Thank you very much, Sylvie.
We're now at the slide titled “Low-income dynamics”. Sylvie has been talking about the rate through time and across provinces. I want to talk somewhat about movement of people into low income, how long they stay in low income, and the exit, which we refer to as low-income dynamics.
Between 1999 and 2004, a six-year period, about 80% of Canadians did not experience any low income. Among the 20% who did, many of the spells of low income were quite short. About 40% lasted one year or less, so a lot of low income is quite short. About one-quarter of those spells lasted five years or more; that's more chronic.
What we see is that while 20% of the population experienced low income at some point during that six-year period, 4% or maybe 5% of the population were in what we might refer to as a chronic low-income condition.
Why do people move in and out of low income? The research shows that obviously most of it has to do with earnings: people lose their jobs, their wages fall, their hours of work fall. But changing family formation patterns are also important. For instance, when we look at people who leave low-income spells, from one-quarter to one-third of them leave because a single person has either married or entered a common-law relationship or because there is some other reason for increasing their earnings. So family formation is important.
Going to the next slide, on persistent low income, we find it's concentrated in five groups. Frank has already talked about this; it is based on work from HRSDC. We see a very high degree of concentration of persistent low income among the five groups mentioned on this slide. In the late nineties, these groups accounted for about a quarter of the population but almost two-thirds of the persistent low income. Current data suggest the same kind of thing. The percentage of people in these groups who experienced persistent low income varies from 15% to 30%, while for the remainder of the population it's around 3% or 4%; you can see that there are huge differences.
How are these groups doing over time? Frank has already talked about this, and he referred to the period from 2000 to 2006. I want to focus on a little longer time period, because we know that low income rises in recessions and falls in expansions, but that can mask long-term trends. I want to look back at the business cycle peak of 1989, for instance, and ask how we are doing now compared with then. When we do that, we see that for female lone parents there has been quite an improvement in low income. The low-income rate is still high, at around 28% in 2006, but it has fallen dramatically from about 41% in 1989, the previous business cycle peak.
If we look at off-reserve aboriginal people—we simply don't have good data for people on-reserve—we have to be a bit cautious, because there have been some issues about differences in definition through time of this population, but it looks as though their situation is improving relative to that of the rest of the population since the mid-1990s. They had a low-income rate twice that of the rest of the population, and it looks as though it's down around 1.7 times.
For people with work-limiting disabilities, the low-income rate has been relatively stable. This is the relative low-income rate, compared with that for the rest of the population. As Frank pointed out, it has been falling since 2000 because the low-income rate for the population as a whole has been falling, but if you try to abstract from the business cycle, it looks as though it's been fairly stable.
Looking on the next slide at unattached people 45 to 64, their low-income rate compared with the rate in 1989, the business cycle peak, is quite stable. It was around 35% then and it's about 35% now—“now” being 2006. However, their low income gap has increased. The low-income rate, as you know, measures the proportion of people below a low-income cut-off. The low-income gap measures the depth of that low income; that is, how poor these families are. The greater the gap, the lower the income of these families. That low-income gap has actually increased for this population through the 1990s and since the year 2000.
If we look at recent immigrants—this is the one that stands out—again in the short run, as Frank said, their low-income rate has been fairly stable and maybe even declining, but compared with that in the 1980s or even early 1990s, their low-income rate has risen quite dramatically. Back in 1980 it was about 1.4 times that of the Canadian-born; now it's around 2.7 times that.
That's all I want to say about the specific groups. The last point I want to make is a simple calculation we did asking the effect the tax transfer system has had on the low-income rate in Canada through time. This is a very simple calculation.
Looking at the chart, let's say back in 1979 we take market-based earnings, employment earnings. If we use employment earnings only in the family, what would the low-income rate have been? It turns out to be 18.4%.
We then say, let's add in the taxes and transfers and see how much that changes the low-income rate. That reduced it to 12.9%, so we saw a reduction of about 30% due to the direct effect of the tax transfer system. There are lots of indirect effects, but we are referring to direct effects. You can see that the extent to which the tax transfer system has been reducing low income actually increased dramatically between 1979 and 1989. Again, these are business cycle peaks and by 2004 it was around 55%.
So the tax transfer system is reducing the low-income rate as much now as it did back in the last business cycle peak of 1989.
I'm going to stop there. The next slide suggests other topics we can talk about, if you wish: where Canada stands internationally in terms of this low-income rate, what we know about the decline in low income among lone parents, and something about the rising low income and falling earnings among recent immigrants. But I'll stop here for now.