In his recent article in the National Post on the “myth” of rising income inequality, Andrew Coyne argues that, when it comes to poverty, “the news is quite remarkably good.”
He posts a chart showing the proportion of the population living below Statistics Canada’s Low Income Cut-Off (LICO). This indeed shows a decline from the late 1990s, to under 9%.
Could this possibly be the same Andrew Coyne who argued in Macleans Magazine in 2009 that the LICO measure is far inferior to the Low Income Measure of poverty?
The LICO measures the proportion of Canadians living in households which spend more than 63% of their income on the necessities of food, clothing and shelter.
Most experts agree that this measure is now very badly flawed since the calculations are based on what an average family spent on necessities more than twenty years ago, back in 1992. Statistics Canada has stopped updating LICO for recent patterns of spending.
By contrast, the Low Income Measure or LIM reports the proportion of Canadians living in households which have incomes less than half the median or mid point income of comparable households.
Mr. Coyne of Macleans argued (rightly) that the Low Income Measure is much better.
“The problem is it’s hard to say what LICO does measure. It’s clear that “one-half the median” is a relative measure, and it’s clear what it means. But LICO?"
Had Mr. Coyne of the National Post looked at Statistics Canada data for the Low Income Measure, he would have found that the incidence of low income has increased more or less steadily since the early 1990s, from about 11% to 13% of all Canadians.
The clear difference between low income as measured by the LICO and the LIM is shown in the recent presentation of University of Ottawa economics professor Miles Corak to the House of Commons Finance Committee hearings on income inequality (link).
As Professor Corak, underlines, the trend has been for the income gap between middle and low income households to grow rather than to shrink, the inconsistent Mr. Coyne notwithstanding.
Inequality is one of the defining issues of our time. We'd be proud to sponsor a debate between the two Mr. Coynes.