03) STATSCAN CONFIRMS INCOME GAP GROWING QUICKLY

(The following article is from the May 16-31, 2008, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.)

By Kimball Cariou

During the so-called lengthy period of "economic growth" before the present downturn, most working people in Canada were losing ground, and the gap between rich and poor continued to widen. That's the conclusion of Statistics Canada figures just released from the 2006 census.

     According to Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives, "Canadians have been pedalling as fast as they can and they are not getting much further than they were when there were fewer of them working and they were working fewer hours and they were less educated."

     Statistics Canada reports that the median earnings of all Canadians who work full time rose a miniscule 0.1 per cent to $41,401 in 2005 from $41,348 in 1980 (a gain of one loonie a week in inflation-adjusted 2005 dollars).

     Meanwhile, the top 20 per cent of earners saw their incomes skyrocket 16.4 per cent, including a 6.2% gain since 2000. The proportion of Canadians earning over $100,000 jumped from 3.4% in 1980 to 6.5% in 2005. The poorest 20 per cent saw their incomes shrink 20.6% since 1980.

     One out of nine Canadians (11.4 per cent of the population, or 3.5 million people, including almost 900,000 under the age of 18) qualified as low-income in 2005, as defined by spending at least one-fifth more of their income than the average family on the necessities of food, shelter and clothing.

     Poverty rates are highest among children and young people. In 2005, 14.5 per cent of children aged 5 and under were part of a low-income family, as were 13 per cent of children aged 6 to 14.

     Some mainstream economists expressed surprise that incomes fell for many Canadians while the economy grew 2.4 per cent between 2000 and 2005.

     Informetrica president Mike McCracken, for example, said "You would expect an economy that has been performing better to be helping to raise the bottom end as part of the old saw that `a rising tide lifts all ships.' Of course, the cynics say, `it just lifts all yachts,' and we're seeing that."

     The StatsCan report also found the following:

* The median income for lone-parent mothers in 2005 was $36,765, higher than in 1980 but still the lowest of all the major economic family types.

* Immigrants have lost much ground compared to their Canadian counterparts. In 1980, recent immigrants with some employment income earned 85 cents for each dollar received by Canadian-born employees. By 2005, the ratio had dropped to 63 cents for men, and just 56 cents for women. (StatsCan suggests that many newcomers arrived with IT degrees at a time when the information and technology sector is in decline; this explanation seems inadequate at best given the catastrophic widening of this pay gap.)

* The wage gap between young male and female workers has stalled after narrowing for years. The wage gender gap, unchanged from the last census, leaves women earning on average 85 cents for every dollar earned by a man.

     The CCPA's latest report on this issue ("A Quarter Century of Economic Inequality in Canada") includes fascinating data on the longer-term trends raised by the StatsCan figures.

     For example, a detailed analysis of employee compensation reveals that the total value of pay packages was about 51% of the total Gross Domestic Product back in 1961. That proportion rose to 54% by the mid-1970s, when the Trudeau Liberal government introduced "wage and price controls," a tool to limit rising wages and begin shifting more wealth towards the rich and the corporate sector. After some ups and downs, employee compensation took a big hit starting in the late 1980s, dropping to just under 50% of GDP by 2005. This trend is a critical factor in the widening income gap reported by StatsCan.

     Another important piece of information from the CCPA is a graph showing the history of wages in Canada. Expressed in 2006 dollars, real average hourly wages were about $5 during the First World War. Over the next several decades, reflecting the upsurge of working class struggles and growing unionization rates, the average hourly wage climbed to about $23 in 1975. Under the impact of "neoliberal" attacks on the working class, and then the deep recession of the early 1980s, hourly rates declined, then rose slightly again by the late 1990s. During this period, of course, corporate profits began their climb to today's dizzy heights.

     Finally for now, the CCPA's findings on the net worth of Canadian families is also significant. The poorest one-fifth of families accounted for -0.5% of the total net wealth of all families in 1977, a figure which changed only slightly to -0.6% in 2005. These families owe more in debts than the total value of their assets.

     Meanwhile, the wealthiest ten percent of families saw a sharp increase in their share, rising from 50.6% in 1977 to 58.2% in 2005.

     Between these extremes, the remaining 70% of families saw their total share fall from 50% in 1977 to about 43% in 2005, with the biggest decline since 1999.

     The class struggle is a daily fact of life under capitalism. For the past thirty years, the Canadian ruling class has waged a determined struggle to wrest back income and wealth gained by the working class in previous decades. Reversing this attack will require a powerful and all-sided mobilization by the labour movement and its allies, not only in collective bargaining, but in the wider arena of extra-parliamentary, political and ideological battles.