Newspaper article The Canadian Press

Income Inequality Steady by One Measure, but Absolute Gains Tell Another Story

Newspaper article The Canadian Press

Income Inequality Steady by One Measure, but Absolute Gains Tell Another Story

Article excerpt

Income inequality in Canada steady since 1998

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Income inequality in Canada has remained steady since 1998 according to the traditional benchmark, but absolute dollar gains by the country's highest earners have far outstripped the gains by those at the bottom, a report by TD Bank said Tuesday.

Even though the poorest saw a slightly larger percentage gain in income, absolute gains -- the amount of dollars in a person's pocket -- tell a different story, said TD Bank chief economist Craig Alexander.

"Although the traditional benchmark of income inequality isn't showing an increase, the absolute levels of income matter enormously," he said.

After a 20 per cent increase, the after-inflation level of income of those in the bottom 20 per cent increased to only $15,200 in 2010 from $12,700 in 1998.

Meanwhile, at the high end of the income scale, the top 20 per cent have seen an 18 per cent increase in income since 1998, but that translates into $26,700 to bring their income to $171,900.

"So part of the issue around income inequality is the fact that households at the low end of the income scale have extremely absolute low levels of income and that's a major challenge," Alexander said.

And he points out, those in the middle of the range have seen the slowest pace of increases as the downward pressure on jobs and wages in the manufacturing sector has weighed on growth.

Alexander said within the middle group there was likely a range of experiences depending on what sector individuals worked.

"The recession has concentrated in the manufacturing sector. We lost a lot of manufacturing jobs and a lot of those manufacturing jobs would have been in the middle income category," he said.

"However we also had a lot of public employment growth in public administration, education and in health care which are good paying high-quality jobs and I think in those areas we probably had significant gains in middle income. …

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