Social inclusion and social exclusion are multifaceted concepts. No single factor separates those non-elderly adults and their families who earn adequate income from the labour market and are able to fully participate in their communities and those who do not.
Rather, a number of problems such as a depressed labour market, low incomes, lack of skills, bad housing, ill health, family breakdown and high neighbourhood crime levels combine to exclude many Canadians from steady paid employment and isolate them and their families from living active, healthy lives in their communities.
Recent research at the Applied Research Branch and at Statistics Canada sheds light on one of these barriers to social inclusion- persistent low income and its causes. This research has important implications for policies aimed at reducing persistent low income, particularly among the five groups identified as being most at risk of experiencing it.
Using the recently available longitudinal data from the Survey of Labour and Income Dynamics carried out annually by Statistics Canada we found that over the 1993-1998 period about one in thirteen Canadians who were aged 16-59 in 1993 were persistently in low- income households. This means that on average over this six-year period their household income was below Statistics Canada’s post-income tax Low Income Cut-offs.
Members of five groups had an incidence of persistent low income that was at least double, and in some cases up to five times, this level. These “high risk” groups are
Of the 80% of the population 16-59 in 1993 who did not belong to one of these groups, less than one in twenty-five experienced persistent low income over the 1993-1998 period.
Clearly, belonging to one of these groups predisposed their members to persistent low income. But the vast majority of members of these groups did not experience persistent low income. Indeed, a majority of them were not in low-income households even one year during this period.
By far the main factor, which distinguished the persistent low-income population within the high-risk groups from those who escaped this fate, was steady attachment to paid work. Those in the high-risk groups who were never without paid employment, regardless of whether they worked full-time or part-time and regardless of their wage rate, were only slightly more likely to be persistently low income than persons who were not a member of a high risk group.
Unfortunately, while long-term total exclusion from paid work, even among members of the high-risk groups, is rare in Canada, sporadic attachment to paid work is not. Those living in households whose main income earner works for pay part-time part-year or full-time part year experience a much higher risk of persistent low income than those who work full-time or part-time all year do. In1998, 80% of families where the main income recipient was not a member of a high-risk group had that person working for pay full-time all year. This was true for barely half of families where the main income recipient was a member of a high-risk group.
Steady attachment to paid work is a far more important indicator of low income than low levels of education, even among members of the high-risk groups. For example, persons who had not graduated from high school were the main income recipients for a quarter to one-third of both low income and non-low income off reserve Aboriginal families in 1998. However, off reserve Aboriginal Canadians who had a jobless spell in that year, were the main income recipients for almost three-quarters of the low-income Aboriginal families, but for less than 30% of non-low income families.
Staying a member of a high-risk group is also a barrier to escaping persistent low income. Of those who left a high-risk group between 1998 and became low income, half escaped low income within a year. Of those who stayed in their 1993 high-risk group and became low income it took three years before half had escaped from low income.
And many people who were members of a high-risk group in 1993 did leave the high-risk category at least one year between 1994 and 1998. Just over one-third of the work-limited population of 1993 remained in that state all six years. This was also true for less than half of the lone parents and for less than six in ten recent immigrants. Only the older unattached and, by definition, off reserve Aboriginal Canadians were highly likely to remain in their high-risk group for the full 1993-1998 period.
Other characteristics within the high-risk groups significantly added to the risk of persistent low income. For recent immigrants being a member of a visible minority almost doubles the probability as does being a status Indian among the Aboriginal population. Among lone parents, having a child before age 19 adds ten percentage points to the risk of persistent poverty. Finally those who experience a work-limiting disability or health problem and are members of high-risk groups also double the odds of a spell of persistent low income.
So what do these findings imply for a social inclusion policy agenda?
First, they underline the importance vital importance of macroeconomic policies which lead to labour markets with a high demand for the labour even of socially-disadvantaged groups. This is illustrated by the experience of the classic new entrant group- the recent immigrants. For this group, despite their high and rising levels of education, low-income rates soared in the early 1990’s when jobs were scarce, particularly in the main immigration destination of Toronto. However, those rates came down much more sharply than for the overall population between1996 and 1998 as labour markets-particularly in Toronto- tightened.
They also lend support to policies that encourage and support full-time entry level employment for members of high- risk groups who have difficulty establishing a steady attachment to paid work. Such policies can range from time-limited earnings supplements such as in the Self-Sufficiency Project to more comprehensive vocational rehabilitation services in the health care system. They also include work supports such as access to non-insured health care services available on social assistance but not in low-wage employment, barrier-free workplaces and improved access to child care.
The findings also lend support to a long-term policy of improving learning and skills for the coming generation and to the provision of community-based non-market employment opportunities in times of weak labour markets or in communities with few private sector job prospects.
Equally important, they indicate priorities. Providing general educational upgrading for disadvantaged older workers will not succeed as well as policies directly targeted to placing them in full-time employment. While too many Canadians work at low-wage jobs, those who can get steady work even at low wages have a very good chance of escaping low income, especially with well-designed in-work supports. Meeting unmet needs for health, education and social services in weak local labour markets will do more for employment, income and the quality of life than subsidising private businesses to locate there against their better business judgement.
These are our main findings to date and their implications for policy. We believe they point the way towards an agenda, which can appeal to a wide range of views and interests- encompassing not only those at risk of exclusion and their advocates but Canadians in general.
Michael Hatfield was born in Hartland, New Brunswick and received an Honours BA in history from Mount Allison University and a Masters degree in history from Queen’s University. He have been in the public service of Canada since 1979, and is currently a Senior Economist with the Income Security and Labour Market Studies Directorate of the Applied Research Branch of Human Resources Development Canada. He joined the Applied Research Branch in 1994.
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