(Bloomberg) -- Child poverty fell to near record lows in Canada during the pandemic, but additional data provided to Bloomberg suggest that while generous government benefits offset income losses in poorer families, higher earning households received more.
The number of Canadians under 18 who live in poverty fell by more than half to 324,000 in 2020, Statistics Canada reported Wednesday. Since Prime Minister Justin Trudeau was elected in 2015, the number of children and teenagers living below the poverty line has fallen by 780,000. The proportion living in poverty, meanwhile, dropped to 4.7%, one of the lowest rates on record.
Income inequality was also reduced. Canada saw its Gini coefficient, which measures the degree of inequality, fall to 0.281 in 2020, matching a half-century low set in 1989, as lower earning Canadians had their incomes temporarily supplemented with government aid.
The Liberal government sent out C$82 billion ($65.4 billion) in direct income support to more than eight million Canadian families and individuals after Covid-19 forced a halt to activity in wide swathes of the economy. The government’s marquee worker benefit gave C$2,000 a month to anyone who lost income because of the virus. Another measure gave students C$1,250 a month if they were unable to find work.
The rapid roll-out of such programs helped counter massive job and income losses during shutdowns, shielding the country from more severe economic damage.
But supplemental data provided to Bloomberg by the statistics agency raise questions about the progressiveness and precision of the spending. While lower earning Canadian families had a larger proportion of their incomes supported, they weren’t the primary beneficiaries of government assistance.
The highest two household income tiers received an average C$6,400 in Covid benefits, according to the supplemental Statistics Canada data. That’s nearly double the C$3,550 received by the average family in the lowest two tiers.
The numbers reinforce concern that Canada’s pandemic support -- among the world’s most generous, financed with hundreds of billions in new debt -- was inefficiently distributed, with much of it winding up hoarded in savings accounts. A Bloomberg analysis of preliminary data last June also showed government Covid aid largely favored higher earners.
Lower income families tend to have fewer employed people than higher income households, which may also include students. Adjusting for household size reveals a more equitable distribution of benefits, with the second and third income quintiles receiving the largest average amounts.
Reducing inequality has been a focus for the Liberals since Trudeau took power. In March 2020, the prime minister celebrated the fact that one million Canadians had been lifted out of poverty under the his government’s watch.
But with inflation now running at three-decade highs and rising interest rates crimping household finances, it’s unclear whether poverty rates will continue to fall.
©2022 Bloomberg L.P.
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