inconvenient facts

In light of Occupy Wall Street and the spin­offs that are grow­ing in many other cities, there have been a large num­ber of excel­lent arti­cles and stud­ies going around look­ing at the top 1% of income earn­ers in the United States.  I have included links to some of them below.

This U.S. focused read­ing got me think­ing about Canada’s place in this all this, and the con­ven­tional wis­dom about how much more of an equal soci­ety Canada is.

An arti­cle in the Guardian back in May enti­tled Top income earn­ers: are they get­ting richer? See the data exam­ined the World Top Incomes Data­base pub­lished by the Paris School of Eco­nom­ics. From this data, I cre­ated this chart to com­pare the incomes of the super-rich in select coun­tries over the past 25 years.

While it is true that Canada’s top income earn­ers do not earn as much as their rich Amer­i­can coun­ter­parts, the dif­fer­ences are not quite as stark as one may have thought. Fur­ther, when com­pared to many other coun­tries, Canada, the U.S. and a select few other coun­tries are nes­tled in a league of their own when it comes to com­pen­sa­tion for the rich.

A fur­ther inter­pre­ta­tion of the data shows which country’s rich peo­ple have received the great­est increases in the share of the income pie as the years pass by:

Canada is once again in the top 3.  The rich are get­ting richer every­where, but if you are hop­ing to be a mul­ti­ple yacht owner, some places are more wel­com­ing than oth­ers, and Canada seems to be one of them.

Ok, the rich are get­ting much, much richer, but isn’t it because they are build­ing the econ­omy and bring­ing every­one riches too? A ris­ing tide raises all boats and all?

Nope.

A quick look at one (of many) telling graphs from an excel­lent 2008 Sta­tis­tics Canada study shows how stag­nant incomes have become for all but the top 5% (though, to a lesser extent, the next 15% has also made some gains). This stag­na­tion has occured despite sig­nif­i­cant growth in pro­duc­tiv­ity and the over­all economy.

Fig­ure 3: Median Total Income for each income group in 5% incre­ments (Vingtile).

Source: Sta­tis­tics Canada, Spe­cial Tab­u­la­tions from the Lon­gi­tu­di­nal Admin­is­tra­tive Data­bank (LAD) in (Brian Mur­phy, Sylvie Michaud and Michael Wolf­son Sta­tis­tics Canada, 2008) “Income Tra­jec­to­ries of High Income Cana­di­ans 1982–2005” Fig­ures in con­stant 2007 dollars.

With­out even look­ing at what this growth in richer coun­tries has meant for envi­ron­men­tal degra­da­tion or for other parts of the world which have, in large part, acted as low value added labour pools for the richer world’s pro­duc­tiv­ity, it is clear to see that the immense riches of the top earn­ers have not trans­lated into big pay­days for Cana­di­ans. This is espe­cially true when you con­sider the rapidly ris­ing costs of edu­ca­tion, health, elder­care, den­tistry, and other essen­tial, big-ticket items that have eroded Cana­di­ans over­all pur­chas­ing power.

And this was dur­ing the ‘good times’.  Imag­ine where the mid­dle and poor­est classes might be headed if we con­tinue on this same course as we dive head first into uncer­tain, reces­sion­ary times.

Stay strong Occupy Toronto, Van­cou­ver, etc… we sorely need you.

— Dar­ren Pus­cas, Toronto

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Sources and fur­ther read­ing on the 1%:

1. The Cana­dian Cen­tre for Pol­icy Alter­na­tives recently put out a fan­tas­tic report on Canada’s top 1% which dis­pels many, many other myths – check it out:  The Rise of Canada’s Rich­est 1%
2. For a short sum­mary, also see: Rich­est one per cent’s share of wealth at his­toric high What Wall Street Pro­test­ers are so Angry About from Busi­ness Insider — more great graphs!
3. World Top Incomes Database 
4. Top 1 Per­cent of Amer­i­cans Reaped Two-Thirds of Income Gains in Last Eco­nomic Expan­sion, Report of Cen­ter for Bud­get and Pol­icy Priorities
5.  Top income earn­ers: are they get­ting richer? See the data, Guardian UK, May 16th.
6. Income Tra­jec­to­ries of High Income Cana­di­ans 1982–2005, Sta­tis­tics Canada

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NOTES: In Fig­ure 1 and Fig­ure 2, the lat­est year avail­able varies because of lim­i­ta­tions in the data set.  Those years are as fol­lows: U.S. (2002); Canada (2006); S. Africa (2007); Sin­ga­pore (2005); Japan (2005); Italy (2004); France (2006); Spain (2005); Aus­trailia (2002).  Despite these small vari­a­tions, the num­bers are indica­tive of over­all trends.

Also, 1985 is a some­what arbi­trary choice of begin­ning year, but, again, over­all trends were sim­i­lar even if you began with other years.

by Darren Puscas October 14, 2011