Canada's Wealthy: They're richer than you think

By Stephen LaRose
Planet S 
January 2012

Whether it’s Greek mythology, Shakespeare or Mickey Mouse stealing his master Yen Sid’s robes in The Sorcerer’s Apprentice, one common element in drama is that protagonists — heroes as well as villains — are often humbled by their own pride, greed and stupidity.

No one will confuse studies with titles like Why Have Poorer Neighbourhoods Stagnated Economically while the Richer have Flourished? Neighbourhood Income Inequality in Canadian Cities, or Currents: Western Canada’s Economic Bulletin, or even Canada’s CEO Elite 100: the 0.01% with Antigone, Julius Caesar or Fantasia.

But you can’t read through the three recent reports — by the Canadian Labour Market and Skills Research Network, the Canada West Foundation and the Canadian Centre for Policy Alternatives, respectively — without feeling that the Canadian economy is in the first stage of an economic apocalypse.

First things first. The CLMSRN report, released last August, studied the gap between rich and poor Calgary neighbourhoods between 1980 and 2005. During that time, the mean after-tax income for Calgary’s richest neighbourhoods increased 75 per cent. Most of those people had jobs in the oil industry or related fields.

In Calgary’s poorest neighbourhoods during the same period, after-tax income increased by a mere five per cent.

Most of those poorer Calgarians held lower-paying white-collar or blue-collar jobs in 1980, but with the decline in unionization, more outsourcing of work and the elimination of many light- and heavy-industry jobs, they drifted into service industry McJobs.

Back in 1980, most of those residents thought they could work their way to a better life. Today, they don’t.

The Canada West report says that while western Canada’s poor haven’t gotten poorer (at least in real dollar amounts), “those who are neither rich nor poor — the middle 60 per cent — are feeling the pinch.”

It continues: “Income growth for the 60 per cent in the middle has significantly lagged behind the richest 20 per cent and the poorest 20 per cent in western Canada.”

So, if the lowerand middle classes aren’t benefitingfrom the expansion of the Canadian economy, then who is?

Step right up, Hugh Mackenzie of the CCPA. Mackenzie’s report says the poorest of Canada’s top 100 chief executive officers had an annual pay of $1.85 million in 2007.

The average full-time annual wage for a Canadian in the same period? Mackenzie reports it was $44,366.

The CEOs’ wages also went up during the 2008-09 recession — butthe average Canadian wage didn’t, “resulting in a dangerous mix: Canadians are feeling the squeeze of shrinking disposable incomes, a rising cost of living, and record high household debt,” Mackenzie’s report says.

The report, published on the CCPA’s website policyalternatives.ca, is accompanied by a graphic counter comparing CEO salaries to average Canadian wages. When we checked on Tuesday afternoon, top CEOs had collected over $207,786 in 2012 while regular Canadians had earned $1,003.55.

Hey, what happened to “the rising tide lifts all boats”? Weren’t round after round of tax cuts, business deregulations and free-trade agreements supposed to unleash the power of capitalism, giving everybody jobs and a new enlightened age?

“Put it this way,” says the executive director of the CCPA’s Saskatchewan office, Simon Enoch, “the last time the Canadian economy saw income disparity to the extent that we’re seeing today was in 1929. And we all know what happened in 1929.”

Enoch says it’s no coincidence that Canadians, and people in most western economies in general, have felt their earning power slip away.

“It pretty much started in the 1970s, when wage increases were decoupled from productivity,” he says. “With that, the productivity of workers increased, but they didn’t share in the benefits — workers didn’t get paid more for their productivity, but their employers got more money from the workers’ productivity.”

Secondly, Enoch says, the attacks on the trade union movement and the social safety net have eroded the confidence people had in the economy a generation ago.

Much of what’s passed as economic growth in the past couple of decades is the result of an expansion of consumer credit and a housing “bubble,” Enoch says. (In Saskatchewan and Alberta’s case, things may be a bit different — our economies depend on the exploitation of non-renewable resources. It’s not particularly more egalitarian though, since our governments collect royalties far below market value to boost resource-sector profits.)

Meanwhile, governmental fiscal and tax policies are designed to shift taxation away from big business and onto consumers.

“If people have a strong social safety net, people are less apt to be intimidated by employers when it comes to issues such as pay disputes,” says Enoch.

That’s why, he says, the attack on trade unions to organize workers is just as important to the entrenchment of a neo-liberal economic agenda — the one we have now — as the dismantling of social programs.

Ironically, the outcome is a stressed-out workforce whose members are less productive than they were before these cuts, says Enoch.

“First of all, you have more stressed people: worrying about their finances, worrying about their futures, retirements, what they’re leaving to their children, that sort of thing. The end result is that you have a lot more mental health issues, manifesting in, for example, depression, anxiety disorders and the like. People feel powerless, especially when it comes to their financial state.”

Income disparity’s effects, says Enoch, blow a big hole in the boat of democracy.

“First of all, politics becomes a rich person’s game: the middle class and poor can’t participate in it because they have to work for a living,” he says. “The rich are the only ones who can take part in the political process apart from voting in elections — [that’s why] the rules get drawn in ways that benefit the rich.”

Such as? “Well, you have, increasingly, a larger attitude being expressed by those in the one per cent category that the universality of health care and education isn’t necessary,” says Enoch. “They can afford their own, and they think what they can access will be better than they could get under the public system, and they don’t care about what will happen to anybody who can’t afford what they’re willing to pay.”

And what’s the end result? People who have already maxed out their credit, have no hope that their McJob will lead to anything better and who worry they’re one illness or missed paycheque away from financial catastrophe.

They don’t sound like the kind of people who are willing to spend money to kick-start an economic recovery.

Especially when the one per cent regard themselves as beyond the reach of governments (and the people they’re supposed to serve).

Ironically, without a reorientation in political and economic thinking, that same one per cent may well be brought as low as any tragedy’s protagonist — or those who lost everything in the 1929 stock market crash.

“One good thing about the Occupy movement is that the issue of income disparity has returned to public discussion,” concludes Enoch. “Governments might not want to talk about it, but that movement is an expression of disenfranchisement with what’s passing for public discourse on economic and social policy today.

“Once the issue of income disparity is mentioned in public, political parties have to talk about that issue. They haven’t had to before,” he says.

“At least, that’s progress.”