Big cities are much more unequal than Canada as a whole

Posted on January 5, 2017 in Equality Debates – ROB/8Commentary/Executive Insight
Jan. 03, 2017.   ANDREW JACKSON

It is no secret that big, global cities such as London and New York are highly unequal and display harsh extremes of wealth and poverty. This is increasingly true of Canada’s largest cities, as shown by recently released Statistics Canada data on the geographical distribution of high-income earners.

The data are for 2014, and income is defined as total before tax income including capital gains. Over all, the top 1 per cent of individual tax filers in Canada earned a minimum of $246,200, had average incomes of $548,500 and declared 11.6 per cent of all income.

The top 0.1 per cent (just one tax filer in every 1,000) earned a minimum of $867,100, had average incomes of $2,013,300 and declared 4.3 per cent of all income.

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At the very summit of the income pyramid, the top 0.01 per cent, a tiny group of just 2,685 tax filers, reported an average income of $7,070,100 or 1.5 per cent of all income.

The very affluent tend to live in our four largest cities, the Toronto, Montreal, Vancouver and Calgary census metropolitan areas. While 38.9 per cent of all tax filers lived in these cities, this was true of the majority (55.5 per cent) of the top 1 per cent, and two in three (66.6 per cent) of the top 0.1 per cent.

Given that very-high-income earners tend to be investors, senior business executives and top professionals, it is not too surprising that Canada’s high earners are to be found in the country’s leading business centres.

What is shocking is the degree of inequality within our biggest cities.

Then-booming Calgary led the way in 2014. The top 1 per cent of tax filers in that city earned a minimum of $476,100 and earned almost one-fifth or 18.5 per cent of all income declared in Calgary. That is far more than the 10.9-per-cent income share of the top 1 per cent in Edmonton, which has more blue-collar workers and a larger public sector.

Toronto was not too far behind Calgary, with the top 1 per cent earning at least $311,800, and declaring 16.0 per cent or one in six dollars of all income in the city.

The top 1 per cent in Vancouver and Montreal declared incomes of 12.8 per cent and 11.8 per cent of all city income respectively.

In all other urban and rural areas of the country, the share of the top 1 per cent was below, and usually well below, the national average.

The picture is even more extreme for the top 0.1 per cent. They declared 7.8 per cent of all income in Calgary and 6.3 per cent of all income in Toronto. The average income of the top 0.1 per cent was $5,557,000 in Calgary and $3,130,800 in Toronto.

Looking at the situation from the bottom of the income pyramid, the bottom 95 per cent of Canadians received 74.9 per cent of all income in 2014, but this proportion was just 69.3 per cent in Toronto and 66.0 per cent in Calgary.

Based on other Statistics Canada data, low income is less concentrated in big cities than is high income. Of the four biggest cities in 2014, only Toronto had a poverty rate that was well above the national average (15 per cent compared with 13 per cent going by the low-income measure.) Calgary had a well-below-average poverty rate.

That said, this metric does not capture the impact of well-above-average housing costs on low income households in large cities.

The dry statistics on high income are visible in our big cities in wealthy residential enclaves and sky-high prices at the top end of the housing market, as well as in the many high-end retail outlets and service providers catering to the needs of the very affluent. As social commentator John Stapleton has noted, the retail scene in Toronto has seen a major shift to both high-end and deep-discount options.

Along with the poor, the squeezed urban middle class, especially the young, are increasingly unable to enjoy the benefits of big city life. These growing spatial inequalities will increasingly shape urban politics in the years to come.

Andrew Jackson is an adjunct research professor in the Institute of Political Economy at Carleton University in Ottawa and senior policy adviser to the Broadbent Institute.

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