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Market Basket Measure

Definition

Percentage of persons in low income as defined by the Market Basket Measure (MBM). The MBM tracks low income based on a specific basket of goods and services developed by Employment and Social Development Canada.

Why This Matters

The MBM is a useful measure for estimating the level of income individuals and families require to meet basic needs, specific to the costs of goods and services to their geographic location. The MBM arose out of a realization by Federal, Provincial, and Territorial Government Ministers that the costs of goods and services vary between geographical regions (HRSDC, 2009). Consequently, merely looking at household income across different geographical regions does not give a clear picture of the ability of individuals to meet their basic needs through disposable income.

For instance, an individual living in rural Manitoba with a disposable income of $40,000 per year may be able to purchase the same quality and quantity of goods and services as an individual living in downtown Vancouver with a disposable income of $70,000 per year because of geographical variations in prices.

The MBM is often used to complement measures such as low-income cut-offs-after tax (LICOs-AT), the low income measure, and household income, since MBM provides greater sensitivity to geographical variations in prices (HRSDC, 2009).

The MBM is connected to Basic Needs. Individuals and families whose disposable income falls below the total cost of the specified basket of goods and services for their community are unable to purchase the goods and services deemed necessary to sustain a basic standard of living.

Measurement and Limitations

The MBM is a measure of low income based on the cost of a specified basket of goods and services. The basket includes specific quantities and qualities for a nutritious diet, clothing and footwear, shelter, transportation, and other household needs, such as school supplies, personal care products, telephone, furniture, and modest levels of entertainment and recreation (Hatfield, Pyper, & Gustajtis, 2010).

Statistics Canada collects income data from the Survey of Labour and Income Dynamics (SLID) and data on the costs of goods and services in the specified basket to calculate low income thresholds in 48 geographical areas within the 10 provinces of Canada (HRSDC, 2009). Using this information, Statistics Canada estimates the basket costs for different geographical areas and family sizes.

As defined by the MBM, a low-income person is someone whose disposable income falls below the cost of the goods and services in the Market Basket in their community or community size. For instance, a family of two adults and one child living in Winnipeg whose disposable income is $25,000 but whose basket cost is $28,000 would be defined as a low-income family. On the other hand, a single individual living in Fredericton whose disposable income is $20,000 but whose basket cost is $17,000 would not be defined as in low-income.

MBM disposable income excludes total income taxes paid, the personal portion of payroll taxes, other mandatory payroll deductions such as contributions to employer-sponsored pension plans, supplementary health plans and union dues, child support and alimony payments made to another family, out-of-pocket spending on child care, and non-insured but medically prescribed health-related expenses such as dental and vision care, prescription drugs and aids for persons with disabilities (HRSDC, 2009).

This data represents the number of individuals who fall below the market basket cost. It should be noted that the data for the Market Basket Measure is reported for the Winnipeg Census Metropolitan Area – an area that extends beyond the borders of the city and includes the City of Winnipeg plus the municipalities of West St. Paul, East St. Paul, Headingley, Richot, Tache, Springfield, Rosser, St. Francois Xavier, St. Clements, and the Brokenhead First Nation. It should be noted that the data as presented here does not indicate the depth at which families fall below the low-income threshold. When given only the percentage of low-income households, it is not possible to tell how the families are distributed beneath the low-income threshold. In Peg’s indicator system, the MBM can be used to complement the LICO-AT indicator, as MBM provides greater sensitivity to geographical differences in living costs.

A note from Statistics Canada States that “Market Basket Measure (MBM) attempts to measure a standard of living that is a compromise between subsistence and social inclusion. It also reflects differences in living costs across regions. The MBM represents the cost of a basket that includes: a nutritious diet, clothing and footwear, shelter, transportation and other necessary goods and services (such as personal care items or household supplies). The cost of the basket is compared to disposable income for each family to determine low income rates. Following a review by Human Resources and Skills Development Canada, the shelter component of the MBM thresholds along with the disposable income definition have been revised. The revision takes effect in 2011 and includes an historical revision back to 2002 (the first year in which housing tenure information is available in SLID).

Data Source

Data for the Market Basket Measure is not available at a sub-Winnipeg CMA level. Data was obtained from Statistics Canada, CANSIM table 206-0042. http://www5.statcan.gc.ca/cansim/a26?lang=eng&id=2060042

The most recent data for this indicator was made available in 2015. This data is updated annually as it becomes available.

References

Hatfield, M., Pyper, W., & Gustajtis, B. (2010). First comprehensive review of the market basket measure of low income. Gatineau, Quebec: HRSDC. Retrieved from http://publications.gc.ca/collections/collection_2011/rhdcc-hrsdc/HS28-178-2010-eng.pdf

Human Resources and Skill Development Canada (HRSDC). (2009). Low income in Canada: 2000-2007: Using the market basket measure. Gatineau, Quebec: HRSDC. Retrieved from http://www.hrsdc.gc.ca/eng/publications_resources/research/categories/inclusion/2009/sp-909-07-09/sp_909_07_09e.pdf

Market Basket Measure

Percentage of persons in low income as defined by the Market Basket Measure (MBM). The MBM tracks low income based on a specific basket of goods and services developed by Employment and Social Development Canada.
 
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Market Basket Measure Sustainable Development Goals

1. End poverty in all its forms everywhere
1. End poverty in all its forms everywhere

1. End poverty in all its forms everywhere

Extreme poverty rates have been cut by more than half since 1990. While this is a remarkable achievement, one in five people in developing regions still live on less than $1.90 a day, and there are millions more who make little more than this daily amount, plus many people risk slipping back into poverty.

Poverty is more than the lack of income and resources to ensure a sustainable livelihood. Its manifestations include hunger and malnutrition, limited access to education and other basic services, social discrimination and exclusion as well as the lack of participation in decision-making. Economic growth must be inclusive to provide sustainable jobs and promote equality.