Most BC families are vulnerable as we head into a recession

Many people think that our province's economic woes are just beginning. But in fact, even before the current recession started, most BC families were falling behind.

A new study by the Canadian Centre for Policy Alternatives (CCPA) reveals that not only are the poorest families in BC worse off than ever before, but the middle class is losing ground as well, and much more so than in the rest of Canada.

Using data provided by Statistics Canada, the CCPA tracked the earnings and after-tax incomes of BC families with children over the past 30 years. We found that fully 60% of BC families are earning less than their parents' generation in the late 1970s. Only the wealthiest are making more. In fact, earnings have grown so much for the top 10% of families that they now take home a bigger share of the earnings pie than the entire bottom half of families.

BC's tax and transfer system has helped to make up for some of the earnings losses for the poorest 10 per cent of families, but it hasn't done much for the rest of the bottom half of families. So 60% of families not only have lower earnings than the last generation, but their after-tax incomes are lower as well. This is something unique to BC - other provinces have done a better job of addressing inequality in the labour market using government transfers and taxes.

It's disturbing that poor and middle class families in BC have not able to get ahead even during the height of the economic boom, despite the fact that they're playing by the rules, getting more education and working longer hours than ever before. With the recession, this problem is only going to get worse.

But it doesn't have to be this way. Economic growth alone does not automatically translate into higher incomes for most people, especially for those at the lower end of the scale. The BC government can and should take action to reduce income inequality and help British Columbians weather the recession. There is a range of policy options available, including making the tax and transfer system fairer, expanding public services and social programs for all citizens, implementing a comprehensive poverty reduction plan and improving earnings and working conditions for low-wage workers.

In the end, it is up to all of us to decide what type of society we want to live in: a society that is growing more unequal by the year or a more inclusive one, where the benefits of prosperity are shared.

Economist Iglika Ivanova is the Public Interest Researcher at the Canadian Centre for Policy Alternatives and the author of BC's Growing Gap: Family Income Inequality, 1976-2006. Read the report at www.policyalternatives.ca.