Canadian income gap widens

  • October 23, 2008
{mosimage}TORONTO - The rich are getting richer, poor are getting poorer and even the middle class is losing touch with wealthy Canadians, according to a new report from the Paris-based Organization for Economic Co-operation and Development.

After 20 years of declining inequality from the mid-1970s to mid-1990s, the gap between rich and poor has risen sharply in Canada since 1995, the OECD said in Growing Unequal, released Oct. 21. Canada is now one of the more unequal countries among the 30 rich nations who make up the OECD.
CPJ is an Ottawa-based ecumenical social justice advocacy group.

“Poverty is a human rights issue,” said Karri Munn-Venn, Citizens for Public Justice socio-economic policy analyst. “We’re a country that seems to have a lot to say on how other countries are behaving on civil and political rights, and yet the OECD report demonstrates that we’re falling down here at home.”

The OECD’s economic analysis found that:

  • inequality of household earnings in Canada increased more and faster the last 10 years than any other OECD country except Germany;

  • Canada is one of a half-dozen countries where the gap has increased between the rich and middle class;

  • Canada’s young people — children and young adults — are 25 per cent more likely to be poor than the population as a whole;

  • poverty, meaning people who live on less than half the nation’s median income, has increased for all age groups by between two and three percentage points to an overall rate of 12 per cent. For Canadian children the rate is 15 per cent; for the elderly it is six per cent;

  • if Canadians fall into poverty they are likely to remain poor for longer than poor people in most OECD countries;

  • it takes two jobs to make it in Canada. Two-thirds of Canadian households where no one has a job are poor; 21 per cent of households with just one person working are poor; only four per cent of households with two or more people working are poor.

“As Canadians there still sometimes seems to be a perception that this isn’t about us,” said Munn-Venn. “But poverty is an issue that affects everyone. It has an impact on our health care system and plays into costs in terms of crime and the costs of addressing crime.”

Whether it’s viewed in terms of human rights or good government, poverty is a key issue for Christians, said Munn-Venn.

“God created human beings to live in His image. As such, everybody should be able to live in dignity and with compassion,” she said. “As Christians we do need to be concerned about how things are going.”

“With 3.5 million people in this country below the LICO line, that’s our measure of poverty, this is a problem,” said Jill Carr-Harris, KAIROS’s Canadian social development expert. The Statistics Canada Low Income Cut-Off measures poverty in relative terms and is used as the standard poverty measure for poverty.

The Toronto-based KAIROS, funded in part by Canada’s Catholic bishops, is a social justice advocate.

For Carr-Harris inequality is at least as much a fundamental dysfunction in the economy as the credit freeze and tumbling stock prices on Bay Street.

“Sure there’s a credit freeze and there’s a problem, but I think from the point of view of people who are struggling what you need is to provide some kind of job creation,” she said.

At the same time policy makers need to recognize that just having a job doesn’t necessarily lift families out of poverty. Minimum wage and no benefits still adds up to poverty, she said.

Ontario Finance Minister Dwight Duncan told a business audience at Toronto’s Canadian Club that fighting poverty is still part of the government’s approach to the economy even as it deals with the crisis in financial markets and manufacturing.

“We could no more abandon our efforts to reduce poverty than we should abandon working with our businesses to increase productivity,” Duncan said a week before a scheduled economic update Oct. 22.

A look at food bank use shows that Canadian policy makers have  been unable  to make much of a dent in entrenched poverty, said Carr-Harris.

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