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Income gap grows wider
PETER POWER / TORONTO STAR
'Everything is so expensive, yet our wages increase just a little," says Myrna Stoller, on a break from her job at the Royal York Hotel. 'Before you know it, you're getting behind.' Email story
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Speak Out: Income gapSpecial CoverageMeasuring what matters (.pdf)Star Video: Jason's storyMan 'amazed' by dental care offersReaders respondLayton sounds alarm on rich-poor gap (Feb. 10)Voices: A liveable wage?Mar 01, 2007 04:30 AM
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The vast majority of Canadian families – almost 80 per cent – are working more and earning less of the national economic pie than they did 30 years ago even as incomes of the richest families are soaring, says a new study to be released today.
What's more, the growing income gap has hit a record high during an economic boom, a period when traditionally the gap between rich and poor has shrunk.
"The rich are getting richer, the poor aren't going anywhere and there are fewer people in the middle to mediate the two extremes. We ignore these trends at our collective peril," says the study by the Canadian Centre for Policy Alternatives, an independent research institute concerned with issues of social and economic justice.
The report, titled "The Rich and the Rest of Us," shows that the richest 10 per cent of families with children – those with incomes more than $131,200 in 2004 – earned 82 times the amount earned by the poorest 10 per cent. In 1976, the richest families earned 31 times the amount of the poorest families.
The bottom half of families raising children, those earning less than $60,000 in 2004, earned less or stayed the same, in inflation-adjusted terms, compared to a generation ago. Those in-between worked more hours just to keep pace.
The data only consider earned income and don't count returns from investments and other assets, which could further increase the wealth gap.
The study, based on Statistics Canada labour income data from 1976 to 2004, doesn't say why most families aren't sharing in the current economic boom, but it calls the trend "unsustainable."
Economist Hugh Mackenzie, a research associate with the Canadian Centre for Policy Alternatives, blames the growing income gap on several factors:
Minimum wages that haven't kept pace with inflation.
The loss of well-paying manufacturing jobs and rise of lower-paying service sector work.
The decline in unionized workplaces.
The increase in contract and temporary employment.
"There's no single culprit you can point to," said Mackenzie, also a research associate at the U of T. "But there's no question the changing nature of work and how we value it is playing a role in what we are seeing."
The report paints a stark portrait of the vast majority of families, including the middle class, working longer hours but losing ground.
Take Myrna Stoller. The 50-year-old hotel-room cleaner and her husband, a tool and die designer, earn a combined $70,000 annually – the average income for a Canadian family in 2004. They don't feel average though, or middle class.
"It's getting worse because everything is so expensive, yet our wages increase just a little. Before you know it, you're getting behind," said Stoller, who arrived here 20 years ago from the Philippines and has raised three children, two still in their teens.
For 16 years she has picked up after the privileged at the Royal York Hotel, working 40-hour weeks tidying up rooms that go for $280 to $450 a night. She often sees the same people. "I see the rich are getting richer," she said. "But we're not getting to where we're supposed to be."
History has shown the income gap typically grows during recessions as low-wage workers are laid off. The gap tends to shrink during periods of economic prosperity.
Not so today.
"A rising economic tide raises all boats, but what we are seeing is that some of those boats are yachts that are sailing far out into the harbour and are turning into rocket ships," said the study's author, Armine Yalnizyan, research director for the Toronto Community Social Planning Council.
The study notes that the one ray of hope is the role government has played in stopping the freefall of incomes for almost half the population raising kids. The tax and transfer system – primarily the tax-free monthly Canada Child Tax Benefit – is working, says the study.
For some, the study's breakdown of family income into 10 per cent groupings may yield some surprises, including that a household income of $131,000 counts as rich (top 10 per cent). The poorest 10 per cent of families raising children earned incomes below $9,400.
The analysis focuses strictly on the 3.8 million households raising children under the age of 18 – almost half of all Canadians.
Jim Davies, economics professor at the University of Western Ontario, finds the study's results puzzling since the income gap has narrowed in the past decade when you look at all Canadian households, not just families.
"Rather than an injustice story, it may be about the changing composition of who is in this group," said Davies, an expert in income and wealth distribution. In the past 30 years, for example, the number of single-parent families has grown, as has the number of immigrant families stuck in low-paying jobs.
"It's something to investigate further to find out what is happening because, as they're saying, we haven't had a recession in a long time. We really ought to try and make sure we're prepared for things like that."
The study's focus on families is deliberate. Families busy raising children are among the most time-pressed of Canadians. And yet, the report notes, all but the richest Canadian families are spending more time at work.
The average Canadian family with children clocked almost 200 more hours of work in 2004 compared to nine years earlier. Only the richest 10 per cent of families didn't work more hours between 1996 and 2004. And yet they were the only ones to see major increases in earnings.
"Families are doing everything they're told to succeed," said Yalnizyan. "They get a better education. They delay family formation. They work harder than ever before. They should be better off than their parents' generation. But 80 per cent of families cannot say that."
[link to www.thestar.com]
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