Economic Woes In Canada: Wealth Divide Growing Wider?

Yet another interesting article on the impacts of our current economic woes, especially on the middle class:

Will Crash Pry Canada's Wealth Divide Even Wider?
As rich got richer here, middle class bet big on their houses.
By Crawford Kilian

Are you better off now than you were in 1988? Chances are you're not, according to a new report from the Organization for Economic Cooperation and Development.

The report, titled "Growing Unequal?," says that the income gap has widened in most OECD countries, despite two decades of apparent prosperity.

Canada is one of the most affected countries, along with Germany, Norway and the United States. Related data suggest that B.C. has become one of the most unequal regions in the country.

"The income of the richest 10 per cent of people is, on the average across OECD countries, nearly nine times that of the poorest," the report asserts. The richest Mexicans, however, earn 25 times the income of the poorest Mexicans.

Turkey's top 10 per cent make 17 times the income of the bottom 10 per cent, and the U.S. is close behind with about a 16:1 ratio between the incomes of richest and poorest.

Canada comes in at the OECD average, 8.9:1, between Spain and the UK. Most equal are Sweden and Denmark, with an income ratio of less than 5:1.

You're poor if...

The OECD says you're living in poverty if your income is 50 per cent or less of your country's median income. For Mexico, that means a fifth of all Mexicans -- 22 million -- are poor. Only one Dane in 20 is poor. The U.S. has a poverty rate of 17 per cent, or 51 million. Canada's 11 per cent poverty rate means over 3 million of us are poor.

The report's "Country Note" for Canada is illuminating. Evidently we were becoming richer and more equal from the mid-1970s until the mid-1990s. Then, just about the time that Paul Martin started the age of tight budgets, we started to get poorer and less equal.

"The rich in Canada are particularly rich compared to their counterparts in other countries," the OECD says. "The average income of the richest 10 per cent is US$71,000... which is one third above the OECD average of US$54,000."

Meanwhile poverty has increased for all Canadian age groups for an overall rate of 12 per cent. But only 6 per cent of our seniors are poor, while 15 per cent of our children are.

Don't be a single mother

Inequality of household earnings has risen fast in the last decade, and our increase in single-parent households seems to have been a major factor.

According to York University's Dennis Raphael, B.C. is especially unequal. He cites a 2006 StatsCan survey that showed a fifth of all British Columbians were living in poverty in 2004. Over 23 per cent of our children were poor, and 62 per cent of persons living in female lone-parent families were poor. That makes us Canada's poverty leader.

We may be proud of Canadian social programs, but they're actually below average: "Canada spends less on cash benefits such as unemployment benefits and family benefits than most OECD countries. Partly as a result, taxes and transfers do not reduce inequality by as much as in many other countries. Furthermore," the report adds, "their effect on inequality has been declining over time."

(Keep reading ...)