Inequality not growing, median incomes up

[Argus]

Andrew Coyne makes the case that much of the disparity and economic difficulty we see ourselves as experiencing is a fallacy born out of our close contact with American media. We imagine ourselves to be suffering the same economic ailments as they are, even though we don't. I don't expect this data to influence those who see the solution to our at least partly imaginary problem as simply raising taxes on upper income people. And it's unlikely to influence politicians who cater to the baying hounds, as in the PQ in Quebec, or the NDP, but it's certainly food for thought.

It should also be noted that the Conservatives are going into their seventh year of power...

It was perhaps the most shocking headline ever to appear in the Toronto Star. “Income gap isn’t growing,” it ran, citing a “TD bank report.” Sure enough, the report found that income inequality in Canada has remained more or less flat since the mid 1990s. As if that were not alarming enough, it found median household incomes in this country grew steadily over the same period, to the point where they now exceed those of the United States for the first time in nearly 30 years.

http://fullcomment.nationalpost.com/2012/12/14/andrew-coyne-canadian-income-inequality/

[Guest Manny]

Have you seen the price of whole wheat noodles lately?

[Michael Hardner]

Thanks for posting that Argus.

[TimG]

the report found that income inequality in Canada has remained more or less flat since the mid 1990s..

It is worth noting. These stats are true despite the fact that Canada has no inheritance tax and the top marginal income tax rate is 50%. In fact, given the timing of the period you could argue that a national VAT contributes to reducing the income gap between the rich and poor.. Edited December 15, 2012 by TimG

[Canuckistani]

Set that off against this:

The gap between the rich and the rest is growing ever wider -- with the chasm increasing at a faster pace in Canada than in the United States.

That’s the conclusion of a Conference Board of Canada study Tuesday, which says income inequality has been rising more rapidly in Canada than in the U.S. since the mid-1990s.

Its global analysis found that Canada has had the fourth-largest increase in income inequality among its peers. Between the mid-nineties and late 2000s, income inequality rose in 10 of 17 peer countries -- including Canada. It remained unchanged in Japan and Norway, and declined in five countries.

“Even though the U.S. currently has the largest rich-poor income gap among these countries, the gap in Canada has been rising at a faster rate,” noted Anne Golden, president and chief executive, adding that high inequality raises both “a moral question about fairness and can contribute to social tensions.”

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/income-inequality-rising-quickly-in-canada/article618311/

So, who to believe?

[Michael Hardner]

Both articles link to their sources ?

Seems like a mystery !

[TimG]

So, who to believe?

The G&M article you quote does not use data that includes the last recession. The TD report does. It appears that the change in Gini index is very sensitive to endpoint selection. i.e. choose a start in a recession and an end in a boom and it looks bad. choose a start and an end in a recession and it is not so bad. Edited December 15, 2012 by TimG

[WIP]

Andrew Coyne makes the case that much of the disparity and economic difficulty we see ourselves as experiencing is a fallacy born out of our close contact with American media. We imagine ourselves to be suffering the same economic ailments as they are, even though we don't. I don't expect this data to influence those who see the solution to our at least partly imaginary problem as simply raising taxes on upper income people. And it's unlikely to influence politicians who cater to the baying hounds, as in the PQ in Quebec, or the NDP, but it's certainly food for thought.

It should also be noted that the Conservatives are going into their seventh year of power...

It was perhaps the most shocking headline ever to appear in the Toronto Star. “Income gap isn’t growing,” it ran, citing a “TD bank report.” Sure enough, the report found that income inequality in Canada has remained more or less flat since the mid 1990s. As if that were not alarming enough, it found median household incomes in this country grew steadily over the same period, to the point where they now exceed those of the United States for the first time in nearly 30 years.

http://fullcomment.n...ome-inequality/

Here's a tip to anyone reading propaganda from slavish devotees of corporate power like Andrew Coyne and the whole operation at National Post, which has been nothing more than a corporate-funded charity used for propaganda purposes ever since Black got the whole thing started........read the comments after the article! Because among the first five or ten comments, there will be at least one slip through that has taken a hard look at the story and the evidence presented. This one was four comments down when I checked:

Andrew's headline and content misrepresents the report, but perhaps he doesn't write the headlines for his opeds. Here is what TD said.

Income inequality in Canada has remained steady since 1998 according to the traditional benchmark, but absolute dollar gains by the country's

highest earners have far outstripped the gains by those at the bottom.

Even though the poorest saw a slightly larger percentage gain in income, absolute gains — the amount of dollars in a person's pocket — tell a different story, said TD Bank chief economist Craig Alexander.

"Although the traditional benchmark of income inequality isn't showing an increase, the absolute levels of income matter enormously," he said.

After a 20 per cent increase, the after-inflation level of income of those in the bottom 20 per cent increased to only $15,200 in 2010 from $12,700 in 1998.

Meanwhile, at the high end of the income scale, the top 20 per cent have seen an 18 per cent increase in income since 1998, but that translates into $26,700 to bring their income to $171,900.

"So part of the issue around income inequality is the fact that households at the low end of the income scale have extremely absolute low levels of income and that's a major challenge," Alexander said.

And he points out, those in the middle of the range have seen the slowest pace of increases as the downward pressure on jobs and wages in the manufacturing sector has weighed on growth.

In other words, we are just slightly behind the curve that the Americans are trapped in right now. I can attest to that last point about middle incomes being stagnant, because with working a significant amount of overtime each year, my gross income has been a little over $70,000 per year for the last five years. And most prices are rising, some like food and gasoline are never included in those inflation statistics that are put out....likely for the obvious reason that there still are a few people with benefits and pensions that incorporate a COLA, and phony inflation numbers help prevent increases from adjusting with real inflation. As soon as it starts sinking in a little more widely that the shift from conventional oil to tar sands oil is going to choke off the expected 3% annual growth rates, then we will inevitably end up with a fight for the pieces of real value in the economy....that the super-rich are the only ones winning in the U.S.. The only way to prevent the U.S. and European collapses in income of middle and lower income groups is to have an educated population, that cannot be fooled by BS about the billionaires being the JOB CREATORS, and prevents them from enriching themselves at everyone else's expense.

And, needless to say, that the poor have the least amount of influence on economic policymaking of any group in society, and are not going to be able to keep up if cities.... especially here in Ontario, keep cutting back on benefits and supports for those on welfare and disability pensions, but the billionaires.....they seem to be doing just fine.....just like across the border --

Canada’s super-rich getting richer: magazine ranking

CTV

[Canuckistani]

I'm big on worrying about income inequality. But if the percentage gains of the poorest really are higher than those of the richest, that would show that we're heading in the right direction or at least not the wrong one. Of course absolute dollar gains will be bigger at the top - they have the most dollars. Even if the poorest made a huge percentage jump in income, while the top increased only slightly, absolute gains would still likely be higher at the top. Percentages is what counts, not absolute. But I sure would like to look at TD data, because I just can't believe that the middle and bottom income earners have done nothing but stagnate at best, lose at worst. We just see it in the hollowing out of good, middle class jobs. A few move up the ladder, many are dropping down to McJobs, and we're importing people to take the few good jobs still going. (As well as the McJobs).

[bush_cheney2004]

...And, needless to say, that the poor have the least amount of influence on economic policymaking of any group in society, and are not going to be able to keep up if cities.... especially here in Ontario, keep cutting back on benefits and supports for those on welfare and disability pensions, but the billionaires.....they seem to be doing just fine.....just like across the border --

Of course, because what happens "across the border" is the framework that defines your world. A pity.....

[WIP]

We shouldn't be fooled by any snapshots of the economy that select specific start and finishing points to get the results more to their liking. The conclusions can be skewed as noted in the Canadian Press article:

Income inequality steady by one measure, but absolute gains tell another story

Read it on Global News: Global News | Income inequality steady by one measure, but absolute gains tell another story

Income growth in Canada is not going to continue in a high oil cost environment after the money being dumped in right now in venture capital starts drying up. And even without TPP, the present free trade rules have hollowed out manufacturing in Ontario, and we are getting a replay of the same right wing, supply side bullshit that Americans first heard 30 years ago. I hope Ontarians are able to look at the disaster south of the border that resulted from stripping unions of collective bargaining power and giving more power to the corporate elite. Because the Americans in the rust belt states and the Northeast especially can be excused for falling for a novel idea, but if Canadians fall for the same warmed over right wing BS from Harper or a Hudak...if he ever becomes Premier of Ontario...we will be guilty of more than getting duped, like the American Reagan Democrats; we will have allowed the same fate to happen to us in spite of what we could learn from the U.S. example.

[bush_cheney2004]

Income growth in Canada is not going to continue in a high oil cost environment after the money being dumped in right now in venture capital starts drying up. And even without TPP, the present free trade rules have hollowed out manufacturing in Ontario, and we are getting a replay of the same right wing, supply side bullshit that Americans first heard 30 years ago. I hope Ontarians are able to look at the disaster south of the border that resulted from stripping unions of collective bargaining power and giving more power to the corporate elite. Because the Americans in the rust belt states and the Northeast especially can be excused for falling for a novel idea, but if Canadians fall for the same warmed over right wing BS from Harper or a Hudak...if he ever becomes Premier of Ontario...we will be guilty of more than getting duped, like the American Reagan Democrats; we will have allowed the same fate to happen to us in spite of what we could learn from the U.S. example.

Can a brutha get some Canadian content?

Edited December 15, 2012 by bush_cheney2004

[TimG]

Can a brutha get some Canadian content?

It is getting kinda ridiculous considering one of the points of the op was that Canadians do not have the same issues as Americans when it comes to these issues.

[bush_cheney2004]

It is getting kinda ridiculous considering one of the points of the op was that Canadians do not have the same issues as Americans when it comes to these issues.

Agreed.....it is like getting a circular reference error using Microsoft Excel.

I am sure that there are unique and specific issues in Canada unrelated to whatever the hell Americans are doing, but damned if I can find them here.

Edited December 15, 2012 by bush_cheney2004

[Shady]

There's no such thing as income inequality, because there's no such thing as income equality. People earn different incomes based on many things, such as type of job, type of industry a job is in, where they live, how many hours they work, etc.

[bush_cheney2004]

There's no such thing as income inequality, because there's no such thing as income equality.

Spot on...it's just another one of those terms invented for the propaganda war. There is even height inequality in the NBA....for shame !

[cybercoma]

There's no such thing as income inequality, because there's no such thing as income equality. People earn different incomes based on many things, such as type of job, type of industry a job is in, where they live, how many hours they work, etc.

Yet, despite all that the Top 20% consistent outpace the Bottom 20% in the amount their median income increases over time, which means the gap is spreading. Even though it's all just a bunch of people making a bunch of different incomes.

[Argus]

It is worth noting. These stats are true despite the fact that Canada has no inheritance tax and the top marginal income tax rate is 50%. In fact, given the timing of the period you could argue that a national VAT contributes to reducing the income gap between the rich and poor..

The top marginal income tax rate is 28% actually. Though when you add provincial taxes to that it's more like 40%.

[WWWTT]

There's no such thing as income inequality, because there's no such thing as income equality. People earn different incomes based on many things, such as type of job, type of industry a job is in, where they live, how many hours they work, etc.

I think what you mean to say is "There is no such thing as income inequality".We get it Shady.

WWWTT

[Argus]

Set that off against this:

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http://www.theglobea.../article618311/

So, who to believe?

The only thing which strikes me off the top is that the conference board study seems to use 1993 as a starting point, while the TD study uses 'the mid 1990s". That would be important in that there was a bad recession which began in 1989 and ended in 1994/95.

From Coyne's opinion piece:

Why was income inequality growing before, and is not now? The explanation is very simple. In the early 1980s and early 1990s, Canada went through two nasty recessions — the first deeper, the second longer. Whenever there is a recession, and for some time after, more people are out of work for at least part of the year, and as such earning very little income. That drags down incomes for those at the bottom — hence increasing both poverty and inequality — but also for the median.

Edited December 16, 2012 by Argus

[TimG]

The top marginal income tax rate is 28% actually. Though when you add provincial taxes to that it's more like 40%.

I was quoting combined rates - and Nova Scotia has a 50% marginal rate on high incomes.

[Canuckistani]

So since we've just had the mother of all recessions, income inequality should have really shot up the last few years.

[Argus]

So since we've just had the mother of all recessions, income inequality should have really shot up the last few years.

The Americans had such a recession. Canada has a fairly mild, short-lived one.

[Canuckistani]

Seems to me that income inequality is something that you measure year to year. Then you post a graph showing the trendline. There shouldn't really be so much argument about this measure.

[TimG]

Seems to me that income inequality is something that you measure year to year. Then you post a graph showing the trendline. There shouldn't really be so much argument about this measure.

It appears that Conference Board is using the same data as the national post - they are just spinning it differently.

Canada reduced inequality in the 1980s, with the Gini index reaching a low of 0.281 in 1989.1 Income inequality rose in the 1990s, but has remained around 0.32 in the 2000s.

http://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx