Rising Income Inequality in Canada

Senator Art Eggleton

Income Inequity in Canada

Income Inequality in Canada

Statistics Canada reports that from 1980 to 2005 the income of the richest 20% of Canadians grew by over 16% while the poorest 20% declined by 21%. And for those in the middle, earnings were essentially stagnant

The top-earning 1 per cent of Canadians share of national income went from about 8 per cent to close to 14 per cent over the past three decades

Income Inequality in CanadaIn 2012, the top 100 CEOs made 189 times

the average Canadians salary

Last year, while many Canadians were still feeling the effects of the recession, the executive pay for the CEOs of Canada’s largest companies was going up 13%

This has led to about 4% of Canadian households controlling 67% of the total wealth

Income Inequality in Canada

In this land of plenty, 10% of our fellow citizens live in poverty - that’s equivalent to every man, woman and child in Nova Scotia, Newfoundland and Labrador, New Brunswick and Prince Edward island – combined

One in four of them are children

Income Inequity in CanadaInequality playing itself out in Canadian cities

A report by U of T professor David Hulchanski found that Toronto is now made up of 3 cities

One zone of the city is of tremendous wealth and prosperity

On the other hand, there is a huge zone of concentrated disadvantage and poverty with low income neighbourhoods growing from 19% to 53%

The middle class making up a smaller share of the city decreasing from 66 per cent in 1970 to 29 per cent in 2005

How does Canada compare?

Income inequality in Canada is well above the average of the 34 countries of the OECD

According to the OECD, the average income for the top 10 per cent of Canadians is ten times that of the bottom 10 per cent

Why is income inequality increasing?

There is a widening disparity in labour earnings between high- and low-paid workers

The prevalence of part-time and temporary contract work is eroding wages and benefits

Technological progress has been more beneficial to high-skilled workers

Rising self-employment also plays a role, as the self-employed typically earn less than other full-time workers and have more precarious employment

Why is income inequality increasing?

Less redistribution

Canada’s tax-benefit system, which was effective in stabilizing equality, has declined in the last number of years

Corporate boards pushing up executive compensation

ConsequencesBritish epidemiologists Richard Wilkinson and

Kate Pickett, in the Spirit Level, show that less equal societies almost always have more violence, more disease, more mental health problems, higher infant mortality rates, reduced life expectancies, as well as less social cohesion

There's also evidence that shows that a poor distribution of income negatively affect economic growth and reduces social mobility

Solutions?

Tax reform

Better investments in post-secondary education for under-represented groups

Social assistance reform for those in poverty