Canadians are in a rut when it comes to keeping up with the Joneses.

New data analysis from Statistics Canada shows that income mobility has stagnated over the past decade, which means fewer people are climbing up the ladder into the next class — especially people in lower-income brackets.

But while fewer people are getting ahead, they are also not falling behind much. Despite all the hand-wringing about worsening inequality and the rich getting richer while the poor get poorer, Canada’s income picture is one of stability, with incremental progress for some.

As both the federal Liberals and Conservatives take a magnifying glass to middle-income earners in the hopes of wooing their votes with promises of prosperity, they see an enigma — discontent over the affordability of everyday expenses and anxiety about the future coupled with employment growth, rising wages and an economy that is growing slowly but steadily. The data on mobility — and what they say about inequality, income security and confidence in the future — are perplexing but offer some insight into why we don’t all feel fantastic amid good economic news.

During the 1980s, about 40 per cent of Canadian taxpayers would move into higher income brackets over the course of five years. But that percentage fell to about 35 per cent in the early 2000s and has continued to edge down bit by bit since then.

The trend doesn’t mean that when you graduate and get your first job, you’ll be stuck at that income level for the rest of your life. Age and experience still count for a lot. For 18-24-year olds, 46.5 per cent of them are moving to higher income brackets over the course of five years. That’s down from the 48.2 per cent in the late 1980s, but it’s substantial mobility all the same.

More worrisome, for the lowest paid among us, mobility has decidedly decreased. In the late 1980s, almost 73 per cent of the bottom 10 per cent of wage earners would move up a rung on the ladder over five years. Nowadays, it’s about 62 per cent. So the implicit, society-wide understanding that hard work means economic advancement is less solid than it was in previous decades.

It’s a somewhat different story for immigrants who have been in Canada a while. They have above-average income mobility, although they too have become more stagnant over the years. In the early 1980s, about 56 per cent of those taxpayers would move up into the next decile — the next rung on the income ladder — over five years. Since the turn of the millennium, their upward mobility is hovering around 44 per cent.

But the numbers that show a lack of ladder-climbing hide a few things. Taxpayers’ incomes are more likely to be going up than down, and that stands the test of time, Statscan shows. Between 2011 and 2016, 57.7 per cent of taxpayers saw their incomes go up; that’s fewer than in the early 2000s but more than in the late 1990s.

Also, income mobility and ladder climbing are related to income inequality but they’re not synonymous. The gap between rich and poor widened substantially in the late 1990s but stabilized in the early 2000s and has remained about the same since then.

And because of the lag in number-crunching, we haven’t fully digested how the federal increases in the Canada Child Benefit and tax hikes on the rich are affecting taxpayers’ ability to ladder-climb. We know the child benefit payments have moved many families out of poverty. And we know there was a lot of churn in the top decile of taxpayers as rich people sought to rejig their personal finances before the higher tax rates kicked in. We don’t yet know if the middle class has expanded or become more prosperous as a result.

Mobility is important because it’s the economic manifestation of hope. If low-income earners see their peers finding decent jobs and better benefits, they will be encouraged to strive for similar success. If young workers see their older brothers and sisters surging in their careers, they will have confidence that they will follow in their footsteps.

With immobility more prevalent, the corollary is less hope, less encouragement and less confidence in the future. Throw sky-high housing and daycare costs in Canada’s biggest cities into the mix and you have a middle class that feels uncertain about their own future and their children’s.

When Liberal Leader Justin Trudeau or Conservative Leader Andrew Scheer come calling with their competing ideas about how government should help taxpayers make ends meet, they’ll have an attentive audience.

Heather Scoffield is an economics columnist based in Ottawa.

https://www.thestar.com/politics/political-opinion/2019/07/16/think-we-are-all-falling-behind-think-again.html