Toward a Shared Prosperity

1. Toward a Shared Prosperity Rising Income Inequality in Canada Senator Art Eggleton

2. Income Inequity in Canada “This generation of rich Canadians is staking claim to a larger share of economic growth than any generation that has preceded it in recorded history” Economist ArmineYalnizyan Canadian Centre for Policy Alternatives

3. Income Inequality in Canada • Statistics Canada reports that from 1980 to 2005 the income of the richest 20% of Canadians grew by over 16% while the poorest 20% declined by 21%. And for those in the middle, earnings were essentially stagnant • The top-earning 1 per cent of Canadians share of national income went from about 8 per cent to close to 14 per cent over the past three decades

4. Income Inequality in Canada • In 2012, the top 100 CEOs made 189 times the average Canadians salary • Last year, while many Canadians were still feeling the effects of the recession, the executive pay for the CEOs of Canada’s largest companies was going up 13% • This has led to about 4% of Canadian households controlling 67% of the total wealth

5. Income Inequality in Canada • In this land of plenty, 10% of our fellow citizens live in poverty - that’s equivalent to every man, woman and child in Nova Scotia, Newfoundland and Labrador, New Brunswick and Prince Edward island – combined • One in four of them are children

6. Income Inequity in Canada • Inequality playing itself out in Canadian cities • A report by U of T professor David Hulchanski found that Toronto is now made up of 3 cities • One zone of the city is of tremendous wealth and prosperity • On the other hand, there is a huge zone of concentrated disadvantage and poverty with low income neighbourhoods growing from 19% to 53% • The middle class making up a smaller share of the city decreasing from 66 per cent in 1970 to 29 per cent in 2005

7. How does Canada compare? • Income inequality in Canada is well above the average of the 34 countries of the OECD • According to the OECD, the average income for the top 10 per cent of Canadians is ten times that of the bottom 10 per cent

8. Why is income inequality increasing? • There is a widening disparity in labour earnings between high- and low-paid workers • The prevalence of part-time and temporary contract work is eroding wages and benefits • Technological progress has been more beneficial to high-skilled workers • Rising self-employment also plays a role, as the self-employed typically earn less than other full-time workers and have more precarious employment

9. Why is income inequality increasing? • Less redistribution • Canada’s tax-benefit system, which was effective in stabilizing equality, has declined in the last number of years • Corporate boards pushing up executive compensation

10. Consequences • British epidemiologists Richard Wilkinson and Kate Pickett, in the Spirit Level, show that less equal societies almost always have more violence, more disease, more mental health problems, higher infant mortality rates, reduced life expectancies, as well as less social cohesion • There's also evidence that shows that a poor distribution of income negatively affect economic growth and reduces social mobility

11. Solutions? • Tax reform • Better investments in post-secondary education for under-represented groups • Social assistance reform for those in poverty