The Inequality Debate: Canada’s middle class is losing ground
TheStar.com – Opinion/Commentary – The claim that the Canadian middle class is doing better than the American loses sight of deeper trends — trends that have continued during the past decade of Conservative government.
Sep 29 2015. By: Miles Corak
You could almost hear the air rushing out of a political agenda tailored around middle-class malaise after the New York Times published a story last year called “The American Middle Class Is No Longer the World’s Richest.” Here was that bastion of liberal thinking showing with hard data that the Canadian middle class was about to overtake the American on its way to becoming the richest in the world.
How long have the federal opposition parties been telling us that the Canadian middle class is under threat, not well served by current government policy, in need of something better?
Conservative pundits seized on the story to make these talking points look like limp balloons on the floor of a party that’s gone on too long. Even the Prime Minister got in on the game, telling his opponents in the debate on economic policy to pick up a copy of the Times.
Trouble is, the claim that the Canadian middle class is doing better than the American loses sight of deeper trends — trends that have continued during the past decade of Conservative government.
The ups and downs of oil and commodity prices have masked more important forces. Global markets and a revolution in technology hold the promise of prosperity, a promise that needs sustained policy attention because it is fickle, uncertain, and generates higher inequality, both in the United States and in Canada.
Never mind that the information in the Times story dates back to 2010. It also fell short of a complete explanation of middle-income trends because it wasn’t detailed enough to highlight the huge variation among provinces.
Statistics Canada data show that the past 10 years has been a decade of lost prosperity in Canada’s most populous provinces. In Ontario, the typical income has not grown since 1999, and things are not much different in Quebec. There has been no middle-income prosperity and the only winners have been those who already had the most.
But incomes were on fire in Newfoundland and Labrador, hotter still in Saskatchewan, and red-hot in Alberta. In 1992 the typical Albertan earned $42,000, about the same as the average Canadian; two decades later, typical earnings surpassed $66,000 in Alberta, almost $20,000 higher than the middle-ranking income countrywide.
These fires have been put out.
If the Canadian middle class was overtaking the American, it was because these three provinces had a greater presence in the overall scheme of things than North Dakota, where resource extraction also created a boom economy, had south of the border. It was because cycle masked trend. The much deeper U.S. recession depressed American incomes to an extraordinary degree, while the oil and commodities boom buoyed them up in Canada.
Now that oil prices have plunged, we need to be much better at keeping our eyes on the underlying fundamentals.
Yes, Ontario manufacturers are hiring again; well, actually no, for now only some manufacturers.
At ATS Automation in Cambridge the workdays of the middle managers are a little lighter; more time spent recruiting and training beats the years spent managing layoffs and restraint. They’re hiring workers who build and service automated platforms, laser processors, robotics, control systems and high-accuracy dispensing units capable of delivering drops of a drug, solution or chemical as small as one-trillionth of a litre.
The stars of the company’s promotional video are not assembly line workers, who are almost entirely absent. They’re the few university grads working out the concepts in the back room — as well as the shimmering steel robots and sleek control systems.
The manufacturers who are hiring, and who are the basis for future prosperity and solid middle-class incomes, are those who build and install the automated units that are replacing the guys and gals on the assembly line.
Companies like ATS epitomize the underlying tide driving jobs and incomes when the computer revolution meets global markets. This tide never went away, even if until a year or so ago a swift current of oil made it easier for some of us to paddle in the opposite direction. It’s a tide offering prosperity to a lucky few, creating proportionately fewer jobs than Canadians need, and leaving many hanging on tight to whatever jetsam floats within reach.
But this tide was always there, even when it looked like we were richer than others. And it will continue to leave many Canadians standing still, waiting, and hoping for the promise of prosperity.
Turbulent times call for smarter government. Our politicians need to take their heads out of the oilsands, offer up policies geared to a future that is already here, and contribute to putting the typical Canadian family on a more secure footing.
Miles Corak is a professor of economics at the University of Ottawa. The original version of this article appears at MilesCorak.com.
< http://www.thestar.com/opinion/commentary/2015/09/29/the-inequality-debate-canadas-middle-class-is-losing-ground.html >
Tags: economy, globalization, ideology, participation, standard of living, tax
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