TORONTO -- The concentration of power in the corporate sector is perpetuating income inequality trends in Canada, says a study published by the Canadian Centre for Policy Alternatives (CCPA).
The study, A Shrinking Universe: How Concentrated Corporate Power is Shaping Income Inequality in Canada, links the rise of the richest Canadians with a shift toward more concentrated power within the country’s largest firms.
“Something dramatic happened in Canada after 1980: the top 60 firms have effectively delinked from the rest of the corporate universe, and we now see a staggering degree of concentrated power,” says the study’s author Jordan Brennan.
“That’s interconnected with the concentration of income among Canada’s richest 1%, especially among the richest 0.1% -- a factor driving income inequality trends.”
The study tracks the dual concentration of income and corporate power in Canada:
- The share of national income going to corporations in the form of profit was higher in 2008 than it had been in five decades.
- In the early-1950s, the share of national income going to the top 60 Canadian-based firms in the form of corporate profit was 2%, staying at that level for four decades. By 2006, it reached 5.5%, almost a three-fold increase.
- In the mid-1970s, the top 60 Canadian-based firms accounted for 15% of all equity market capitalization and 30% of all corporate profit. More recently, the top 60 made up 67% of all equity market capitalization and 60% of all corporate profit, a staggering development.
- In the mid-1970s, an average firm within the top 60 was three times larger than an average firm listed on the TSX. In 2008, it was 23 times larger.
- In the mid-1960s, the average net profit of a firm within the top 60 was approximately 1,000 times larger than an average firm. By 2009, that ratio had risen to 12,000 – that’s a 12-fold increase in just four decades.
- During this time frame, the richest 1% enjoyed a greater share of Canada’s income pie while income inequality reached troubling new levels.
“When we speak about Canadian business or the corporate sector, we are effectively referring to 60 firms that dominate the push for corporate profits and help shape income inequality trends in Canada,” Brennan says. “It’s a phenomenon well worth paying greater attention to in Canada.”
-- 30 --
The study is this year’s winner of the Progressive Economics Forum student essay contest. Download the study at www.policyalternatives.ca. For more information, please contact: Trish Hennessy, CCPA Ontario director, 416-551-2059.