Canada’s economy posted impressive GDP growth of 3.7 per cent this quarter, marking the greatest three-month period of growth since 2017. These numbers, along with low unemployment levels, have been hailed as indicators of a strong economy.
But they do not tell the whole story. Most Canadians are feeling anxiety about their economic prospects, and nearly half are only $200 away from financial ruin. They have good reason to feel these growth numbers are at odds with their own experience: over the past 35 years, the fruits of a growing economy have largely gone to a small number of high-income individuals.
Aggregate figures, like GDP growth, tell us by how much our economic pie is expanding, but they do not tell us who is getting the slices of that pie. For that information, we need to look at Statistics Canada’s data on earnings broken out by income brackets. This data paints a less rosy picture of how our economy is working for the majority of Canadians.
From 1982 to 2015, the share of total income going to those in the top 1 per cent grew from 8 per cent to 14.2 per cent — a jump of 78 per cent. Meanwhile, the share of income going to the bottom 50 per cent — half the country — fell by 29 per cent. So while our economy has grown, the bulk of those gains are flowing to the richest 1 per cent of people.
We can also look at how median incomes have changed over the same time period and find a similar pattern. Since 1982, the top 1 per cent’s median market income (adjusted for inflation) increased by over $275,000, from $92,600 to $368,000. Compare that to the bottom 90 per cent of earners: their income grew by a meagre $12,000 over the same period, from $10,000 to $22,100.
Given these numbers, it’s little wonder Canadians feel financially precarious. Unfortunately, our political leaders often dismiss these concerns, arguing that the economy is stronger than ever. Often they point to growth numbers and unemployment figures to make their point.
Our anxiety is not a delusion based on a misunderstanding of economic data. It is in fact grounded in deep truths about how our economy now functions to enrich those at the top while leaving most people scrambling to stay afloat.
Canadians rightly perceive this. They know that something is broken. With an election only a few weeks away, it’s not surprising the opposition Conservatives are trying to leverage this dissatisfaction for vote-getting. Their tag line of “It’s time for you to get ahead” is a direct appeal to the frustration Canadians feel with their economic prospects.
Sadly, Andrew Scheer’s Conservatives have no ideas to fix what is broken in our economy. The so-called change they are marketing to voters is in fact a return to the trickle-down program — tax cuts for the rich, service cuts for the rest of us — that landed us in this mess.
Their proposals would do nothing to improve the prospects of the 90 per cent of Canadians who have spent three decades falling further behind, and would in fact make most people’s financial situation even more precarious.
If the next 30 years are to be different than the last, we will need to change our economy so growth is shared widely rather than captured by only a small number of people at the top.
Some progress has been made on this over the past four years by the Trudeau government through policies like the Canada Child Benefit, but tinkering around the edges through tax credits and means-tested programs is not enough. The forces driving inequality are powerful, and require a more aggressive response. The wealth tax on the super-rich proposed by Jagmeet Singh’s NDP is one such idea. All parties looking to claim a progressive mantle should welcome it.
We need to go further with other policies at our disposal too. An inheritance tax on large fortunes would reduce inter-generational inequality, and could be used to fund an expansion of the welfare state to include services such as dental care, pharmacare, and mental health care.
More basic structural reforms will also be required. Ownership funds, like those proposed by Bernie Sanders, would give employees at large corporations an ownership stake in their workplace and begin to distribute profits more broadly throughout our economy.
Just as it was the task of progressives in the 20th century to democratize politics, it is the task of 21st century progressives to democratize the economy. Unfortunately, our political leaders seem relatively uninterested in this task.
Trumpeting GDP growth numbers may make for compelling headlines, but Canadians are not fools: we know the economy is working mainly for those at the top. We now need political leadership willing to demand it works for us.
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