The Growing GapAnd What We Can Do About It

Armine YalnizyanSenior Economist Canadian Centre for Policy Alternatives

October 2, 2008Newcomer Organizations Network Meeting

Overview

The DreamThe PromiseThe RealityMoving Forward

The Dream

HAPPY BIRTHDAY! – 60th Anniversary of the Universal Declaration of

Human Right – Dec. 10, 2008

Canada: the UN in Action– We live in the most cosmopolitan urban centre in

the world

The Dream

Freedom from conflict (peace and stability)

Freedom from need (universal access to housing, food,

water, warmth, health care, education) Freedom to grow (Pathways of opportunity to develop human

potential)

A value on sharing (Social provisions and supports for those unable to support themselves)

Acknowledgment of interconnectedness (of human and material systems)

How do We Get There? The Promise

Get better educated, work harder, and you’ll get ahead

Focus on economic growth - A rising tide lifts all boats

Economic justice without friction of redistribution by “baking a bigger pie”

Did the promise deliver?

Sustained strong economic growth for a decade Lowest interest rates since 60s Low inflation rates since 60s Lowest unemployment rate in 30 years 11 back to back fiscal surpluses at federal level All provinces in fiscal surplus

Best performance in G7 for past decade Now 9th largest economy on planet with fraction of

population

Is Bigger Better? The Trillion Dollar Baby

Nominal Growth

Real Growth

Unemployment Rate

Dollars (in millions) Constant $ (2002)

1981 360,471 647,323 7.6%

1995 810,426 898,814 9.6%

2005 1,371,425 1,246,064 6.8%

Q1 2008 1,577,976 1,327,452 6.1%

Is Bigger Better? Share of Corporate Profits at Record High

Is Bigger Better? Share of Wages and Salaries at record low

Income Distribution Deteriorating

Rich/poor gap at 30 year high (in earnings and after tax terms)

Fastest growth in past ten years (economic conditions traditionally lead to it falling)

Stagnant incomes in middle Bottom half shut out of economic gains of last 30

years As a cohort, working more, better educated

Rich/Poor Income Gap at 30 Year High, Growing Faster in Past 10 years than at any time on record

Canadian Families Raising Children Working Longer Hours Since 1996

www.growinggap.ca

Ontario is Driving the Trends - Inequality in uncharted territory

Definitions for Ontario

“Rich” = top 10% of families raising children, those with household earnings over $145,000 in 2005 ($120,000 after-tax)

“Poor” = bottom 10% of families raising children, those with less than $9,500 earnings ($25,500 after tax)

Why focus on families raising children?- constituted about half (47%) Canada’s population in 2004 - largest single household type - building block of civic society

The Rich and the Rest of Us – Ontario worst income polarization in Canada

Trends are not driven by work – everyone but top 10% working more

Biggest Gains by Top 10%40% lose ground despite more work

Governments stopped the freefallthrough income supports and taxes

Not enough to offset the breakaway of The Rich from The Rest of Us

What does this mean here?

Ontario drives Canada trends GTA drives Ontario trends A city of immigrants, the UN experiment in action Highly racialized nature of income gap (forthcoming) Not just about income

– Affordability (housing, education, child care, transit)– Community (location, infrastructure and supports,

connectedness/ isolation)

What’s at stake when the rich “divorce” the rest of us

Housing – Shrinking rental stock– Overleveraged new homeowners– Spatial polarization (Hulchanski)

Education – Hard to increase focus on ESL in public schools– Tuition increases and rising student debt loads

Health Care – Less primary care (docs, nurses) in new growth areas– Increasing agitation for two-tier health care

Community Connections– Everyone working more means less time for voluntary activity and

social supports

Moving Forward

New ball game– those were the good times, what happens in the

bad times?

Ontario’s Poverty Reduction Strategy– on the political agenda, need to keep it there

How do you reduce poverty?

Make Work Pay—minimum wage; living wage; employment standards; skill accreditation; pay equity

Support incomes—improve unemployment insurance; harmonize benefits for working poor; enhance and index child benefits; basic income for disabled

Assure essential goods—affordable housing; early learning; skills upgrading; public transit; dental and vision coverage

Why should you care?

Local Economic Benefits - Low income households spend all their money, mostly near home

A more vibrant middle class – Improving pay and working conditions creates greater social resiliance

Healthier, wealthier societies – Reducing poverty means less stress, less illness, and lower health care spending, for individuals and for whole societies

Returns on investments - Investments in education, affordable housing, public infrastructure build assets. That increases incomes and reduces costs for years to come.

Momentum

Ontario, Quebec, Newfoundland, Nova Scotia have committed to poverty reduction

Federal flurry of concern in 2008 – Urban and Rural Poverty Reports in Senate– Social Determinants of Health Report in Senate– House Committee on Status of Women– House Committee on Human Resources

Momentum

Not just politicians but civil society– 25 in 5– Living wage campaign & Good Jobs coalition– No One Is Illegal– Physicians coalitions

Not just Canada but in US– More about inequality, less poverty reduction– Main Street vs. Wall Street scuttles “bailout” – Need to stabilize housing, do something about health care

A new ball game

Recession? Shrinking revenue base?– structural vs. cyclical deficits

Not acting not an option– US events trigger new conversation about role of

government

No better time to act than now– Strategies to reduce poverty help everyone

Getting Back To The Dream

Universal Declaration of Human Rights written in 1948, still working on it

Size does NOT matter – In 1948, Canada started building, no money but lots of dreams

We can get there from here, with a plan. There’s nowhere better to go.