Tuesday, May 06, 2008

Middle class losing ground in B.C.

Disturbing news in the latest StatsCan report on incomes in Canada.
The report, which used data from the 2006 census, found that people's perceptions were correct.
In Canada, and B.C., the rich have been getting richer and the poor have been getting poorer.
And in B.C., particularly, those in the middle have seen their incomes shrink since 1980.
Over 25 years, the real median income in B.C. fell 11.3 per cent, to $42,230. (The median income is the midpoint; half the people in the province earn more, half learn less.)
That's a big hit, for the middle class. Canadians have, for a couple of generations, believed that with hard work they could get ahead. That's not happening.
Even since 2000, average British Columbians have been losing ground. The real median income - adjusted for inflation - has fallen 3.4 per cent even as the government has celebrated its economic success.
What's most striking is how rarely this issue is even considered by government.
There's a great focus on overall economic growth - the rise in the gross domestic product each year. And governments track both job creation and employment statistics.
But they rarely - perhaps never - talk about targets that reflect not just the overall numbers, but the improvement or drop in the living standard of average people in the province.
Even Premier Gordon Campbell's response to the bad news from StatsCan fudged the issue.
Campbell noted "personal disposable income per capita in B.C. is up 17.2 per cent since 2000."
But again that's an aggregate number; the response ignores the way those increase are - or are not shared - among British Columbians.
The traditional view of government is that a rising tide lifts all boats. If the economy grows, everyone benefits.
But the StatsCan numbers show that's not true. That at the least, governments should be factoring income distribution into their plans.
There are lots of different ways to look at income numbers. The effects of taxes and transfers tend to reduce inequities slightly. And family incomes can rise even as individual incomes decline if two parents - and perhaps a child - can all find jobs in a good market.
But the fact remains the average British Columbian has a lower real income now than in 1980.
Some of the reasons seem obvious. Thousands of good jobs have vanished from the forest industry and fisheries. They were replaced with lower-paying work.
None of this is to suggest governments can guarantee wages. Some of the factors - the rise of foreign competitors for Canadian businesses, the decline of a forest industry that has cut down the best, most accessible timber - are largely beyond government's control.
Protecting mill jobs, for example, by requiring timber to be processed locally, might mean companies decide to shut down both logging and processing.
But government should at least be considering the effect of its decisions on individuals, not just on the broad economic impact. There's little evidence that is happening.
The federal and provincial governments have, for example, launched a radical expansion in programs to allow temporary foreign workers. Some 125,000 people from other countries have been accepted as short-term residents because employers say they can't find workers. About 36,000 were in B.C. in 2006.
The governments say without the workers, the economy would be hurt. But the reality is that they also depress wages in a market-based economy. Without them, some employers would pay more to attract the workers they need.
It might be a good program for the economy, but governments offer little evidence that they have given weight to the effect on average Canadians.
There is nothing inevitable about economic growth and the way in which the benefits flow. The results reflect the decisions government make.
And over the last several decades, those decisions have resulted in rising incomes for the rich, greater struggle for the poor and - in B.C, - lost ground for those in the middle.
Footnote: Campbell's response also noted, correctly, that tax cuts since 2001 have increased after-tax income for most British Columbians. But the benefits for a family of four with a household income of $90,000 are more than 50 per cent greater than the benefits to a family with an income of $30,000.


Anonymous said...

"Campbell's response also noted, correctly, that tax cuts since 2001 have increased after-tax income for most British Columbians."

Don't forget the silent tax hikes: user & other fees. Also, let us not forget the cost of living has gone through the roof. The BC Liberal Finance Minister does not seem to appreciate that the cost of housing is at an all time high across the province.

'Real' disposable income is down.

Anonymous said...

I think you're right, Paul, about the foreign workers issue reflecting who and what really matters to our governments. The reality is and always has been that in an unregulated environment, wealthy investors and employers control the capital that gets parties elected or keeps them forever on the opposition benches.

Since the mid-1980s, they have relied on Reagan/ Thatchery theories about a rising tide floating all ships to convince voters to support deregulation policies that favour wealthy investors and employers. As it becomes increasingly clear that this hasn't worked, they will have to come up with a new con, rely on reduced transparency or up the propaganda level to cover up/ downplay/ muddy the waters.

It is therefore also telling that the Campbell government's reaction to all the recent bad news is to move to drastically restrict third party spending during next year's elections to muzzle citizens' groups, while doing absolutely nothing to restrict the corporate capital they will be relying on to try to persuade enough people that despite everything, it's still in our interest to re-elect them.

Anonymous said...

Does no one pay attention to these political creeps. After living through 10 years of that NDP imposed train wreak in the 90's, me being a person who believes in capatalism voted for the Liberals. Does anyone remember what they were offering? A 25% reduction in taxes for the bottom 2 income groups, and they said they couldn't offer more untill they had seen the books. Then on election night they gave the top income group a 25% tax reduction (which amounted to more than the other 2 groups combined). Then their first acts as government was to raise the pst and all the service charges on the people who could least afford it. I remember how deafing the silence was from the upper middle class public sector unions and the overpaid media types was!!! Then the government went on to give the public sector unions big raises and a billon dollar signing bonus. But thats not the kicker, they also gave these union 300 million out of any future surplus (after 150mil) in 2010. Do you people have any idea at some of the perks these public sector unions get, take a look a the nurses union contract (ie, 166% for ever dollar they contribute to pensions, 100% topped up EI for maternaty leave, instead of the measly $125 a week for jury duty, they get full pay and the list goes on and on). So your government is great for the ps and the rich, but it obvious they have contempt for the average worker.