How today’s parents got squeezed out

By Paul Kershaw - Wednesday, November 2, 2011 at 12:00 PM - 41 Comments

Joseph Robertson/Flickr

The Occupy movement has sounded the alarm about the gap between the rich and the rest. Some of that inequality runs along generational lines.

In Canada, the economy doubled in size since 1976, producing an additional $35,000 per household in 2010 dollars. But despite this prosperity, the standard of living for the generation raising young kids has declined. Household incomes have stalled for young couples, even though far more women contribute employment income than in previous generations. And with stagnant incomes they must pay housing prices that rose by 76 per cent, after inflation, in the last 35 years.

While the generation raising young kids is squeezed for time at home, squeezed for income after housing, and squeezed for services like child care, the generation about to retire is doing far better. Compared to retirees in the 1970s, household incomes for baby boomers are up 18 per cent, and they have more wealth because the value of the housing market nearly doubled over their adult lives. As their personal finances improve on average, boomers have left larger fiscal and environmental debts than they inherited. Continue…

A phony class war

By Andrew Coyne - Monday, October 24, 2011 at 10:10 AM - 234 Comments

Photographs by Carlo Allegri

Was there ever a more ersatz political movement than that which purported to “occupy” Canadian cities over the last week? The Occupy Wall Street protest on which it was modelled may betray the same cartoonish understanding of the world, but it at least reflects the genuine despair felt by many people in a country with a number of deep and serious problems: a housing collapse that left millions with homes worth less than their mortgages; a financial sector that, having lent the money to buy these homes to people who couldn’t afford them, then resold the bad loans via opaquely bundled securities to others—then had to be bailed out when the whole house of cards collapsed; high and seemingly intractable levels of unemployment, poverty at a 17-year record, declining social mobility, and a general stalling in income growth. The reasons for these may be debated, but if you lived in the United States, you would have good reason to be ticked.

By contrast, well, let’s just run down the list, shall we? Canada did not have a housing bubble, hence had no housing collapse, nor the resulting epidemic of mortgage failures. Our banks did not get overextended, did not have to be bailed out, and are lending, again unlike the U.S. banks, at a good clip. Unemployment is not rising in Canada, but has been falling steadily for more than two years: at 7.1 per cent, it is still above its pre-recession lows, but remains lower than at virtually any other time since the 1960s. Ditto for poverty: even when measured against a moving target like Statistics Canada’s low income cut-off, it is just off its 40-year low, at 9.6 per cent, from a peak of 15 per cent in the mid 1990s.

The observed stagnation of income growth in recent decades is more a phenomenon of periodic recessions, and associated spikes in unemployment, than a generalized inability to get ahead. Outside of recession years, median incomes have in fact grown steadily. In the long boom from 1993 to 2008, for example, median family income grew by 21.5 per cent after inflation. Indeed, it is hard to reconcile the supposed stalling of living standards with the spread in ownership of a wide range of household appliances that were once affordable only to the few. Since 1980, the percentage of Canadian homes with a dishwasher, for example, has more than doubled, from less than 30 per cent to 60 per cent. Fewer than one in 10 homes had a microwave oven in 1980; today it is upwards of 90 per cent. Washing machines, colour televisions, computers, cellphones and so on: the trend is the same.

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Is Jim Flaherty a hippie?

By Aaron Wherry - Thursday, October 13, 2011 at 4:50 PM - 17 Comments

First, the Finance Minister quotes Bobby Kennedy and waxes romantic about public service and “working together” for the “public good.” Now, he expresses some sympathy for the Occupy Wall Street protestors.

Jim Flaherty says he can understand the “legitimate frustration” of Occupy Wall Street protesters in light of persistently high youth unemployment … “It really is a Wall Street proposal,” he told reporters prior to flying to France for key G20 meetings on the global economy. “In Canada we have a progressive income tax and it favours people with lower incomes who are vulnerable, quite frankly, in Canadian society. Our tax system is clearly progressive. Having said that I see a point that income distribution is important and that there is a concern that a very, very small group of people have very large incomes.”

While the present circumstance may not be as dramatic, income inequality is reported to be growing at a faster pace in Canada.

When only the rich get richer

By Colin Campbell - Monday, March 7, 2011 at 5:12 PM - 12 Comments

The U.S. Economic Policy Insititute offers this fascinating (but also scary) interactive graph. Set the slidders to the dates 1970 and 2008, and it reveals that while average incomes in the U.S. grew by US$12,320, all of the growth went to the richest 10 per cent of the population. Income for the bottom 90 per cent actually declined over that time.

The EPI’s The State of Working America publication sums up: ”This fragmenting of income growth has been accompanied by other fissures—for example, those at the bottom of the income distribution are not only less likely to get ahead financially, but they have also been left behind when it comes to recent gains to overall life expectancy. In the past three decades, it has been impossible to answer the basic question of ‘how’s the economy doing’ without first specifying for whom.”

So much for the American Dream. But this, of course, isn’t unique to the United States. A report by the Canadian Centre for Policy Alternatives found that between 1997 and 2007, the richest 1 per cent of Canadians (246,000 people) accounted for 32 per cent of all income growth.