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August 14, 2012

Monthly Income, Basic Expenses and What's Left Over


An apple a day keeps the doctor away.  This old adage speaks volumes about the importance of a healthy diet to a healthy life style.  Unfortunately, there are many people living in Ontario who cannot afford a healthy diet, let alone other basic needs, in order to achieve the healthy life style that we all deserve. 

Each year, Region of Waterloo Public Health (and other public health authorities around the province) publish local information about the weekly cost of eating a healthy diet.  The cost information accounts for family size, age and gender.  The Region of Waterloo also does some number crunching and provides a bit of information about basic shelter costs and annual incomes for a number of different family types and income brackets.

Taken together, all of the information tells us a very interesting story.  A family of four with a median after tax income earns about $76,320 a year.  After healthy food and basic shelter costs are taken into account, this family will have over 70% of its income left over for other expenditures.  However, if this same family of four is receiving Ontario Works benefits, they will have less than 12% of their monthly budget ($237) left to purchase the remaining basic needs including school supplies, toiletries, cleaning supplies, transportation and communications. 

A single person receiving Ontario Works benefits, on the other hand, will have over spent their budget by 36% simply by eating a healthy diet and paying market rent for housing.  In reality, a single Ontario Works recipient will be forced to choose between healthy food and a decent place to live and they will have very little money, if any, left over for transportation to job interviews, to purchase used clothing or to buy the cleaning products needed to keep their apartment clean.

One of the main differences between the income (in)adequacy of families and singles living on low incomes are Child Benefits -- the Ontario Child Benefit and the Canada Child Tax Benefit.  Data from 2011 indicate that child poverty has been reduced by more than 6.5% since 2008, when the Ontario Poverty Reduction Strategy was launched.  The Child Benefits help ensure that all children in our province have an income with which one can afford healthy food and appropriate shelter.  Though there is still much progress to be made in meeting the target of a 25% reduction in child poverty by 2013, recent increases in the Ontario Child Benefit are making a difference in the lives of children and families living on low incomes.




3 comments:

  1. May I ask WHY you decided to only work with after tax income? It should show how much our wasteful, inefficient and ineffective government and social programs are costing us and people at all income levels! How much more could everyone do for themselves if they were not being stolen from by our government. The poor would be better off and the people with extra money would have more of it to give to charities and the needy! Charity has ALWAYS been more effective and efficient than government programs!

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    1. When it comes to taxes, we might just have to agree to disagree Jimmy, but, as always, thanks for your comments and for participating in the conversation!

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    2. The reason to look at after tax income is that it reflects disposable income, what people actually have to spend. Jimmy, your statement that we would all have more money if government did not tax us is factually inaccurate. In 2010, the poorest 20% of Canadian households had, on average $3,100 in Market Income. The average after-tax income for the poorest 20% of Canadian households was $14,600. That is the effect of Canada's tax and transfer system. It is made up of things like Canada's public pension system (including Old Age Security and the Guaranteed Income Supplement which provide a basic minimum income of around $15,000 a year for seniors in low income) and child benefits, among other programs. And this does not even capture the value of public services - like health care and schools, not to mention roads, sidewalks and parks. If we each had to pay for that on our own or through charity, rather than pooling our resources through public services, many of us would not be able to afford these services. Before the days of Canada's Old Age Security and Guaranteed Income Supplement, one in three seniors lived in poverty. Charitable giving was not enough to lift them out of poverty. Today, fewer than one in ten Canadian seniors lives in poverty.

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