Executive Summary - Income and Child Well-being: A New Perspective on the Poverty Debate

Income and Child Well-being - related material

Executive Summary

May 1999

Income and Child Well-being:
A new perspective on the poverty debate

by David P. Ross and Paul Roberts

Two significant events have occurred during the past few years in relation to the study and discussion of child well-being in Canada. The first is the release of new and important data from the National Longitudinal Survey on Children and Youth (NLSCY) and the National Population Health Survey (NPHS). The second event is the growing public debate about the meaning and measurement of poverty in Canada. Essentially, this debate is occurring between those who consider poverty to be grossly over-estimated in Canada, and those who hold that poverty is, if anything, underestimated.

In carrying out the research for this report, it became clear to the authors that what is needed in Canada is a new and realistic approach to determining an appropriate poverty line. With this in mind, the authors framed their research around the following question: "What if producing healthy children was the main objective of anti-poverty efforts in Canada?"

In Part 1 of this report the authors examine 27 elements of child development including family functioning, neighbourhood safety, aggression, health status, math and vocabulary scores and participation in sports or clubs. They find that the level of family income plays a crucial role in the child development process: in 80 per cent of the different variables examined, risks to child outcomes and the likelihood of poor living conditions are noticeably higher for children in families with incomes below $30,000. This is also true for 50 per cent of the variables for children living in families with incomes below $40,000.

For their analysis, the authors divide the child development process into six categories: family, community, behaviour, health, learning outcomes and cultural and recreational participation.

Family

children in low-income families are twice as likely to be living in poorly functioning families as children in high-income families
nearly 35 per cent of children in low-income families live in sub-standard housing, compared to 15 per cent of children in high-income families

Community

>more than one-quarter of low-income children live in problem neighbourhoods, compared to one-tenth of children in high-income families

Behaviour

nearly 40 per cent of very low-income children demonstrate high levels of indirect aggression (such as starting fights with peers or family members), compared to 29 per cent of children in families with incomes of $30,000 or more

Health

children in low-income families are over two and one-half times more likely than children in high-income families to have a problem with one or more basic abilities such as vision, hearing, speech or mobility.

Learning Outcomes

more than one-third of children from low-income families exhibit delayed vocabulary development, compared to only eight per cent of children in high-income families

Cultural and Recreational Participation

about three-quarters of children in low-income families rarely participate in organized sports, compared to one-quarter of high-income children

Measuring Poverty

In Part 2 of this report the authors discuss the relationship between poverty lines and children's development. Much of the debate today around establishing the "correct" poverty line is not only diverting attention away from the plight of poor children and their families, but also from the question of why poverty lines should be set in the first place. This report attempts to define an unacceptable level of inequality among families - that is, one that fails to ensure roughly equal life chances for all children. The authors suggest that once a level at which children experience "poverty of opportunity" is determined, discussion can then turn to how best to change these circumstances so that children will have optimal chances of developing to their potential and becoming successful adults.

Poverty Lines and Children's Development

This report demonstrates that the level of income families need to maximize children's chances of full development goes well beyond the amount needed for the basic provision of food, clothing and shelter. Based on their research, the authors suggest that an appropriate child poverty line should be set within the $30,000 to $40,000 range for a family of four. This line is above any of those currently in use, such as that suggested by the Fraser Institute and Statistics Canada's low income cut-off (LICO).

It is also higher than a poverty line that the public has indicated that it would set, and it is well below the median income level.

Recent Trends in Family Income Distribution

In reviewing earnings trends over the past 25 years, the authors find that income inequality between families with children has worsened. In 1973, the poorest 20 per cent of families with children earned only 5.3 per cent of all market income - that is, earnings from employment and private investments. By 1996, that percentage had dropped to 2.3 per cent. At the same time, the richest 20 per cent of families with children saw their share of market income rise from 38.4 per cent to 43.2 per cent. This disparity lessened somewhat after adjusting for government transfers such as welfare payments, unemployment insurance and child benefits, however the poorest families still received a vastly smaller share of the total family income than did the ones with the highest incomes.

With regards to family earnings, those parents with low levels of education and skills are still lagging behind in employment and wages. Social benefits have also fallen relative to increases in the cost of living. Certain groups, most notably young and single parents, those with disabilities and those belonging to ethnic minorities face particular difficulties earning enough money to raise their incomes above the LICO.

Relating Public Policy Development to Family Incomes

Having identified an income level most likely to enable families to provide reasonable opportunities for their children to develop, and reviewing the growing polarization of income distribution, the authors then consider how public policy can best support children's optimal development. While income transfers can help to redistribute income to Canada's poorest children, they are insufficient to assuage the difficulties faced by families with children with regards to poor housing and family conditions.

The authors also stress that transfers are not the only anti-poverty strategy that can be adopted. Ideally, they claim, increased transfers should be accompanied by attempts to increase families' economic self-reliance. This can be accomplished by providing educational and training opportunities, housing assistance, child care and workplace assistance to those with disabilities, as well as job flexibility and more family-friendly workplaces. The authors claim that by positively and pro-actively supporting families to generate more earnings, these measures will reduce the need for pure income transfers.