Understanding what has been happening in recent years with income inequality in Canada is vitally important.
What do we know, for example, about the incidence of low income and poverty, or the impact of taxes and income transfers on the level and distribution of family income? What are the differences in income across provinces, or between different kinds of families, such as seniors and lone-parent families? More pressingly from a public policy perspective, what difference has government policy made to the economic well-being of Canadian families and to the fairness and equity of Canadian society?
Answering these questions relies on having sound data that are reliable and comparable over time.
As Statistics Canada itself notes: “Governments use income statistics to develop income support programs and social services, such as the Canada Child Tax Benefit, Employment Insurance, provincial income supplements, and welfare payments.Private sector and public sector researchers as well as academics also use data on income, low income, income inequality and earnings from income surveys to study labour markets, industrial patterns or changes in family situations.”
With the release today of Statistics Canada’s Canadian Income Survey, there is now a major gap in these important statistics that make it very difficult to know if there have been important changes to the Canadian social and economic fabric.
Worrisomely, we will not be able to know of any such changes before the coming federal election.
For 2011 and previous years, Statistics Canada produced a major, time consistent, series of data on family and individual incomes in a package called Income in Canada. It told us the incidence of low income by province, age and family type; provided data on income inequality as measured by the share of different income quintiles (dividing the population into five groups) and the so-called Gini coefficient; and the contribution of market income, government transfers and taxes to the after tax incomes of families and individuals, by such important variables as age, family type and province.
Today's release of partial income data for 2012 gives us a snapshot of incomes, but there are no data on income inequality, and only limited data on low income.
Most importantly, Statistics Canada notes that the 2012 data, based on the new Canadian Income Survey, are not comparable to the previous series that was based upon the now-cancelled Survey of Labour and Income Dynamics or SLID. The most important difference is that the SLID had a different design since it followed a sample of persons over time, while the new survey is an annual snapshot based upon a household survey plus tax data.
The new survey was introduced because it is much cheaper to administer. Many researchers have lamented the loss of SLID because it was able to follow individuals and families over several years, for example, as they transitioned between jobs and between different kinds of families. We knew from SLID not just how many families lived in poverty, but for how long they lived in poverty. We knew to what extent incomes of families fluctuated from year to year.
The new income data for 2012 cannot be compared to 2011 and previous years. Statistics Canada tells us not to use the new data to look at trends over time. That leaves a huge gap. To their credit, Statistics Canada do promise to provide a consistent time series, but by December, 2015 or one year from now. It is unclear if all of the old data series will be revised to be consistent with 2012 and beyond.
The data gap is of even greater concern in that there are major questions, to say the least, about changes in the level and distribution of income between 2006 and 2012 because of the cancellation of the long form Census and shift to the National Household Survey that tends to under-sample low income groups and vulnerable populations.
Good data is central to an informed policy debate and to the conduct of democratic politics. Statistics Canada must have the resources to provide the information needed by citizens and governments alike.
Andrew Jackson is a Senior Policy Advisor to the Broadbent Institute.