Poverty Among Senior Citizens: A Canadian Success Story

Lars Osberg makes the case in his paper that the major success story of Canadian social policy in the twentieth century has in fact been the reduction of poverty among senior citizens. According to Osberg, the poverty rate, defined with the poverty line measured as one-half median equivalent income after taxes and transfers, for households headed by a person 65 or over fell from 28.4 per cent in 1973 to 5.4 per cent in 1997, while the poverty gap or income shortfall below the poverty line fell from 26.2 per cent to 15.8 per cent over the same period. In contrast, the elderly poverty rate and gap before tax and transfer income are much higher and show no downward trend. Osberg attributes the difference between the before and after transfers and taxes poverty rate and gap to the introduction of the Old Age Security in 1952 and Guaranteed Income Supplement in 1968 and the reduction in poverty after 1973 to the maturing of the Canada/Quebec Pension Plan regimes established in 1966. Osberg notes that income trends capture only part of the improvement in well-being enjoyed by seniors over the past several decades. Many of the current elderly population received significant capital gains from a large run up in housing prices in the 1970s and 1980s. In addition, the elderly have not been hit by the labour market insecurity that has affected the non-elderly, particularly youth, in the 1980s and 1990s. They have also greatly benefited from the introduction of universal medicare. Osberg also finds that relative to the United States, Sweden and the United Kingdom, Canada has done the best job in boosting the income levels of seniors above the poverty line. In his view, Canada has done a remarkable job in ensuring that senior citizens receive an income sufficient to prevent poverty.