low income cut off

(source: CCSD(external link))

The low income cut-offs (LICOs) are published by Statistics Canada. Persons and families living below these income levels are considered to be living in "straitened circumstances." There are 35 different LICOs, varying according to family size and size of community. The LICOs are usually referred to as Canada's poverty lines.

For instance, in 2001, a family of three living in a city larger than 500,000 people making less than $29,290 would be below the poverty line; or a single person living in a rural area making less than $13,021.

LICO statistics

  • 40% of low income children would need more than $10,000 to reach the poverty line (Campaign 2000(external link))

  • Manitoba's minimum wage of $7.00/hour (as of April 1, 2004) falls well below both LICO ... and ALL - the Acceptable Living Level (a poverty-line determined by anti-poverty organizations in Winnipeg). (UN Platform for Action Committee(external link))

Since 1971, Statistics Canada has conducted its income survey annually. Ideally, the family expenditures survey used for updating the cutoffs should also be annual, but in fact it is done every second or fourth year depending on the extent of its coverage. In calculating its low-income standard, Statistics Canada begins by estimating the percentage of gross income spent by the average Canadian family on food, clothing and shelter. It then somewhat arbitrarily marks this percentage up by 20 percentage points. This final percentage corresponds on average to a given household income level, and this level becomes the low income cut-off for that year.

The most recent estimate of the proportion of income spent on essentials is carried forward until a new expenditure survey reveals a different proportion. The 70 per cent standard based on the 1959 survey gave way in 1973 to a 62 per cent standard based on a 1969 survey. This figure in turn yielded, in 1980, to a 58.5 per cent standard based on the 1978 expenditure survey, to a 56.2 per cent standard based on the 1986 survey, and finally to the current 54.7 per cent based on the 1992 expenditure survey. In the years in which Statistics Canada does not undertake an expenditure survey, it updates its low income cut-offs in accordance with changes in the consumer price index.

Statistics Canada has always varied its cutoff levels with the number of family members. Since 1973 it has also distinguished between urban and rural communities (a distinction that it has applied retroactively to its data for 1969 through 1972). The larger the community, the higher the low income cut-offs for any family size. The accommodation of these two factors - family size and community size -results in 35 separate low income cut-offs.

LICO resources

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