Canada’s economic growth is the best in the G7. The job market is improving with the unemployment rate dipping to below 6 per cent, the lowest since 1976.
From all accounts, Canadians should be feeling pretty good about things.
And yet, there is considerable economic angst.
That’s because beneath the macro-economic numbers, incomes for far too many Canadians are simply standing still or falling behind and job quality is declining. And while the nation’s wealth or GDP looks good, less of it is getting shared around and more and more of it is hoarded at the top end.
Governments are collecting less from the rich and corporations, limiting their ability to share wealth and invest and build things that benefit everyone.
At the same time, household debt levels are at their highest, sitting at 168% last year.
Many Canadians are feeling less secure in their employment, experiencing deteriorating job quality, with almost two-thirds earning less than the average wage. Indeed the share of Canadians earning less than the average wage has continued to climb over the past two decades.
This is directly linked to a rising share of low-wage jobs, according to the CIBC Capital Markets’ job quality report issued in late 2016. So while the job market on the surface looks good, wages are lagging.
Late last fall, Ekos pollster Frank Graves did a deep dive on this widespread feeling of economic insecurity.
Fewer Canadians, he found, identify with being in the “middle class” and more and more Canadians are feeling pessimistic about their futures.
A multitude of tax cuts has not helped assuage the economic angst.
This should give the current federal government pause for concern given their “commitment” to growing the middle class.
This undercurrent of economic stagnation and insecurity can have serious political consequences as governments around the world are learning, causing instability and a rise in right-wing populism. Case in point: Donald Trump. Need I say more?
Nearly three decades of government policies have created the conditions for inequality to soar, including stagnating wages and incomes.
New policies that tackle the rise of inequality can make a difference. They include but are not limited to investing in a multitude of social programs from childcare and post-secondary education to creating good jobs through the building of public infrastructure. They include serious and progressive tax reform, rather than the bungled efforts of the federal government. They include changes to labour laws across the country to improve collective bargaining coverage for workers, turning the minimum wage into a living wage and pay equity laws with teeth.
In recent weeks there have been a number of reports that highlight this growing gap between the rich and everyone else, including last week’s CEO pay report by the Canadian Centre for Policy Alternatives.
It found that pay for Canada’s top 100 CEOs continues to soar, growing a whopping 8 per cent on average in 2016.
Indeed, CEOs earned an average of $10.4 million while average incomes for the rest of Canadians fell behind in real terms, failing to grow at even the rate of inflation, barely budging up by a miniscule 0.5 per cent. The average CEO makes an astonishing 209 times more in a year than the average worker.
In addition, corporations are paying less and less as a share in taxes, and some avoid paying even that by socking it away in tax havens, including Canada’s top five banks who raked in over $44 billion in pre-tax profits last year.
According to an investigative analysis by The Toronto Star and Corporate Knights magazine, the last time corporations paid the same in taxes as people was 1952. By comparison in 2015/16 Canadians paid $145 billion in taxes compared to $41 billion by corporations. In addition, 102 of the country’s biggest corporations avoided paying $63 billion in taxes over the last six years, or over $10 billion a year.
A lot could be done with $10 billion a year to change the economic circumstances for millions of Canadian families.
The 2018 World Inequality Report says progressive taxation is crucial to stop rising inequality.
The fact is there is plenty of money in the economy. It’s how that money is not getting shared.
Global inequality has steadily gotten worse over the past 40 years, with the top 1 per cent capturing twice as much wealth as the bottom 50 per cent of the population.
The richest 500 people on the planet saw their wealth grow by an astounding $1 trillion in 2017.
It is obscene.
The inequality report, compiled by a number of economists, notes that the very poorest in the world have seen some small improvement in their lot in life, but the middle class in North America and Europe are worse off.
The report’s authors say that “if rising inequality is not properly monitored and addressed it can lead to various sorts of political, economic and social catastrophes."
Proactive steps to deal with inequality and growing economic angst sound like good political advice. Any takers?
Lana Payne is the Atlantic director for Unifor. She can be reached by email at email@example.com. Twitter: @lanampayne Her column returns in two weeks.