Thursday, May 1, 2008

Income gaps grow, as Canada's have-nots get left behind

The Canadian economy is a star among G7 economies, the statistics tell us. It's churning out jobs, housing prices are still rising, inflation is at a generation low.

J.J. Stiles sits in her new apartment in Toronto with daughters Hana and Lily, right. Stiles doesn't exactly fit the typical image of Canada's poor. The single mother of two girls has a university degree, a diploma in radio and television arts and a certificate to teach English as a second language. She works in Toronto as an administrative assistant and makes just over $37,000 a year. J.J. Stiles sits in her new apartment in Toronto with daughters Hana and Lily, right. Stiles doesn't exactly fit the typical image of Canada's poor. The single mother of two girls has a university degree, a diploma in radio and television arts and a certificate to teach English as a second language. She works in Toronto as an administrative assistant and makes just over $37,000 a year. (J.P. Moczulski/Canadian Press)

So overall, we're doing relatively well. Overall, of course, is one pretty broad brushstroke. It turns out that the big picture of rising prosperity hides some less-than-rosy vignettes when it comes to some key reference points — how much we make and how we're doing relative to others.

For those who think that recent immigrants, younger Canadians, and the lowest-earning members of society might finally be making more financial headway, Statistics Canada's most recent income reality check came as an alarming wake-up call that all is still not well, critics say.

Statistics Canada's findings are based on 2006 census figures so there's no arguing with the data — everyone's included. The census stats prove that some of the income gaps between the most and least advantaged in this country are wide — and growing ever wider.

First some good news: If you belong to a family with children, you belong to the richest earning family group, and you're making a lot more than similar families did in 1980. The median income for couples with children — the point where half earned more and half less — rose more than 20 per cent in a generation to $82,943 in 2005. That's mainly due to the jump in the number of families where both partners worked.

Even couples with no children saw their inflation-adjusted incomes rise in that period — up 14.6 per cent to $59,834.

But you can slice and dice raw data many ways, and some of the dissections Statistics Canada carried out show that some groups are falling way behind.

The poor get poorer

Let's look at how the poorest working Canadians have been faring — those at the bottom 20 per cent of the income pyramid. Between 1980 and 2005, this group's full-time income fell by 20.6 per cent, after adjusting for inflation. The median income for this low-income group dropped from $19,367 in 1980 to $15,375 in 2005 (all figures in 2005 dollars).

For the lowest-earning families, the median income fell 9.1 per cent over the 25-year period to $14,176.

"Earnings for this group have fallen steadily since 1980," Statistics Canada noted.

Those in the middle 20 per cent income group saw their earnings stagnate. Statistics Canada said this group's median full-time income was $41,348 in 1980. In 2005, that figure was just $53 a year higher — a net gain of a buck a week.

The richest group — the top 20 per cent of income earners — saw their median incomes rise by 16.4 per cent to $86,253, after taking inflation into account. The faster income growth of Canada's richest meant a big increase in the number of those earning at least $100,000 a year. In 1980, 3.4 per cent of full-timers reached that earnings plateau (in 2005 dollars). By 2005, that high-earning club was a lot more crowded, as 6.5 per cent of earners were in that category: more than 600,000 people.

Many observers say this widening income gap shouldn't be happening, given the recent strength of the Canadian economy.

"It's outrageous," said Ken Georgetti, president of the Canadian Labour Congress. "We've enjoyed the largest sustained period of growth since the Depression and ordinary Canadians are falling behind," he said.

"The only people that are getting ahead are the people who don't need the money."

Younger Canadians get poorer

The census figures also show that younger workers were earning less in 2005 than their parents did a generation earlier. That was especially true for young men.

For the 25- to 29-year-old set, Statistics Canada paints a picture of falling fortunes. The median earnings of young men tumbled from $43,767 in 1980 to $37,680 in 2005. For women of the same age, the median income fell by a much smaller $709 in that period to $32,104.

"The next generation is really going to suffer," said Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives. "This might be the first generation that clearly is not going to do better than their parents' generation," she told

Niels Veldhuis, an analyst at the Fraser Institute said young workers are making less because they're getting more education, delaying their entrance into the labour force, "which obviously delays the increase in incomes that we experience as we get more experienced or more skilled."

Statistics Canada analyst Rene Morissette agreed that the trend to stay in school longer is part of the reason for the drop. But he says the figures also show that young men seem to have difficulty finding full-time work these days once they leave school, and once they do find work, the jobs don't pay like they used to.

Recent immigrants lose ground

But it is among recent immigrants that the growing income gap is most noticeable.

Not only do recent immigrants make far less than their Canadian-born counterparts, the figures show that the most educated immigrants who came to Canada recently are losing ground to almost everybody, including similarly-educated immigrants who arrived in 1980.

StatsCan's figures show that recent immigrants — those who arrived from 2000 to 2004 — earned 85 cents for every dollar earned by Canadian-born workers in 1980. By 2005, that had shrunk to just 63 cents.

The immigrant versus Canadian-born gap widened even though the educational qualifications of the recent immigrants rose much faster than Canadian-born workers.

Education seemed to provide no insulation for this group; in fact, the most recent university-educated newcomers made even less than Canadian-born workers who had a high school education.

The 2006 census figures show that recent immigrant men with university degrees earned just 48 cents for every dollar earned by Canadians. In 1980, they earned 77 cents.

Statistics Canada lays part of the blame for the lost ground among the better-educated immigrants on recent job losses in the information and communication technologies sector. In 2005, the agency said half of all recent immigrant men with university educations had earned their degrees in either computer sciences or engineering. Only one in six Canadian-born grads had similar majors.

But those who work with recent immigrants say it's more than a story of the dot-com collapse.

"Primarily, I think it is the lack of recognition of their skills, the lack of recognition of their credentials," Eyob Naizghi, executive director of Mosaic, a Vancouver-based non-profit that works with recent immigrants, told

His organization did a study in 1997 that found that it took newcomers to Canada an average of 15 years to catch up to the incomes of their Canadian-born neighbours. The most recent Statistics Canada study suggests conditions have worsened since then and many won't ever catch up.

"Any policy maker should be alarmed at that," Naizghi said.

The income gap has worsened for immigrant women, too. Just ask Alice Xie. She was trained as a bookeeper in China. In Toronto, she toils for minimum wage at a clothing factory.

"I want to be a get professional job because I have some experience," she told CBC News. But companies want Canadian experience, she says, and English is not her first language.

Whatever the cause, it's clear that the good life is still proving to be much more elusive for immigrants than for their Canadian-born neighbours.