Income Inequality

Income inequality is the statistical measure of how fairly wealth is shared in a country, province, or community. The higher the income inequality, the less fairly wealth is shared. In Canada right now, income inequality is higher than it has been for nearly a hundred years. Not since just before the Great Depression has our country been so unequal.

Between 1987 and 2011 (the last year for which statistics are available), income inequality has risen across Canada and in every province. It has risen by more than 9 per cent across the country, and by the following rates in each province.

CANADA

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

9.1%

10.4%

6.5%

3.7%

5.6%

2.8%

12.7%

6.1%

2.4%

15%

8.3%

High income inequality ultimately hurts everybody. In a book called The Spirit Level: Why Equality is Better for Everyone, a pair of British epidemiologists named Picket and Wilson found significant evidence that high income inequality makes everybody—including the very rich—sicker, angrier, less educated, and less safe.

Rising income inequality is not inevitable. It is the direct consequence of governments passing laws that

  • cut taxes to corporations and the wealthy,

  • cut or privatize public services,

  • restrict our labour and other human rights,

  • abandon industrial strategies in favour of the “trickle-down approach.”

Just as our politicians can push income inequality up, so they can also push it back down. Between 1945 and 1980, for example, income inequality fell in Canada every year. We were electing politicians who passed laws that ensured:

  • Tax Fairness: Corporate and high-income taxes held steady, around 50% and 75% respectively.

  • Quality Public Services: With health tax revenues, we strengthened and expanded our public services, and created highly successful national programs such as Medicare, CPP, Old-Age Security, and Unemployment Insurance.)

  • Labour and other Human Rights: Unions thrived through this period. Their memberships grew, they negotiated fair wages and safe workplaces, and much of what they fought for and won—pay equity, paternity leave, long- and short-term disability, protection from discrimination and harassment—now helps every Canadian worker.

  • Good Jobs: From 1945 to 1980, Canadians created booming industries in manufacturing, high-tech, and banking. We did it by electing politicians who brought business and labour to the table to set our best course together.

The wealthy can afford higher taxes

If anyone doubts that the wealthy can afford to pay their share in income tax, consider these numbers. According to this year’s Canada’s Private School Guide, it costs up to $72,000 per year to send one child to a private school. The median income in Canada is $31,900.

A wealthy family with two kids that chooses to send their kids to private schools is paying up to $144,000 a year. That’s 4.5 times as much as most Canadians earn.

International Monetary Fund economists question austerity

A recent article by economists with the International Monetary Fund (IMF) shows that even those who are ideologically committed to austerity are starting to question it.

In an article entitled, Neoliberalism: Oversold? three IMF economists concluded that austerity is causing serious problems. They pointed to evidence that the increase in income inequality caused by austerity is harming economic growth.

First, business or economy inequality

When we talk about income inequality, often we use something called the Gini coefficient that measures inequality in terms of income distribution. 

To see where countries rank, the Gini coefficient has maximum and minimum values: a Gini of 0 is exact equality and a Gini of 1 is exact inequality. The 0 value means that everyone has the same share of income; the 1 value means that only one person has all the income and the rest have none. Countries fall in between. Canada's Gini coefficient as of 2011 is 0.32.  The U.S. Gini coefficient is 0.41. 

II

Income inequality is the statistical measure of how fairly wealth is shared in a country, province, or community. The higher the income inequality, the less fairly wealth is shared. In Canada right now, income inequality is higher than it has been for nearly a hundred years. Not since just before the Great Depression has our country been so unequal.

Canada Needs a Modern Industrial Strategy

Income inequality (the income gap between the richest and the poorest) is the biggest challenge facing Canadians today. When it comes to tackling income ienquality, the challenge is to develop an economic strategy that will not only make a bigger economic pie but also ensure all the bakers get a bigger slice. The Canadian government has taken a hands off approach to the country's industrial strategy for far too long. Today, it’s more important than ever that the interests of people and nature be at the heart of industrial and economic policy.

 

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