Did you know that 10 per cent of all the money made in Canada in 2010 was earned by the richest one per cent? Those are the latest numbers released by Statistic Canada on income. While it might seem a shockingly high amount, that number is actually down from a 2006 survey that showed the richest one per cent earned 12 per cent of all reported income that year.
The fact is, the income gap between the richest and poorest has been widening since the 1980’s – both in Canada and around the world, with the disparity felt even more so in the United States.
Let’s take a look at the factors dividing Canada’s middle class from the elite earners.
Breaking Down the Numbers
Canada’s highest earners make more than $201,400 annually. This earning group is predominantly male, married and resides mainly in Canada’s urban centres. Take for example The Canadian Centre for Policy Alternatives’ analysis of the new data of Canada’s biggest cities, Vancouver, Toronto, and Montreal. The bottom 90 per cent make less today than they did in 1982. They’ve seen drops in income of $4,300, $1,900, and $224, respectively. The top one per cent in those cities, however saw pay increases of $189,000, $297,000, and $162,000, respectively.
Why Is the Income Gap Growing?
Among the countries that make up the Organisation for Economic Co-operation and Development , including Canada, the average income of the richest 10 per cent of the population is about nine times that of the poorest 10 per cent – a ratio of nine to one. Globalization is one of the major reasons for income disparity. As the world’s need for cheap labour and higher consumption continues, so does the disparity between the world’s richest and poorest.
Income Inequality is a Worldwide Crisis
Income or wealth inequality is a worldwide concern. In India the top 10 per cent make 12 times what the bottom 10 per cent does. In the U.S., the top one per cent have doubled their share of pretax income since 1979. Recently, the World Economic Forum reported wealth inequality coupled with rising government debt as the “top two prevalent global risks.” The report says, “The world is more at risk as persistent economic weakness saps our ability to tackle environmental challenges.”
How Can Canada Close the Gap?
While the income gap in Canada is growing, it is still nowhere near as extreme as it is the U.S. or around the world. And, as the world’s economies continue to struggle with mounting national debt, it is almost guaranteed this income disparity will continue to widen.
The reality is, the responsibility of wealth protection lands is up to the individual, and their ability to invest wisely.The market swings that started in 2008 have been a major driver toward people losing their wealth. Its also important to encourage our younger generation to pursue an education as wealth disparity is less extreme among higher educated countries. Most importantly, Canadians should stay vigilant about understanding what we can do reduce the income gap not only in our own country but around the world.