Beyond Poverty: What Happens When We Look at Poverty and Inequality Together?
Updated: 2 days ago
In our earlier blog, Beyond Poverty: What Growing Income Inequality Means for Halton[1], we look at income inequality separately from poverty. The key message was simple: poverty and inequality are related, but they tell us different things. Poverty asks, “Who does not have enough?” Inequality asks, “How unevenly is income distributed?”.
What happens when we put the two measures together?
Using Statistics Canada’s 2023 T1 Family File (T1FF) taxfiler data, we can look at both the Census Family Low Income Measure -After Tax (CFLIM-AT) and the Gini Index across Halton’s Forward Sortation Areas (FSAs). The result provides a more nuanced picture of economic conditions across the region.
Four different economic stories
For this analysis, FSAs are classified as above or below these benchmarks to show how their levels of poverty and inequality compare within Halton as a whole. The 2023 Halton benchmarks are 13.1% for low income (CFLIM-AT) and 0.294 for income inequality (Gini Index).
The resulting map identifies four different situations:
Higher poverty + higher inequality → L6H, L6J, L6K, L6M, L7R and L9E
Higher poverty + lower inequality → L9T
Lower poverty + higher inequality → L6L and L7N
Lower poverty + lower inequality → L7G, L7J, L7L, L7M, L7P, L7S and L7T
Why does this matter?
If we looked only at poverty, we might conclude that areas with higher poverty are the places experiencing the greatest economic challenges. But adding inequality changes the picture.
Consider L9T, its poverty rate is 14.9%, above Halton’s 13.1%, but its Gini Index is 0.252, below Halton’s 0.294. In other words, more people are living in low income, but the income distribution is not as inequal as it is across Halton as a whole.
Compare this with L6H, where the poverty rate is 16.8% and the Gini Index is 0.324. Here, both measure area above the Halton average.
These are two very different economic situation, even though both have higher-than-average poverty.
Looking at each FSA
The six FSAs with higher poverty and higher inequality are particularly notable:
L6H has a CFLIM-AT rate of 16.8% and a Gini of 0.324.
L6J has 13.4% poverty and the highest Gini in Halton at 0.455.L6K has the highest poverty rate in this group at 17.8%, alongside a Gini of 0.394.
L6M has 14.5% poverty and a Gini of 0.318.
L7R has 13.3% poverty and a Gini of 0.299.L9E stands out for its particularly high poverty rate of 19.9%, combined with a Gini of 0.305.
These areas may face a combination of challenges: a relatively large share of residents with low incomes and substantial differences in income among residents. That does not tell us what interventions are needed by itself, but it suggests that a poverty-only lens may not capture the full economic picture.
Not all higher-poverty areas look the same
L9T provides an important contrast. With poverty at 14.9% but a Gini Index of 0.252, the challenge appears to be more about the prevalence of low income than an unusually wide income gap.
This distinction matters for community development. A community where many households have relatively low incomes may require different responses from one where poverty exists alongside a much wider income divide.
Lower poverty does not necessarily mean less inequality
Two FSAs (L6L and L7N) have poverty rates below the Halton average but Gini values above it.
In L6L, only 12.8% of people are below the CFLIM-AT threshold, slightly below Halton’s 13.1%, yet its Gini Index is 0.330.
In L7N, poverty is lower at 10.2%, but inequality is higher, with a Gini Index of 0.304.
These areas illustrate an important point: a lower poverty area does not necessarily mean that incomes are evenly distributed. A community can have relatively few people below the low-income threshold while still have a considerable gap between lower and higher income residents.
Areas with lower poverty and lower inequality
Seven FSAs (L7G, L7J, L7L, L7M, L7P, L7S and L7T) are below Halton average on both measures.
Their poverty rates range from 8.1% to 12.5%, while their Gini values range from 0.204 to 0.278.
These areas generally show more favourable income conditions relative to the Halton average. But “lower poverty” does not mean that everyone is financially secure. There can still be households experiencing hardship within these areas.
What does the map tell us?
The map is not simply showing where the poorest parts of Halton are. It shows that economic disadvantage has different forms and is distributed differently across the region.
The cluster of FSAs with higher poverty and higher inequality particularly, L6H, L6J, L6K, L6M, L7R and L9E suggests areas where both dimensions deserve attention.
The presence of L9T in a different category reminds us that poverty and inequality should not automatically be assumed to move together.
And L6L and L7N demonstrate the opposite: inequality can be relatively high even where poverty is relatively low.
A very important limitation
There is an important geographic limitation to this analysis.
The CFLIM-AT can be examined at the Census Tract (CT) level, providing a more detailed picture of where low-income populations are concentrated. The Gini Index calculated from the T1FF data, however, is available only to the FSA level for this analysis. Therefore, the map does not show poverty and inequality at the CT level. We should not interpret the Gini value of an FSA as if it applied to every neighbourhood or CT within that FSA.
Instead, the map should be read as showing the broader income environment of an FSA, alongside its poverty rate.
This distinction is important. An FSA can contain several different neighbourhoods, and conditions within it may vary considerably.
Statistics Canada notes that T1FF data can be produced for a range of geographic levels, including census tracts and postal geography, but the availability of particular measures varies by geography.
Why put poverty and inequality together?
For community development, the value of this analysis is not to rank one FSA as “better” or “worse” than another. It is to recognize that communities can experience economic challenges in different ways.
A high-poverty/high-inequality area may require attention to both immediate financial hardship and the broader conditions that create unequal opportunities.
A high-poverty/lower-inequality area may point more strongly toward widespread low-income conditions.
A lower-poverty/lower-inequality areas provide a different context but still may contain households and groups experiencing hardship.
The T1FF data therefore gives us more than a measure of how many people are living in poverty. They help us begin to see how income is distributed across the community and how economic conditions differ from one part of Halton to another.
A final thought
Halton is often described as a prosperous region. That is true when we look at overall income levels. But prosperity at the regional level does not necessarily mean that prosperity is experienced equally by everyone. Poverty tells us who may be struggling to make ends meet.
Author: Richard Lau, Senior Social Planner
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