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HRSDC, Low Earnings and the Working Poor

An excellent article on issues facing the working poor in today’s Toronto Star cites a recent study by Human Resources and Social Development Canada in support of the employer counter-point that raising minimum wages would do little to help working poor families.

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&call_pageid=971358637177&c=Article&cid=1158531020220

Indeed, precisely this point is made in an August, 2006 HRSDC Working Paper “When Working is not enough to escape poverty: An analysis of Canada’s working poor” by Dominique Fleury and Myriam Fortin. (I have a copy of this – publication SP-630-06-06E – but unfortunately can’t find it posted on the HRSDC web site.)

The argument is true by definition, but rather trite. The study defines the working poor as non students working more than 910 hours in a year, who also live in a low income family (by two definitions of low income.) Unsurprisingly, this means that the incidence of belonging to a working poor family is very heavily influenced by family size and by the number of earners in the family. Proponents of an increase in minimum wages to deal with poverty almost universally see this as a policy which has to be twinned with higher child benefits and higher rates of employment, rather than a silver bullet to fix the poverty problem. Drawing attention to family composition is a valid analytical point, but rather meaningless in policy terms unless one advocates removing children from low income families, or imposing minimum work requirements on all family members, or telling low income working women to find a higher earning partner.

Actually, the authors do go so far as to explicitly say that policies to help the working poor should target low earners in poor families, and implicitly dismiss the problem of low individual earnings as a non issue so long as the low earner is cushioned by family income. So much for any concern with the economic independence of low paid women, or of young adults.
Moreover, the study does in fact find that fully half of the working poor who are employees are also low paid, defined as earning less than $10 per hour. One could argue that low wages are, then, a significant part of the policy problem. Another part of the problem is that just 19.6% of working poor employees qualify for Employment Insurance benefits, a fact that is mentioned in passing rather than highlighted as a serious issue for HRSDC to consider in terms of its policy priorities.

That said, perhaps the most interesting and important contribution of this study is to highlight the fact that fully 41% of the working poor are self-employed, not employees. It would be interesting to know how many are really self-employed as opposed to “hidden employees”, a distinction which has been crucial in the recent analysis of precarious work by Leah Vosko and others.

Enjoy and share:

Comments

Comment from <![CDATA[Andrew Jackson]]>
Time: September 19, 2006, 8:11 am

The HRSDC paper can be ordered from:

http://www.hrsdc.gc.ca/en/cs/sp/sdc/pkrf/page00.shtml

Comment from <![CDATA[marie-paule guilbault]]>
Time: September 25, 2006, 11:18 am

Is it possible to obtain a copy of the article inToronto Star and also a copy of the study by Human Resources and Social Development Canada in support of the employer counter-point that raising minimum wages would do little to help working poor families. thank you

Comment from <![CDATA[D. Mann]]>
Time: September 25, 2006, 2:12 pm

I haven’t been able to find the report on HRDC’s website, either in pdf or to order, was not available on the link you provided when I looked.

I’m also interested in the self-employed group – specifically, did the report assess their poverty using before-tax or after-tax income? This would make a huge difference in results, as one goal for many business owners and self-employed persons is to reduce taxes payable by minimizing taxable income. If the study used after-tax income, poverty-level incomes wouldn’t necessarily mean these self-employed are deprived (although some likely are); rather, it could reflect the success of their accountants in minimizing taxable income despite a decidedly non-poverty lifestyle.

Comment from <![CDATA[Marc Lee]]>
Time: September 25, 2006, 5:02 pm

This report was never posted up on the HRSDC site. But there was an ordering form which appears to have vanished, as has reference to the report on the What’s New section of the report.
I received a copy by email. I have posted it at:
http://scribbler.ca/HRSDC-wkgpoor.pdf

Pingback from <![CDATA[The missing HRSDC report « Relentlessly Progressive Economics]]>
Time: September 26, 2006, 9:07 am

[…] Just over a week ago, Andrew Jackson posted an item on a new research report from HRSDC, When working is not enough to escape poverty: an analysis of Canada’s working poor, August 2006. It was a bit strange back then in that the HRSDC web page did not allow a download of the report; instead, you had to email them to get a copy. […]

Comment from <![CDATA[C D Rivard]]>
Time: November 30, 2006, 10:13 pm

The United Nations Has Published reports that the Canadian Government through it’s policies regarding our ‘social safety net’, that mirrors it’s own report – the UN Has been telling Canada all along, but Canada, along with big business choose to create wealth for themselves through the exploitation of ‘working poor’ Slaves! Denying them the benefits of a better quality of Life that they have rightfully earned! If you don’t beleive me, go down to any of your local places of employment and have a look around then ask yourself: ” If I owned this place, would I be able to make all my money if I did’nt have joe shmoe over there(who makes minimum wage) running the cash register for me??? What If I could’nt replace him, because others refuse to work under these conditions or poor wages?”

Comment from Rick Jones
Time: July 11, 2008, 5:00 am

A growing number of people are “working poor”. That means they work full time but live in relative poverty because of low pay and high costs of living. If someone like this is victimized by an IRS wage levy the effects can be devastating. Unfortunately the IRS won’t go away. Fortunately there is reasonably priced help available. Get your hands on a copy of the DVD by Attorney Darrin Mish, “How to Get a Release From an IRS Wage Levy.”

Comment from Iglika Ivanova
Time: July 21, 2008, 4:53 pm

I have finally managed to locate the study on the HRSDC website. It’s posted under Publications and Resources –> Research Studies –> Social and Economic Inclusion. Searching the website for the title is not useful, you actually have to browse their studies. I wonder what other studies have been similarly buried by the lack of website functionality.

Here is the direct link:
http://www.hrsdc.gc.ca/en/cs/sp/sdc/pkrf/publications/research/SP-630-06-06/page00.shtml

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