The 1% And Us

Nothing is static, things change.  It was not all that long ago that the United States had an unemployment rate far below our own, and we envied that.  We also envied the fact that the average earner in the United States took home a pay packet larger than Canadians did.  That situation has now completely reversed.  The U.S. underwent a severe economic downturn and a recession.  We wobbled a bit, our unemployment rate went up, but we stood firm, even while most of the international community suffered financial hardship along with the U.S. from 2008 to the present.

Poverty in Canada, according to Statistics Canada figures, is at record low levels.  Whereas in the United States poverty is now at record highs.  Inequality between high earners and mid-to-low-earners in Canada has levelled off and decreased.  In the United States inequality has grown steadily; in fact it has downright surged ahead.  Those popular protests that represented social awareness of the sumptuous lifestyles of the "1%", as opposed to the poor, represented a U.S. phenomenon, not a Canadian one.

Canadians were under the incorrect impression that what pertained in the United States was echoed in Canada.  And they have been quite incorrect in that assumption.  Statistics Canada, again, has the figures and they are meticulous about the accuracy of their data-gathering and conclusions.  Median household income in Canada grew steadily since the mid 1990s with a few hiccoughs.  Now exceeding those in the U.S. for the first time in three decades.

Income inequality in Canada has been flat within that same time period.  The "growing inequality" that people were fond of decrying and which fed the anger of activist groups who assembled protests against the unfairness of it all, did not reflect a Canadian reality, but an American one.  Under a president, moreover, who promised change and hope and that he would be the man to effect it.  The ship of state is a difficult one to turn at a whim.

The American free enterprise system, its capitalism without restraints or the blemish of constraints is alive and well.  In Canada, the middle class is alive and well.  Perhaps we can cite cautious moderation at the key.  In the United States it is groaning under the effects of a recovering economy but a job market that has not invested in itself.  Since 1998 the measure of inequality in Canada has not budged; income gaps did in fact narrow. 

Incomes in the bottom quintile (fifth) have grown by 20% since 1998 as opposed to 18% growth representing those in the upper quintile.  The gap has narrowed from earlier decades.  The inequality between the poor and the middle-class has also narrowed.  People living below Statistics Canada's Low Income Cut-off have fallen from 15% in 1996 to 8% in 2010.

And the manner in which that relative measure is reached is based on the proportion of income a poor family would need to spend on necessities to maintain itself in the same manner as the average family.  The recessions of the 1980s and 1990s which did impact on income inequality simply have not revisited Canada since.  Recessionary periods, when they occur, drag down incomes for those at the bottom resulting in increasing poverty and inequality.

If society looks at the division in wealth between the very wealthy (1%) and all others, the gap is no longer growing.  Figures provided to the Toronto-Dominion bank from Canada's reigning expert in the field came in at 13.6% in 2010, down from a peak of almost 16% from what it was in 1998. 

We're not doing too badly, thanks for asking.