Definitions

For the first time, the Canadian Government now has developed an official measure of poverty based on the Market Basket Measure (MBM). Canada’s official poverty line will be “based on the cost of a basket of goods and services that individuals and families require to meet their basic needs and achieve a modest standard of living in communities across the country” (Government of Canada, 2018).

• Market Basket Measure (MBM): In the case of the MBM, a household’s low-income status is determined by a “specific set of goods and services that represent a basic standard of living” (Government of Canada, 2018). When an individual or family is unable to afford this ‘basket’ of items in the community in which they live, they will be considered low income. MBM statistics are only available beginning in 2002 (Government of Canada, 2018).
• Low Income Cut-offs (LICO): The LICO is a measure of relative poverty that uses an income threshold to determine if a household is living with low-income. By this measure, if an individual or family is spending 20% or more than the average Canadian family on basic needs—food, shelter, clothing, etc.—they will be considered low income. In Canada, Low Income Cut-offs are adjusted for 7 different family sizes in 5 different community profiles as a means of comprehending differences in the cost of living as experienced across Canada. Statistical data is available from 1976, making the LICO especially useful for long-range, comparative analysis and accounting for one of the reasons why the LICO, calculated after tax, is the most commonly used measure of low income in Canada (Government of Canada, 2016).
• Low Income Measure (LIM): The LIM, like the LICO and the MBM, is a measure of relative poverty, whereby low income is determined by a household’s income in relation to the national median household income. In this case, when an individual or family’s income is below 50% of the national median income, they will be considered low income. Statistical information regarding low income as measure by the LIM is available from 1976 (Government of Canada, 2016).