Broken promises are something we normally associate with politicians at election time. But what about the broken promise of economic growth?
For years we’ve been urged to work smarter and harder, repeatedly reminded that a strong and growing economy is the fastest route to prosperity for all.
But the most recent Statistics Canada report on incomes puts the lie to that promise.
In a study that opens the vault on information that we rarely get to see – incomes of the richest Canadians – it’s clear the spoils of economic growth have gone to those at the top of the heap.
Shockingly, up to 90% of Canadians are taking home a smaller share of the economic pie they helped bake – a little detail that might get lost in the news that the rich are getting richer.
It’s official: there are more millionaires in our midst. Those at the very top have seen their incomes double in the past two decades. The share of incomes going to the top 1% has soared – rising from 8.5% in 1982 to 12.2% in 2004 (a 43% increase in their piece of the pie). The higher up the income spectrum you go, the better the story gets.
But what about the rest of us?
It’s constantly dangled out there, that you and I can get rich. But the stats show a more sobering reality. They say only the rich are getting richer.
About 80% of Canadians have seen no improvement in their incomes since 1982. That’s astounding, because 1982 was during the worst recession since the Great Depression of the 1930s.
Since the mid-1990s, the economy has been firing on all cylinders. After a decade of strong and sustained growth, our time should have arrived.
All the markers of economic success – low inflation, low unemployment, low interest rates, strong currency, no deficit budgets – are better than they’ve been for over 30 years. Our real output, as measured by inflation-adjusted GDP, is twice as big as it was in 1981. On the global stage, Canada’s economic performance over the past decade has been the envy of the richest industrialized nations (the G7). This is as good as it gets.
All factors would lead us to assume that the majority of Canadians should be doing better than ever financially. That was, after all, the promise.
Instead, the inverse is happening: a surging economy has coincided with a process of redistributing incomes from the less affluent to the richest.
This is disconcerting, given that Canadians are playing by all the rules.
This generation of workers is better educated than the labour market of the early 1980s. People are working more. The average family raising children is clocking in 200 hours more a year than a decade ago.
Still, as the numbers show, the vast majority of people are just pedaling faster to stay put.
Few would begrudge the rich. But it’s hard to argue the system is working when only the richest 5% enjoy the spoils of economic progress…..and this is in the best of economic times.
Something significant is shifting in Canada. A generation ago, the gains from economic growth were more widespread, and the taxes generated by that era of prosperity financed investments across the country, in every neighbourhood, that enhanced the quality of life of all citizens.
Not only did more Canadians find their paycheques improved in good economic times, our governments made sure we all benefited from prosperity by investing in things that help us get on with our day: decent housing options, quality child care, affordable university tuition, and good public transit.
Today, the majority of Canadians are losing on all counts. Their incomes aren’t rising to match their increased work effort, and they’re facing affordability problems for more of the basics in life.
So what does this mean for Canada? The findings in this statistical portrait aren’t merely a product of the economy. They are a product of our culture. They reflect what is socially sanctioned, and what is considered worrisome for our future.
Do these arguments sound familiar? The rich should get more because they deserve it. The middle – particularly those represented by unions – shouldn’t ask for too much because that is inflationary. And if we raise the minimum wage it will kill jobs.
As in all relationships, we get what we expect.
The Statistics Canada study has lifted the veil on where we are headed as a society. That gives us the chance to ask ourselves if we are expecting the right things from economic prosperity, and ourselves. The promise of prosperity for all need not be an empty one.
Armine Yalnizyan is a research associate with the Canadian Centre for Policy Alternatives and Director of Research at the Community Social Planning Council of Toronto.