Canada's Income Gap Widens, Report Says

First Posted: 07/13/11 05:06 PM ET Updated: 09/12/11 06:12 AM ET

Original


CBC -- The income gap between rich and poor in Canada widened in the period from 1993 to 2009, the Conference Board of Canada reported Wednesday.


The richest Canadians increased their share of total national income while the poor and those with middle incomes saw their portions shrink, according to the board's analysis, entitled "How Canada Performs."


Incomes of the poor increased marginally in the period, it said, but the gap between rich and poor widened.


The average income of the poorest Canadians rose from $12,400 in 1976 to $14,500 in 2009.


However, the gap between the real average income of the richest 20 per cent of Canadians and the poorest 20 per cent widened from $92,300 in 1976 to $117,500 in 2009.


"While the poor are minimally better off in an absolute sense, they are significantly worse off in a relative sense," said board CEO Anne Golden in a release.


"High inequality raises two questions. First, what is the impact on the economic well-being of a country? The answer is that high inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions."


"Second, high inequality raises a moral question about fairness and social justice."


The analysis found that Canadians in general are better off than they were a generation ago.


The average income in 1976 was $51,100. By 2009, it had increased by 17 per cent to $59,700, even after adjusting for inflation.


But using the measure of median income, which divides the sample into two equal parts and better reflects how the majority of people are doing, the growth was only 5.5 per cent.


Another measure, the Gini index, suggests how the income gap has grown from 1993 to 2008.


The index number corresponds to the percentage share of total income that would need to be redistributed to achieve exact income equality, from 0 to one. (Zero means everyone has the same income and one means one person has all the earnings.)


Canada's 2009 Gini index of 0.32 meant that 32 per cent of the country's national income would need to be redistributed in order to have complete equality of income.


The pattern of inequality growth throughout the past three decades has been uneven, the board said.


Poverty among elderly rises


The income gap narrowed in the 1980s, with the Gini index reaching a low of 0.28 in 1989, but remained around 0.32 in the 2000s.


The study found inequality is rising worldwide, but that two countries most similar with Canada in terms of per capita income had narrower gaps. Austria's was 0.265 and Denmark's was 0.232.


The board found that every province except Ontario reduced its share of the population living in low income in the period.


"Recent data, however, indicates that income inequality rose during and after the recession," it said.


"Between 2007 and 2009, seven out of ten provinces experienced a rise in their low-income rates -- Prince Edward Island, Saskatchewan, and New Brunswick were the exceptions. The largest jump occurred in Alberta, where the low-income rate rose from 6.6 per cent to 9.9 per cent."


The study concluded poverty among the elderly, especially women, has risen since the mid-1990s, following a dramatic drop over 20 years.


Between 2006 and 2009, the number of low-income seniors rose by almost nearly 128,000, with 70 per cent of those being women.


Read the whole story: CBC

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