Originally published in the Toronto Star on July 14th, 2011. To go to the Toronto Star website please click here
Economists and community activists are applauding a detailed report on Canada’s growing income inequality, released Wednesday.
The report by the Conference Board of Canada shines a spotlight on how wage gains by rich Canadians far outpaced those by middle-income and poor Canadians from 1993 to 2008.
It also warns that the problem likely worsened during the recession.
“The report doesn’t mince words,” said Susan Eng, vice-president of advocacy for CARP, the Canadian Association of Retired Persons, which is now billed as a national organization for those ages 50 and up.
“Anybody trying to tell us that we have no poverty is now going to be standing on one leg.”
While the richest Canadians increased their share of total national income between 1993 and 2008, middle-income and poor Canadians lost ground relative to the wealthy.
The average income level of the poorest group of people in Canada increased, after taxes and transfers and after adjusting for inflation, but only marginally, to $14,500 in 2009 from $12,400 in 1976.
But the gap between the real average income of the richest group of Canadians and the poorest group grew from $92,300 in 1976 to $117,500 in 2009.
“This is an issue around the world, the U.S., Europe and even the emerging economies. In the next 20 years, this will be one of the most important social and economic issues to deal with,” said Benjamin Tal, economist at CIBC World Markets
“Given the nature of the labour market, you need a high level of education to make money and this requires a high level of wealth. It’s a catch-22.”
The number of low-income people in Canada ranges from 3.2 million to 4.4 million, or 9.6 per cent to 13.3 per cent, depending on how it’s defined.
Vancouver had the highest share of its population in low-income, followed by St. John’s, Halifax and Toronto.
Certain groups tend to be at risk for low-income living, including single-parent families, Aboriginal people, people with disabilities, recent immigrants and seniors.
Seniors in particular don’t have many options to change their circumstances for the better, Eng said.
“We get these calls all the time,” Eng said. “People say, ‘I can’t make ends meet. I’m living on $9,000 a year. If I have one bad fall, it’s game over.'”
From 2000 and 2009, every province except Ontario reduced its low-income population, the report noted. But from 2007 and 2009, seven of out 10 provinces experienced an increase in low-income rates.
The largest jump was in Alberta, where the percentage of low-income residents rose to 9.9 per cent from 6.6 per cent.
The recipe for a healthy economy is having a strong and healthy middle class and people who aspire to be part of the prosperity, said Anne Golden, head of the Conference Board.