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Incidence and depth of low-income among rural and urban Canadians active in the labour market
Personal, family and labour market characteristics of working poor Canadians
Main factors associated with being a low-income family for working individuals
How do the rural and urban working poor face over time?
Labour market trajectories of rural and urban working poor Canadians
Geographical mobility of the rural and urban working poor
In 2003, for Canadians active in the labour market, the incidence of low-income (using the threshold of the Market Basket Measure) (see Box 1) was about the same among rural and urban workers (8.6% in rural areas versus 7.8% in urban centres).
Surprisingly, the income gap or depth1 of low-income for the working poor was comparable whether one lived in a rural or an urban area. This was similar to what was found for the entire (working and non-working) low-income population. For either group, the family income was about 30% below the low-income threshold. This indicates that for the poor, working does not always provide an advantage over inactivity, and this is true whether living in rural or urban areas.
The rural and urban working poor have different profiles. Compared with the urban working poor, the rural working poor are older, less likely to be unattached, more likely to be part of a two-earner couple with children and less likely to hold a university degree (Figure 1).
The labour market characteristics of the rural working poor are also quite different. They are working more hours than the urban working poor (on average 300 hours more per year), have more work experience and are much more likely to be self-employed. They are also a lot less likely to work in the sales and services industry, less likely to work for a medium size business, or less likely to be salaried and low-paid (Figure 2) (See Box 3 for definitions).
Interestingly, the rural working poor are less likely than the urban working poor to receive Social Assistance (SA) benefits2 (7% received SA benefits in 2003 versus 13% for the urban working poor). However, the rural working poor who are salaried are more likely (30%) than their urban counterparts (20%) to receive Employment Insurance (EI) benefits.
Gender is important when comparing the employment conditions of the rural and urban working poor. Working poor men in rural areas work more hours than their urban counterparts. In 2003, these rural men worked, on average, 2000 hours compared with 1700 hours for urban men. Interestingly, those who live in rural areas and are salaried earn higher wages than those who live in urban centres. Salaried working poor men in rural areas earn over $15 per hour versus $13 per hour for their urban counterparts. By contrast, working poor women have similar work hours and wages, whether they live in rural areas or in urban centres.
Separate logistic regressions were conducted for rural and urban working Canadians to determine the main factors associated with being in a low-income economic family unit for working individuals. The results indicate that being the sole earner in the family was the factor most likely to be associated with being a member of a low-income family in both urban and rural areas. Interestingly, the probability of being poor if the worker is part of a one-earner couple with children was higher for those in urban centres (20.4%) than in rural areas (15.6%) (Figure 3).
Figure 3 Impact of family composition on the probability of a working individual being a member of a low-income family
Although being self-employed or low-paid was associated with a higher likelihood of living in a low-income family, being self-employed had a slightly stronger impact for rural workers while being low-paid was clearly more detrimental to urban workers (Figure 4).
Figure 4 Impact of labour force status on the probability of a working individual being a member of a low-income family
As well, working less than 910 hours during the year had a slightly stronger impact on the probability of being poor for urban than for rural workers (it increased the probability of being poor by 10 percentage points for urban workers but by only 8 percentage points for their rural counterparts).
Other characteristics, although of lesser importance, increased the likelihood of living in a low-income family for both rural and urban workers. In order of importance these characteristics were: to be a recent immigrant or an Aboriginal person living off-reserve, working for a small business, having little experience in the labour market, and working less than full-time, full-year. Living in the province of Quebec decreased the risk of living in a low-income family for both rural and urban workers. Interestingly, living in Saskatchewan or Manitoba increased the risk of low-income for rural workers but this was not the case for their urban counterparts.
Often similar characteristics increased the risk of low-income for both rural and urban working Canadians, however some factors had an impact on only one of the two groups:
- For rural workers, living in Alberta or working in a primary industry increased the likelihood of living in a low-income family.
- For urban workers, living in British Columbia, or being young, or working in the sales and services industry, or not having completed high-school, or working for a medium-size business increased the risk of living in a low-income family.
The results show that approximately 40% of the working poor experienced persistent low-income over the 2000 to 2004 period, whether they lived in a rural area or an urban centre. As well, similar proportions (about 80%) of rural and urban working poor Canadians exited low-income at least once over 2001 to 2004 period or exited 'definitively'3 (around 30% for both groups).
These results indicate that the income advancement of the rural and urban working poor were comparable over this five-year period. More importantly, the working poor, whether they lived in a rural or an urban area, were in a rather precarious situation over 2000 to 2004 as they spent, on average, half of their time in a low-income situation.
The reasons explaining an exit from low-income (for those that were able to exit at least once) were very similar whether one lived in a rural or an urban area. Interestingly, in 65% of all cases, the exit was due to a change in the family composition or an increase in the earnings of another family member (Figure 5).
Figure 5 Main reasons for income increasing above the low-income threshold for rural workers who resided in a low-income household
The rural working poor were much more likely than their urban counterparts to be self-employed and for longer periods of time (Figure 6).
As noted above (Figure 2), over one-half of the rural working poor were self-employed in 2003. The results show that over 60% of the rural working poor were self-employed at least once in the 2000 to 2004 period and 40% were self-employed in all years from 2000 to 2004. It is not clear whether being self-employed is the factor "causing" low income or whether the rural working poor cannot find salaried jobs and, as an alternative, need to operate a small self-employment enterprise.
The rural working poor also accumulated more hours of paid work than the urban working poor: 9,300 hours over the 2000 to 2004 period, compared with 7,900 hours for their urban counterparts4. This is equivalent to working an additional eight full-time weeks per year5.
The results presented above focused on the working poor who consistently lived in a rural or an urban area in each year between 2000 and 2004. However, some of these individuals moved from rural to urban (or vice-versa, or both) over this period. Close to 90% of the working poor did not change their type of region6 over the five years. Only 6% of those who were poor and lived in a rural area in 2000 moved to an urban centre, while 7% of those who were poor and lived in an urban centre in 2000 moved to a rural area during the period.
Moving from a rural area to an urban centre seemed to improve the economic situation of the working poor, but the reverse did not appear to be true. Although in this case the differences are not statistically significant (mainly due to the small sample size), those who lived in a rural area in 2000 and moved to an urban centre in the next four years had, on average, higher personal earnings and a higher family income than those who moved from urban to rural.
This indicates that moving is not, in and of itself, a panacea to low income – the start and end points matter. Moving from rural to urban seems to help working poor persons improve their economic situation while moving from urban to rural seems to be detrimental in respect to their earnings and low-income status.
The incidence of low-income is very similar whether one lives in a rural or an urban area. Furthermore, the rural working poor are not in more dire circumstances than their urban counterparts given that their gap or "depth" of low-income is similar. However, the rural and urban working poor have rather different profiles and some factors associated with low-income are specific to where Canadians live. Consequently, universal policies to combat low incomes may have different impacts on rural and urban populations.
For instance, the rural poor are older than their urban counterparts. For this reason, education and training might need to be targeted differently in rural and urban areas. The rural poor are more likely than their urban counterparts to live in two-earner families with children. Consequently, assistance with the cost of raising children may be more helpful in rural regions. Furthermore, self-employment is more predominant among the rural poor. As a consequence, minimum wage policies do not apply to a large segment of the rural working poor. Also, the higher share of self-employed among the rural working poor implies that few working poor have access to Employment Insurance benefits. As well, working in a primary industry increases the risk of low-income for rural residents. One possible strategy is to help family members find jobs in other sectors.
Whatever differences may exist between the factors associated with low-income among rural and urban working Canadians, it is important to recognise that living in low-income is not a transient phenomenon. Over the 2000 to 2004 period, the rural and urban working poor spent on average half of their time in low income, and 40% of them experienced persistent low-income.
- "For those families with disposable incomes below a low-income threshold, the depth of low-income is the difference between their disposable income and their low-income threshold expressed as a percentage of that threshold. For example, a depth of low income of 0.2 means that the person lives in a family whose disposable income is 20% below its low-income threshold." (Exerpt from Human Resources and Social Development Canada Low Income in Canada: 2000-2002 Using the Market Basket Measure, June 2006).
- Benefits received by the individual (not the family).
- To "definitely" exit low-income means that the person's economic family income was below the Market Basket Measure low-income threshold in 2000 and was above the threshold in each year from 2001 to 2004.
- Note that this statistic was calculated only for those who reported their work effort in each year between 2000 and 2004.
- In this study, working full-time means working at least 35 hours per week.
- In this instance changing type of region means moving from rural to urban or vice-versa.
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