Thursday, March 1, 2007

Canada: Income gap widening

Rising tides of economic activity do not raise all boats equally. Some may even sink!
Perhaps the gap will not hurt future economic growth. Production will just shift to luxury goods where there is more demand. Also, there may be just a larger load of individual debt as people buy what they cannot afford. Conservative tax cuts will no doubt exacerbate the income gap. All this shows is that a market economy plus conservative governments that cut social spending, taxes, weak unions, and lack of political action except by the well off means that the income gap will widen.

Canada's wage gap widening despite boom: study
Last Updated: Thursday, March 1, 2007 | 6:33 AM ET
CBC News
Canada's rich are getting richer while the incomes of poor people continue to stagnate in a time when the wage gap should be shrinking, a new report on the Canadian economy said Thursday.

Inequality is continuing to grow year after year in spite of the current economic boom — a period of prosperity that would traditionally see the extremes between the wealthy and the poor drawing closer together, the Canadian Centre for Policy Alternatives said in the study.

The Ottawa-based independent research institute's report, titled The Rich and the Rest of Us, says it has been 30 years since the wealthy and the poor were so far divided in how much they earn. What's more, the share of overall income going to 80 per cent of Canadian families is less than it was a generation ago.

Armine Yalnizyan, the author of the study, said most Canadians are not participating in the economic gains they are helping to create "and that is simply not an economic recipe for future economic success."

The CCPA commissioned Statistics Canada to analyze the economic health of families raising children under 18 years of age — roughly half of all Canadians. They found that on average, Canadian families are putting in 200 more hours a year on the job than a decade ago.

That's a far cry from the situation the nation's economic elite are in, Yalnizyan said.

"The top 10 per cent is the only group that has not worked more weeks or more hours than they worked a generation ago," he said. "Everyone else is working more and they're the ones that are unable to command higher incomes."

Last fall, the CCPA released a poll suggesting three-quarters of Canadians believe inequality is growing.

Still, there is some hope, the study notes. Nearly half of Canadians who are raising children have not experienced a freefall in their incomes thanks largely to the government's tax and transfer system, and especially the tax-free monthly Canada Child Tax Benefit, the study said.

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