Income Research Paper Series
Deep income poverty: Exploring the dimensions of poverty in Canada

Introduction

The COVID-19 pandemic and post-pandemic recovery were “feast and famine” for the budgets of low-income families and individuals across Canada. Because of the income support programs put in place to help Canadians affected by workplace shutdowns, the poverty rate fell to 6.4% in 2020, down by 3.9 percentage points from the previous year. In 2021 and 2022, as the support programs ended and high inflation raised the cost of essentials, the poverty rate rose to 9.9% in 2022, with the expectation that it would continue to rise in 2023. This increased proportion of Canadians living below the poverty line amid the higher cost of living in recent years has become a concern for policy makers.

In Canada, the poverty line is defined by the Government of Canada in the Poverty Reduction Act as the Market Basket Measure (MBM). Living under this poverty line means being unable to buy a standardized basket of goods and services, which includes food, clothing and footwear, shelter, transportation and other essential items adjusted according to family size and area of residence. It means that a family or an individual does not have enough disposable income to live according to a modest, basic standard of living.

While the MBM is Canada’s headline poverty measure, poverty is a multifaceted matter. Therefore, the Poverty Reduction Act also requires Statistics Canada to create a dashboard of indicators for a more holistic evaluation of poverty reduction. Canada’s Official Poverty Dashboard consists of 12 indicators in addition to the headline MBM poverty rate. These indicators track progress on various measures of low income and inequality, as well as aspects of poverty less tied to income, such as material deprivation, lack of opportunity and resilience. One of the low-income measures introduced in the poverty dashboard is deep income poverty (DIP). The DIP concept was introduced in “Opportunity for All – Canada’s First Poverty Reduction Strategy” and refers to having an income below 75% of the poverty line. In 2022, 5.0% of Canadians, or roughly 1.95 million people, were in DIP.

This paper examines the population living in DIP from 2015 to 2022 by analyzing the demographic groups in DIP over time and how the DIP measure compares with other poverty dashboard indicators, such as unmet health and housing needs and food insecurity, to deepen the understanding of poverty. The results show that Canadians in DIP have socioeconomic profiles similar to those closer to the poverty line, with some small exceptions. The results also show that those in poverty are faced with more material concerns, like not having access to food, being unable to live in adequate housing or not having access to health care.

Defining the level of poverty measures

Using the Canadian Income Survey (CIS),^Note  this paper examines three low-income-based measures: the MBM, the DIP, and a measure that captures individuals who fall between the MBM and the DIP threshold (BMT). The CIS is a cross-sectional survey designed to provide information on the income levels and poverty rates of Canadians, as well as income inequalities, food security, housing characteristics, unmet health care needs, labour activities, individual and household characteristics, and geographies. Although the CIS was introduced in 2012,^Note  this paper covers the years from 2015 to 2022, as 2015 is the first year the survey included questions on disability, a likely covariate to poverty.  

The MBM has been Canada’s official poverty measure since 2019. The MBM is based on the cost of a specific basket of goods and services that represent a modest, basic standard of living. It includes the costs of food, clothing, footwear, transportation, shelter and other expenses for a reference family. These costs are compared with the disposable income of families to determine whether they fall below the poverty line (Statistics Canada, 2024). In 2022, 9.9% of Canadians were living in poverty.

DIP is an alternative indicator that reflects a situation where a family cannot afford a substantial share of the necessities included in the MBM’s basket. A household is considered to be in DIP if its disposable income falls below 75% of the MBM threshold. In 2022, 5.0% of Canadians were living in DIP. Compared with the MBM, DIP may display different trends and tendencies.

The BMT category refers to individuals who are not living in DIP but are living in poverty according to the MBM. A family in the BMT category cannot afford all the items in the MBM, but can afford many of them. In 2022, 4.9% of individuals were living in poverty but not in DIP. These individuals were in a state of “shallow poverty.” Therefore, in 2022, about half of those in poverty were in DIP, while half were in the BMT category.

Data table for Chart 1

Data table for chart 1
Table summary
The information is grouped by Poverty rates by type of poverty (appearing as row headers), Percent, calculated using units of measure (appearing as column headers).

Poverty rates by type of poverty	Percent
Notes: DIP = deep income poverty. BMT = between the Market Basket Measure and the DIP threshold. Source: Statistics Canada, Canadian Income Survey, 2022.
Not in poverty	90.1
In poverty	9.9
BMT	4.9
DIP	5.0

Defining deep income poverty

Canadians living in poverty are unable to afford the basket of goods and services, based on their geographic region and family size. This means that if their family’s disposable income is lower than the MBM threshold, the family cannot afford the basket of goods.^Note  Disposable income is the income available to a family after non-discretionary expenses have been removed (e.g., Canada Pension Plan or Quebec Pension Plan contributions, employment insurance contributions, medical expenses, child care). If a family cannot afford more than 75% of its MBM basket, all family members are considered to be living in DIP. Not only is the family living in poverty, but it cannot purchase the necessities to live modestly. Many cannot even afford 50% of the basket (see Chart 2). For example, the price of a basket of goods and services for a four-person family living in Ottawa is approximately $54,177, meaning that this family is living in poverty if its disposable income is below this amount and living in DIP if its disposable income is below $40,632, or 75% of the corresponding poverty threshold (see dark blue column in Chart 2).

Data table for Chart 2

Data table for chart 2
Table summaryThe information is grouped by Percentage of income to Market Basket Measure threshold (appearing as row headers), , calculated using (appearing as column headers).

Percentage of income to Market Basket Measure threshold	Percent
Note: The darker blue column at the 75% threshold corresponds to the deep income poverty cut-off.   Source: Statistics Canada, Canadian Income Survey, 2022.
5	2.99
	0.92
	0.91
10	0.68
	0.73
15	0.56
	0.47
20	0.98
	1.42
25	0.88
	0.92
30	0.90
	0.65
35	1.14
	1.40
40	1.74
	1.78
45	1.56
	1.72
50	1.87
	2.22
55	1.82
	1.92
60	2.01
	2.33
65	3.09
	3.09
70	3.40
	3.02
75	3.07
	4.28
80	3.73
	5.62
85	4.58
	4.04
90	5.06
	5.50
95	4.90
	6.60
100	5.48

Chart 2 presents the distribution of the ratio of a family’s disposable income to its corresponding MBM basket in 2022. The x-axis shows the ratio of a family’s income to its MBM threshold, where 100% indicates the family can afford the full basket and 0% means the family cannot afford the basket because it has no income. The darker blue column at 75% is the DIP cut-off. Those to the left of the DIP cut-off are considered in DIP, while those to the right are above the DIP threshold but below the official MBM poverty line (i.e., in the BMT category). The y-axis shows the proportion of all families living in poverty in a given ratio bracket. The chart shows that 50.2% of families could not afford three-quarters of the basket, and 3.9% of families living in poverty could afford less than 5% of it.

Some demographic groups were overrepresented in deep income poverty

Poverty rates can be divided into three levels: the overall poverty rate, the BMT rate and the DIP rate. Table 1 presents the estimates of the overall poverty rate and the DIP rate by sociodemographic characteristic.

The comparison of the proportion of individuals living at the official poverty line with the proportion of those living in DIP shows that people living in deep poverty tend to have similar characteristics to those living in the BMT category. However, differences exist, especially for Canadians aged 16 to 24 years, those with a disability and those not living in an economic family.^Note 

The “percentage rate” column in Table 1 shows the share of a group living below the poverty line compared with those not living in poverty, while the “proportion” column represents each demographic group’s share of the total population living in poverty. For example, 4.9% of women were living in DIP and 50.4% of all individuals living in DIP were women. Table A2 in the appendix provides additional context for interpreting the proportion at each poverty level by showing the proportion of each demographic group in the Canadian population.

An objective of this paper is to identify the groups with a high likelihood of DIP. Table 1 shows that the DIP rate was higher in Manitoba (6.9%) and Saskatchewan (6.1%) and for those aged 24 years and younger (9.5%), while it was relatively rare for those aged 65 years and older. It was also more prevalent among people not living in an economic family (16.2%), one-parent families (10.5%), people with a disability (6.0%), Indigenous people (8.7%) and immigrants in Canada for less than five years (10.8%). DIP was most prominent among the groups that were more likely to experience poverty overall.

A second comparison offered by the statistics from Table 1 is found in column 4, which is the proportion of the poor population (in each geographic or demographic group) that is also in DIP. Approximately 50% of Canadians who were in poverty were also in DIP, so groups with a proportion significantly greater than 0.5 in this column are those that, when they fall into poverty, are more likely to fall into DIP. Conversely, groups with a proportion significantly less than 0.5 are more likely to fall into the BMT category (i.e., shallower poverty).              

Groups more likely to fall into DIP when they are in poverty include individuals in Ontario, Manitoba and Saskatchewan; aged 24 years and younger; and not living in an economic family. Older individuals aged 65 and older are more likely to fall into shallow poverty (i.e., the BMT category).

One-parent families and those not living in an economic family were the most affected following the COVID-19 pandemic

The previous section focused on different sociodemographic groups of Canadians in 2022 and highlighted those more at risk of falling below the deep poverty line. This section examines the trends over time for these groups. Despite pre-existing policies aimed at reducing poverty for some of those groups (e.g., the Canada Child Benefit), the COVID-19 pandemic and especially its aftermath exacerbated the risks for some of these vulnerable groups. The evolution of the DIP rates from 2015 to 2022 for selected vulnerable groups is presented in Chart 3.

Data table for Chart 3

Data table for chart 3
Table summary
This table displays the results of Data table for chart 3 One-parent families, Individuals not in an economic family, People with a disability, Recent immigrants, Percent, 95% confidence interval , Deep Income Poverty and Indigenous people (living off reserve), calculated using percent, higher and lower units of measure (appearing as column headers).

	Deep Income Poverty			Recent immigrants	Individuals not in an economic family	Indigenous people (living off reserve)	One-parent families	People with a disability
	Percent	95% confidence interval
		lower	higher	percent
2015	7.4	7.1	7.8	23.7	20.9	10.9	14.7	15.8
2016	6.6	6.2	6.9	14.0	19.1	8.4	10.2	16.7
2017	6.1	5.8	6.3	16.3	17.7	8.6	12.8	11.2
2018	5.7	5.4	5.9	15.2	18.4	8.0	12.0	10.0
2019	5.1	4.8	5.4	15.0	16.0	6.5	9.0	8.0
2020	3.0	2.8	3.2	6.2	11.7	3.9	6.4	4.6
2021	3.6	3.4	3.8	7.0	12.0	5.0	7.9	7.5
2022	5.0	4.8	5.2	10.8	16.2	6.0	8.7	10.5
Note: The pink area represents the 95% confidence interval for the rate of deep income poverty.
Source: Statistics Canada, Canadian Income Survey, 2015 to 2022.

In 2020, during the first year of the pandemic, poverty rates significantly decreased across the country. The emergency response benefits accentuated the downward trend observed over the previous years.^Note  Notably, the 2020 decline was observed among recent immigrants, one-parent families and individuals not living in an economic family. Following the major workplace shutdowns in 2020, the overall DIP rate increased, with this trend being even more pronounced among vulnerable groups such as one-parent families. Specifically, from 2020 to 2022, the rate for one-parent families increased by 5.9 percentage points, while the rate for individuals not living in an economic family rose by 5.2 percentage points. The DIP rates for recent immigrants also significantly increased by 4.6 percentage points after 2020, and people with a disability saw 2.1 percentage point growth from 2020 to 2022.

Other Poverty Dashboard of Indicators estimates showcase a similar situation to that of deep income poverty

While a single income-based poverty indicator may be useful for obtaining an overview of Canadians’ situation, it may not offer a complete picture of poverty. Canadians living in poverty sometimes face multiple issues simultaneously. This section explores three additional indicators from Canada’s Official Poverty Dashboard that track progress on aspects of poverty beyond income: access to safe and affordable housing, healthy food, and health care.  

The first dashboard indicator used in this analysis, food insecurity, measures the percentage of Canadians who lack the money to purchase or access a sufficient amount and variety of food to live a healthy lifestyle. The second indicator, unmet health needs,^Note  measures the percentage of Canadians who reported that their health care needs were unmet in the past 12 months. The final indicator, unmet housing needs, is measured by the Canada Housing and Mortgage Corporation’s core housing need indicator. A private household is in core housing need if its housing falls below at least one of the adequacy, affordability and suitability standards and it would have to spend 30% or more of its total before-tax income to pay the median rent of alternative local housing that is acceptable. Table 2 presents the rates of these three dashboard indicators among Canadians with different levels of poverty.

While 9.4% of Canadians reported having unmet health care needs, this rose to 14.2% among those in poverty. Core housing need (58.9%) and food insecurity (34.0%) were also more prevalent among the poor population than the whole population. The rates of unmet needs—whether for health care, housing or food—differed little according to the depth of poverty. For example, individuals in shallow poverty (i.e., the BMT category) had a food insecurity rate of 32.0%, while individuals in DIP had a food insecurity rate of 36.0% (the differences were not statistically significant). Nevertheless, the relationship between poverty and higher unmet needs indicates that Canadians living in poverty, whether in DIP or the BMT category, are more likely to be unable to afford adequate food and shelter and are less likely to have access to health care, relative to others.

Exploring different demographic groups through a multidimensional approach

Economic poverty is a general measure that provides an overall picture of Canadians’ living conditions. It compares their income with a basket of goods and services and determines whether they can afford it. While it is an elegant way of summarizing a complex phenomenon, it flattens the reality of living in poverty. Vulnerable groups living in poverty face tangible problems, such as a lack of access to food or health care. These problems often result from compromises made to access the bare necessities. This section explores how vulnerable groups are differently affected by some of those tangible issues over time.

Data table for Chart 4

Data table for chart 4
Table summary
This table displays the results of Data table for chart 4 One-parent families, Food insecurity, Individuals not in an economic family, People with a disability, 95% confidence interval, Recent immigrants, Percent and Indigenous people (living off reserve), calculated using lower , percent and higher units of measure (appearing as column headers).

	Food insecurity			Recent immigrants	Individuals not in an economic family	Indigenous people (living off reserve)	One-parent families	People with a disability
	Percent	95% confidence interval
		lower	higher	percent
Note: The pink area represents the 95% confidence interval for the food insecurity rate across Canada. Source: Statistics Canada, Canadian Income Survey, 2018 to 2022.
2018	12	11	12	13	15	23	32	21
2019	11	10	11	13	15	22	31	18
2020	11	11	12	17	14	22	27	18
2021	13	12	13	18	15	24	30	20
2022	17	16	18	19	21	29	34	26

Chart 4 shows the food insecurity rate for the same vulnerable groups over the same timeframe as previously presented. Indigenous people (28.6%) and one-parent families consistently had the highest rates of food insecurity over the period (34.0%), approaching the rate of those in DIP (36.0% in 2022). From 2021 to 2022, the rate for individuals not living in an economic family increased by 5.6 percentage points, while the rate for those living with a disability rose by 5.7 percentage points. The food insecurity rate for those in DIP also saw a large increase.

Data table for Chart 5

Data table for chart 5
Table summary
This table displays the results of Data table for chart 5 One-parent families, Individuals not in an economic family, Unmet health needs, People with a disability, Recent immigrants, Percent, 95% lower confidence interval and Indigenous people (living off reserve), calculated using percent, higher and lower units of measure (appearing as column headers).

	Unmet health needs			Recent immigrants	Individuals not in an economic family	Indigenous people (living off reserve)	One-parent families	People with a disability
	Percent	95% lower confidence interval
		lower	higher	percent
Note: The pink area represents the 95% confidence interval for the rate of unmet health needs across Canada. Source: Statistics Canada, Canadian Income Survey, 2018 to 2022.
2018	5	5	5	4	8	8	8	14
2019	6	6	7	4	8	11	9	16
2020	7	7	8	6	9	11	11	17
2021	8	7	8	7	10	14	15	18
2022	9	9	10	9	12	17	13	20

Chart 5 presents unmet health needs by demographic group in Canada, which increased steadily across all groups from 2018 to 2022. The three groups most affected are Canadians living with a disability, Indigenous people and one-parent families. Contributing factors could include the effect of the COVID-19 pandemic on the availability of services during this period and the aging of the Canadian population, which could have strained public health services.^Note Note  The group experiencing the largest increase from 2020 to 2022 is the Indigenous population, with a rise of 6.3 percentage points, almost triple the increase experienced by people in DIP over the same period, followed by recent immigrants and people with a disability.

Data table for Chart 6

Data table for chart 6
Table summary
This table displays the results of Data table for chart 6 One-parent families, Individuals not in an economic family, Core housing need, People with a disability, 95% confidence interval, Recent immigrants, Percent and Indigenous people (living off reserve), calculated using higher , lower and percent units of measure (appearing as column headers).

	Core housing need			Recent immigrants	Individuals not in an economic family	Indigenous people (living off reserve)	One-parent families	People with a disability
	Percent	95% confidence interval
		lower	higher	percent
Note: The pink area represents the 95% confidence interval for the core housing need across Canada. Source: Statistics Canada, Canadian Income Survey, 2016 to 2022.
2016	10	9	11	21	21	13	31	15
2017	10	9	10	21	19	19	26	16
2018	9	9	9	22	20	15	26	15
2019	9	9	10	19	20	15	23	14
2020	7	7	7	13	17	11	20	11
2021	8	8	9	17	18	13	21	12
2022	8	8	9	19	17	13	26	12

Chart 6 shows that core housing need is highest among one-parent families. This could be because the financial burden of housing is not shared between multiple earners, coupled with the need for a larger dwelling, on average, to accommodate children. This phenomenon is not observed to the same magnitude among unattached individuals living alone or couples without children. From 2016 to 2022, core housing need showed a downward trend for all groups, particularly from 2016 to 2020. However, this trend shifted slightly from 2020 to 2022, with recent immigrants (5.2 percentage point increase) and one-parent families (5.3 percentage point increase) being the most affected. Notably, in 2022, the rate for recent immigrants surpassed that of individuals not living in an economic family for the first time since 2018.

The analysis of these vulnerable groups highlighted that non-monetary indicators were on a slight decline before the pandemic, but since 2020, most groups have experienced an upward trend. In the context of the pandemic, individuals from vulnerable groups have been adversely affected by the new economic conditions and face considerable challenges.

Conclusion

While several studies have observed and characterized those living below the poverty line,^{Note Note Note Note}   to the authors’ knowledge, no research has specifically examined people living in DIP in Canada. The DIP indicator does not appear to distinguish a radically different group from those living in general poverty. However, some vulnerable groups make up a disproportionate share of the population living in DIP and have experienced different levels of poverty over time. While historical trends in poverty rates among these vulnerable groups show similarities, the pandemic highlighted their heightened vulnerability to economic fluctuations, such as those observed in the post-pandemic period.

Taking a more holistic and intersectional approach to understanding poverty in Canada would be beneficial. While a single measure of poverty offers valuable insights, it may not fully capture the diverse experiences of Canadians living in DIP. Many face challenges such as affording a modest basket of goods and services, finding adequate housing, having access to sufficient or high-quality food, and meeting health needs. Vulnerable groups in Canada, such as one-parent families, recent immigrants, individuals not living in an economic family, people with a disability and Indigenous people, are more at risk of staying in poverty and are more likely to experience a higher incidence of other forms of poverty (e.g., unmet health or core housing needs). Efforts to gain a deeper understanding of the realities of lived poverty are ongoing, including researching data availability regarding homelessness (Dionne et al., 2023); participating in an international effort to define poverty using income-based, subjective experience, and educational indicators; and measuring the effects of the Poverty Reduction Strategy. Further research into this multifaceted issue would significantly benefit programs designed to help vulnerable groups in Canada. Documenting the risk factors associated with living in DIP can help in understanding the intersectionality of poverty.

Appendix

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