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article imageOp-Ed: Canada's income inequality is a startling economic reality

By Andrew Ardizzi     Jul 16, 2011 in Politics
Depending on who you talk to, Canadians and the Canadian economy are in a fantastic position relative to the international community. Others are not so complimentary.
In a Canadian labour force survey released July 8, the report indicates the Canadian labour force rose for the third consecutive month, rising by 28,000 in June. Despite the unemployment rate remaining unchanged through June at 7.4 per cent, the report further states employment has grown by 238,000 over the last 12 months.
This trend as it's continued throughout the economic downturn indicates the job market, and by extension the economy, are steady and improving. However, a report released by the Conference Board of Canada highlights concerning trends over the last two decades.
The report – released July 13 – states that over the past 15 years income inequality among Canadians has increased, primarily emanating from the top 20 per cent of wage earners in the country becoming wealthier, while the bottom 20 per cent became significantly less wealthy in relative terms. Meanwhile, the middle-class also experienced a decrease in income relative to the country's top wage earners. Despite the median income rising from $45,800 to $48,300 between 1976 and 2009 – which is never a true indicator of the relative wealth of a country's labour force – the gap between the top and bottom 20 per cent of the labour force nearly doubled from $92,300 to $177,500.
"While the poor are minimally better off in an absolute sense, they are significantly worse off in a relative sense," Anne Golden, the conference board's president told the Toronto Star.
What this trend shows us is quite simple. Although in terms of absolute increases in income Canadians are making more than they were 15 years ago, the relative gap between the top and bottom of the income brackets nearly doubled. Ultimately, the country's richest are making more, while the lower income brackets – relatively speaking – make less. Furthermore, the Conference Board report states those at risk of experiencing low-income include children, lone-parent families, women, unattached individuals, seniors, Aboriginal Canadians, people with disabilities, recent immigrants, visible minorities and low-wage earners. Canada's elderly poverty rate is most alarming, having increased since the mid-1990s; between 2006 and 2009, about 128,000 seniors were considered to be living in low income. Seventy per cent were women.
The question, ultimately, is what does this mean for us "working folk." Quite simply, in my view it's a stark indication of an actual income disparity across the Canadian socio-economic landscape, one well beyond the softening concepts of "median" or "average" incomes that fundamentally disguises the actual numbers – and by extension – the true economic realities Canadians face.
The report uses the following example.
"Paul Krugman, winner of the 2008 Nobel Prize in Economics, gives a simple but effective example of the difference between average and median income. Suppose there are 10 people in a bar and they each earn between $34,000 and $36,000. The average income in that room is around $35,000. The median income is in the $35,000 range as well. Now let’s assume that Bill Gates walks into the bar and that his annual income is $1 billion. All of a sudden, the average income of the people in the bar soars to $91 million, but the 10 people who were already there before Bill Gates walked in are no richer than they were before. The median income remains around $35,000. Only one person is better off, and so inequality rises."
Moreover, as the report notes, the wealthiest Canadians (20 per cent) control nearly 40 per cent of the economic pie. Although unemployment is stable and the real employment numbers are increasing, the quality of the work Canadians are employed in is evidently diminishing.
With a majority government in power whose efforts are directed towards ensuring corporations have low tax rates to maintain economic stability and security, it's unlikely this trend will change. Whether this results in dialogue with the provinces to increase minimum wages or federal implementation of "redistribution of wealth" policy is unclear, if not unlikely altogether. Yet, this report paints a different picture than the one presented by the presiding government and is something Canadians should keep in mind every pay day.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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