The Association Between Skills and Low Income
Date posted: February 29, 2016
Last week Statistics Canada released a new article, The Association Between Skills and Low Income. Combining skill data from the Programme for the International Assessment of Adult Competencies (PIAAC) with household income information, the study confirmed that: “Lower levels of literacy are associated with a higher likelihood of low income, even after accounting for other factors that are known to increase the incidence of low income.”
• In 2012, 17% of Canadian adults aged 16 to 65 had a literacy score corresponding to level 1 and below, meaning that they could only find single pieces of information in shorts texts or only had a basic vocabulary. About 13% were in the two highest categories of literacy skills (level 4 and level 5).
• The median household income for individuals who were in the lowest category of literacy proficiency (level 1 and below) was $49,700, compared with $84,600 among those who were in the two highest categories (level 4 and level 5).
• Among individuals in the lowest category of literacy proficiency in 2012, 29% were in a low-income household (households whose income is below the after-tax Low Income Measure), compared with approximately 8% for those in the two highest categories.
• After controlling for other characteristics known to increase the risk of low income, individuals who were in the lowest level of literacy proficiency continued to have a low-income rate higher than individuals who were in the highest levels. The magnitude of the difference, however, was smaller (12 percentage points instead of 21).
• Differences in skill level also help explain part of the higher incidence of low income among certain groups, including groups with low educational attainment and recent immigrants.