverty would fall. The program
could have automatic universal coverage of low-wage workers through integration with
the income tax system. With higher effective minimum wages, welfare rates could beraised because of reduced work disincentive effects. As the effective wage for theemployer would be unchanged, there would be no negative employment effects.

The report is posted at ​http://www.csls.ca/reports/csls2020-06.pdf​.
For further information, please contact:
Andrew Sharpe
Executive Director
Centre for the Study of Living Standards
613-233-8891
andrew.sharpe@csls.ca
The Centre for the Study of Living Standards (CSLS) is a national, independent, Ottawa-based
not-for-profit research organization. Its primary objective is to contribute to a better
understanding of trends and determinants of productivity, living standards, and economic
wellbeing in Canada through research.