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Friday, September 12, 2014
New Reports Shows Poor Get Poorer and Rich Holding It in Canada
Those rosy reports about Canadians’ net worth growing and the country's middle class being among the richest in the worldare masking growing inequality in the country, according to a new report.
The left-leaning Broadbent Institute says Canada’s poorest 10 per cent of the population saw their net worth drop some 150 per cent since 2005, while the top 10 per cent saw their net worth jump nearly 42 per cent in that time.
"This unequal distribution [of wealth] challenges the narrative that suggests Canadians are getting wealthier across the board," the report concludes.
The bottom 10 per cent have an average net worth of minus-$5,100, meaning on average the lowest earners have $5,100 more debt than assets, down from minus-$2,000 in 2005. The top 10 per cent’s net worth worked out to $620,600, on average.
StatsCan typically breaks out wealth numbers into “quintiles,” population groups of 20 per cent each. But the Broadbent Institute report’s broke those numbers down into “deciles,” or groups of 10 per cent, and that revealed greater extremes at the top and bottom ends of the income ladder.
The report found Canada’s top 10 per cent hold 47.9 per cent of the country’s wealth, but that’s actually down slightly from 2005, when they held 50.9 per cent. The share of wealth for the bottom four deciles shrank slightly, while the share of middle-income deciles grew slightly.
British Columbia had the greatest concentration of wealth in the top 10 per cent, with the top 10 per cent holding 56.2 per cent of all wealth in the province, while Atlantic Canada had the lowest concentration. Its top 10 per cent held 31.7 per cent of all wealth.
Still, Canada’s wealth and income inequality problems pale in comparison to some other developed countries, where the gap has been growing at a faster pace.
A recent report from the Federal Reserve found that all of the income growth in the U.S. since 2010 has gone to top earners, with inflation-adjusted incomes dropping for everyone else. The share of wealth held by the richest continues to grow in the U.S., with some 54.4 per cent of all U.S. wealth is in the hands of the top three per cent.
All the same, the report concludes that “deep wealth inequality remains a marked feature of Canadian society.”
"There are so many people being left behind, and there's simply no excuse for this kind of deep and persistent wealth inequality in Canada," Broadbent Institute executive director Rick Smith said in a statement.
"On inequality, politics and the political choices we make matter. It's time the federal government tackles Canada's inequality problem."