Inequality in Canada is rising, an unfortunate trend, creating a gap that is very harmful to the economy and social order in the long run.
A recent study revealed that the top one per cent of income earners received an average of $5,000,000 annually, nearly 40 per cent more than originally estimated. This number is an increase of 13.3% from the previous year while median income according to anecdotal evidence is stagnating.
Why have these patterns emerged that are so detrimental for economic progress?
There are many explanations for this growing disparity. First of all, most Canadians do not participate in the stock market where share prices have increased dramatically, doubling in the past six years, reflecting not so much gains in earnings but a change in valuations.
The volatile stock market kindles fears, particularly after the history of the previous decade when the averages dropped by almost 50%. Too, most of us are all too aware of previous market debacles, and Canadians, more wary than their U.S. counterparts, choose a more conservative money management course.
Then house prices, particularly in our large metropolitan centres, have escalated, reaching astronomic levels in many instances. In downtown Toronto, prices have doubled in just three years. Yet the average Canadian household has not participated fully.
In rural areas, even in exurbs, prices have not risen nearly that dramatically. Hence, the coming younger generation has not been helped, but on the contrary, has been hurt because the entry point to housing has become almost prohibitively expensive.
In rural Canada, farmland prices have soared, but for small holdings in smaller towns in Ontario, Quebec, British Columbia and the Prairies, that increase has been more moderate. The average Canadian has not been able to share in that trend.
Wages of our top chief executives have surged so that median pay for them was $5.6 million last year, up 3.9% recently. Their total income was furthered by stock options.
On the other hand, with the decline of manufacturing and a weaker union presence, many workers have experienced a sharp decline in annual pay. Assembly-line workers were starting to enter the middle class, but that no longer is the case.
These changes justifiably have provoked widespread resentment. With younger people feeling shut out to the economic progress, social stability has weakened. Witness the rise in the average age of people getting married. In the last ten years for males it has climbed from 28.9 to 31.1 years, for females from 27.0 to 29.10 years.
Historically, in many parts of the globe, notably in Europe, this pattern of events has entailed violent social upheaval. Canada, with it more conservative traditions, should adjust more easily.
However, to facilitate that our tax code must become more equitable, unions should be strengthened and our corporations must experience a St. Paul-like revelation to alter their conduct.