8/22/2019 LICO Graph Explanatory Notes

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Explanation of Poverty Gap Graphs #1 & #2

These graphs were created to show the relationship between a commonly used povertymeasure and the income of Ontario families on social assistance or families whose breadwinneris working at the Ontario minimum wage.

Poverty line: For these charts, the poverty line that we have used is the Statistics Canada pre-tax "Low Income Cutoffs" also known at the pre-tax LICO. The LICO is used by organizationslike the Canadian Council of Social Development, the National Anti-Poverty Organization andthe National Council of Welfare as an indicator of relative poverty. The LICO is adjusted for bothfamily size and for different sizes of communities. The LICO that we have used in these chartsis for urban areas with a population greater than 500,000.

Poverty Gap: This is the shortfall between the income of each family represented on the graphand the LICO for that family size. The poverty gap appears as the blank or white area on eachcolumn.

Family sizes: Each graph shows the income level and poverty gap for three different sizes of

single parent families - families with 1, 2 or 3 children.

Monthly Family Income: The family income is calculated on a monthly basis. The graphshows the total of the Canada Child Tax Credit Basic Benefit + the National Child BenefitSupplement + either: the social assistance entitlement for that family or the parent's monthlyearnings at minimum wage.

In every case, the families we have used would be eligible for the maximum CCTC basic benefitand the maximum NCBS.

The social assistance entitlement that we have used in these charts is Ontario Works. We haveused the maximum shelter and basic needs allowance available based on the family size. The

OW entitlement shown is reduced by the amount of the NCBS clawback - approximately $120per child.

To calculate the parent's earnings we have used the Ontario minimum wage as of February 1,2005 - $7.45/hour. The monthly earnings are based on working full time at 35 hours per week.We have deducted EI and CPP premiums from those earnings, but not income tax as a parentof even one child would have income below the taxable level.

Graph #1: Clawing Back the NCBS from Ontario Families on Social Assistance

This graph looks at the financial situation of three sizes of single parent families who arereceiving Ontario Works. It shows that at each family size the families are living on incomesthat are close to half of the poverty line.

Graph #2: The Poverty Gap for Ontario Families on Social Assistance or Working atMinimum Wage

This graph compares the income of families in Graph # 1 to the income of the same family sizeswhere the basic income is minimum wage. The families that are working get to keep the fullNCBS, but what this graph shows is that those families are also living close to 50% below thepoverty line. We think this illustrates that, even with the NCBS, the lowest-income workingfamilies will not get out of poverty until there is a substantial increase in Ontario's minimumwage.