Research & Reports

Losing Ground

Frequently Asked Questions

Q: Most economic indicators show a robust and booming economy in Canada in the first half of this decade. We’re enjoying high employment, strong job growth and corporate profits, and Statistics Canada reports the overall rates of poverty are in decline. It appears as though the problem of poverty has been solved, so why is it an issue in Toronto?

A: National rates of poverty smooth out regional variances that exist across Canada, hiding the fact that poverty has become a persistent and growing problem in many Canadian cities, including Toronto.

Our report provides clear evidence of this. Data shows that Toronto families are in fact losing ground to their provincial and national counterparts, and that a significant gap has opened between their financial well-being, and that of families in areas surrounding Toronto, in the province, and in the country as a whole.

Key findings:

The median income of Toronto families with children 17 and under has fallen well behind the median incomes of families in the Toronto CMA, Ontario and Canada.
In 2005, 1 in 5 of Toronto’s two-parent families were living in poverty, compared to 1 in 10 at the national, provincial and rest of Toronto CMA.
In 2005, 51.6 per cent of Toronto’s lone-parent families were living in poverty, compared to 1 in 3 in 1990.
In 2005, one in four Toronto families were struggling in poverty – Toronto’s family poverty rate was at 28.8 per cent, compared with 19.5 per cent across Canada.
Insolvency rates in Toronto were up 52.3 per cent between 2000-2005, compared with a 16.8 per cent increase nationally and a 39.5 per cent increase provincially.
Eviction applications increased 26 per cent between 1999 and 2006.
Debt management caseloads increased 50 per cent between 2001 and 2007.
Payday loan and cheque cashing outlets increased from 39 in 1995 to 317 in 2007, with most concentrated in high poverty neighbourhoods.

Q: What does "living in poverty" mean?

A: The report uses Statistics Canada’s Low-Income Measure (LIM) as a relative measure of poverty. LIM is defined as having an income of less than half the median income of a family of the same size and age composition.

What this means in actual dollar terms is that in 2005, a lone-parent family with two children 17 and under, was on an after-tax income below $23,375; that a two parent family with two children under the age of 17 is getting by on an income of $27,500 or less.

Toronto is ranked as the most expensive city in Canada, just slightly ahead of Vancouver, based on a recent Mercer annual Cost of Living Survey of 143 major cities around the world.

Q: Do poverty reduction strategies really work?

A: Yes. Other jurisdictions like the Province of Quebec and Ireland and have tackled poverty with impressive results. For example, Ireland reduced the number of children under the age of 15 living in poverty from 12.2 per cent to 9.5 per cent in 2003.

Q: Why the focus on families with children under 17?

A: United Way Toronto (UWT) focused on families with children from 0 to 17 in Losing Ground: The Persistent Growth Of Family Poverty In Canada's Largest City for two reasons:

Toronto is a magnet for families from other parts of the province, the country and the world. Families come here believing that with hard work and sacrifice they can build a better life for themselves and a strong, secure future for their children. Their success not only has an impact on their well-being and that of their children, but also on the longer-term health and prosperity of the city, and whether Toronto will continue to be a desirable place to work and raise a family.

United Way’s interest in families is consistent with its focus on neighbourhoods as healthy and inclusive places to raise a family. The focus on families also corresponds to UW’s desire to improve opportunities for youth in Toronto’s neighbourhoods. In 2004, United Way adopted two priorities, "building strong neighbourhoods" and "setting youth on pathways to success."

Q: Why the focus on regional differences?

A: In recent years, United Way Toronto (UWT) research has focused on understanding the needs of lower-income neighbourhoods across the city. Toronto is rapidly changing and building this knowledge has helped inform UWT’s investment strategies and work with other community leaders in strengthening the most challenged Toronto neighbourhoods.

Losing Ground: The Persistent Growth Of Family Poverty In Canada's Largest City has taken a broader approach in order to understand how Toronto families are faring relative to families in areas surrounding Toronto, the rest of the province and the rest of the country as a whole.

United Way will use this research to inform funding decisions, programs and services that will best address the challenges of Toronto families.

Q: What are your sources of data?

A: The income data in Losing Ground: The Persistent Growth Of Family Poverty In Canada's Largest City was obtained from Statistics Canada, tax filer data. While the focus of the analysis is on the first five years of this decade, data was analyzed at three points in time – 1990, 2000 and 2005. All income data has been adjusted to 2005 dollars, and is expressed in after-tax dollars.

Q: The "mean" or "average" is a much more common way to measure central tendency. Why did you use the median?

A: When it comes to incomes, the "average" can skew the picture of how well families are faring. Families at the upper end of the income ladder pull up the "average" income levels far above what the vast majority of Torontonians experience. This is especially true in urban centres like Toronto, which is home to some of the wealthiest families in the country.

The median income is a better indicator of how typical families are faring because it finds the middle of the income distribution of all families, with half above and half below.

Q: What is the LIM?

Using the LIM, in 2005 a lone-parent family with two children is living on an after-tax income below $23,375; that a two-parent family with two children are living on an income of $27,500 or less.

Q: What does United Way Toronto hope to achieve with this report?

A: United Way Toronto (UWT) strongly supports the Ontario government’s commitment to build a provincial poverty reduction strategy and UWT hopes to inform the development of the strategy with these recommendations:

Developing a poverty reduction strategy for Ontario that takes into account the unique low-income challenges facing the City of Toronto and sets clear poverty reduction targets and aggressive timelines for achieving those targets;
Ensuring the strategy involves all orders of government so that all components of the social safety net are considered, including policies and programs that impact housing security, employment security and child care;
Developing rigorous new regulatory measures to protect consumers from the payday lending sector, including setting interest rate caps, limits on fees and charges and other practices that trap consumers in a cycle of debt.
Calling on the federal government, through Statistics Canada, to develop strategies for the routine collection of precarious employment and indebtedness data at the city level

Q: What causes family poverty?

A: There are a number of complex factors that can contribute to family poverty. This report discusses three causes in Toronto:

The economic climate -

Rising precarious employment – The shift from manufacturing industries to a more service-based economy has resulted in a rise in precarious employment in Toronto, characterized by poor job quality, low wages and no health or pension benefits. Working multiple jobs – Reliance on temporary employment is leading to a parallel increase in multiple job holders as people take on a number of jobs in order to make ends meet.

High cost of living –

In 2006, Toronto was ranked as the most expensive city in Canada, slightly ahead of Vancouver. The real cost of living in an expensive city like Toronto means that most low-income families will be challenged to make ends meet.

Inadequate social safety net –

Employment Insurance (EI) remained inaccessible to most unemployed Torontonians. In 2004, only 27 per cent of Toronto’s unemployed workers were able to obtain EI.

The failure to establish a comprehensive non-profit housing strategy has failed to provide adequate, truly affordable housing for low-income Torontonians.

Wider systemic issues –

Cycles of intergenerational poverty - Our report shows that low-income families struggle to cover even their basic needs or the other necessary costs of raising a family.

Q: You recommend rigorous regulatory measures be developed to protect consumers from the payday lending sector. What is the cost of borrowing from a fringe lender?

A: Borrowing from a fringe lender costs more. The higher cost results from a combination of interest and various fees including administration, processing and broker’s or collection fees.

The Financial Consumer Agency of Canada estimates that it costs a customer $50 to take out a 14-day $300 loan – the equivalent of a 435 per cent annual rate of interest – and far higher than the costs of other short-term borrowing such as, a cash advance on a credit card ($4.13 or 36 per cent), overdraft protection ($2.42 or 21 per cent), or a line of credit ($1.15 or 10 per cent).