Another myth blown away

[Urbane]

So much for the theory that Canada has a permanent underclass. As is mentioned in the article, the results of this study should turn the income inequality debate on its head:

Poor today, rich tomorrow: Permanent underclass in Canada is a myth, study reveals

Kathryn Blaze Carlson | Nov 20, 2012

It’s hard to blame Canadians for believing the great myth of income stagnation given the continuous stream of reports pointing to the low growth in average incomes over the past several decades.

Others have taken the narrative even further. For example, in a recent op-ed, Liberal leadership hopeful Justin Trudeau claimed: “In the past 30 years, the Canadian economy has more than doubled in size. But unlike times before, virtually all of the benefit of that growth has accrued to a small number of wealthy Canadians.”

Or take the Conference Board of Canada’s recent How Canada Performs report that finds that: “most gains have gone to a very small group of ‘super-rich,’ ” and “the average income level of the poorest group of people in Canada rose over the time period … but only marginally.”

As a 12-year-old boy, Charles Lammam earned his first paycheque delivering newspapers on Wednesday and Saturday mornings. As a teenager, he worked part-time in the food and hotel industries. He juggled a part-time position at a financial institution with his undergraduate degree at Simon Fraser University, and then worked as an intern at a think-tank while completing his graduate studies. Mr. Lammam parlayed that internship into a full-time position, eventually becoming an associate director at the Fraser Institute.

As it happens, the latest achievement on his résumé — a study measuring income mobility in Canada — found his experience represents the norm: Over the span of a decade, 83% of Canada’s lowest income earners moved up the income ladder, according to a Fraser Institute report released Tuesday.

“Lower-income Canadians are not permanently stuck with a low income — that’s a myth,” Mr. Lammam said. “Where you are today is not where you’re going to be five, 10 or 20 years down the road.”

The 60-page report is based on Statistics Canada income data for more than one million Canadians, today aged 39 through 64, whose tax returns were linked with Social Insurance Numbers to track their earnings over the course of five, 10 and 19 years. And the findings, Mr. Lammam said, are remarkable: In the 19-year period between 1990 and 2009, one in five Canadians in the lowest of five income groups eventually moved up to the highest-income camp, and nine out of 10 people in the lowest-income group rose out of the bottom.

“The results are extremely encouraging, especially when we’re bombarded with myths of stagnating Canadian incomes or that the rich are getting richer and the poor are getting poorer,” he said, adding that more than a third of top earners in 1990 slipped to a lower income category by 2009. “This study blows those myths out of the water.”

The American dream, it seems, is alive in Canada — and that, he said, should turn the income inequality debate on its head, challenging the underlying assumption that Canada’s poor and rich are the same people, year in and year out. Last year’s Occupy movement, for example, called for higher taxes on higher-income earners, but those very protesters — many young and still in university — might well become those wealthier taxpayers in the not-so-distant future.

“Maybe the Occupy movement needs to be careful what it wishes for,” said Gregory Thomas, a director at the Canadian Taxpayers Federation. “People making tax policy need to be looking at the life cycles of the taxpayers. … We don’t have a permanent underclass.”

I’m not hearing anybody in the public debate say that those at the bottom never get out of the bottom or increase their income
“The natural conclusion for some folks is to tax the rich more,” echoed Mr. Lammam. “But if you understand that the people at the bottom gradually transition from low to high income over time, then you realize that you’re actually doing people at the lower end of the scale a disservice because they’re going to get there in due time.”

NDP finance critic Peggy Nash called that a “convoluted argument,” saying income mobility and income inequality are two separate issues that should not be intertwined.

“I’m not hearing anybody in the public debate say that those at the bottom never get out of the bottom or increase their income,” she said, adding that today’s youth and families face unprecedented challenges, such as record unemployment and household debt. “What I hear is that there is a growing gap between those at the top and those at the bottom.”

What this tells us is that there isn’t a caste society in Canada — that people are continuously transitioning from low to middle to high income over time, and that’s natural
But Mr. Lamman said that when mobility is taken into account, income inequality is actually on the wane: In 1990, the average income of people in the top 20% was 13 times that of the bottom 20%, but 19 years later the people in the top 20% were earning only twice as much as those who were initially in the bottom 20%.

“What this tells us is that there isn’t a caste society in Canada — that people are continuously transitioning from low to middle to high income over time, and that’s natural,” he said. “My own experience is the normal Canadian experience.”

Susan Quipp, an Occupy Lanark County, Ont., member, called the study “malarky” published by a “right-wing group” that “represents higher-income earners.”

Several social justice groups were unavailable to comment on the Fraser Institute’s report at deadline, including the Council on Canadians and Canada Without Poverty.

National Post

[Rwede]

Quit baffling the left with facts, Urbane. You know that just isn't fair!

[Urbane]

Quit baffling the left with facts, Urbane. You know that just isn't fair!

Facts like these that represent good news are particularly troubling for those on the left because they seem to enjoy misery. And the further left the greater desire for misery. Soon the "everything is bad all the time" posters will be all over this telling us how terrible things are in Canada.

[erinmore3775]

[url]http://www.conferenceboard.ca/hcp/hot-topics/canInequality.aspx
[/url]

Canadian Income Inequality
Is Canada becoming more unequal?

" Income inequality in Canada has increased over the past 20 years.

The richest group of Canadians increased its share of total national income between 1993 and 2008, while the poorest group lost share. Middle-income Canadians also lost share.

Although the gap between the rich and poor widened, Canadians in the poorest income group still saw their income levels rise, albeit minimally."

With all due respect, I believe that the interpretation of the Conference Board of Canada report may be taken two ways. Within the report there is evidence that a percentage of those considered to be poor are able over time to "rise" up out of "poverty." However, the more important details were overlooked in the opinion piece. The facts remain, in Canada and the rest of North America, the gap between the rich and the poor continues to widen.

The actual paper and further references on the Conference Board of Canada website make for some interesting and fairly unbiased reading.

[SurplusElect]

...one in five Canadians in the lowest of five income groups eventually moved up to the highest-income camp...

1 in 5 Canadians make over 100,000 dollars a year?

[Captain Awesome]

1 in 5 Canadians make over 100,000 dollars a year?

No, you're reading it wrong.

One in five of lowest paid employees (20%) moves up to the highest paid bracket in their lifetime.
And vast majority of low paid individuals just move up into higher (not the highest) brackets.

I believe the term is "economic mobility" and Canada scores very high on this scale, higher than most European countries.

[GrooveTunes]

[url]http://www.conferenceboard.ca/hcp/hot-topics/canInequality.aspx
[/url]

Canadian Income Inequality
Is Canada becoming more unequal?

" Income inequality in Canada has increased over the past 20 years.

The richest group of Canadians increased its share of total national income between 1993 and 2008, while the poorest group lost share. Middle-income Canadians also lost share.

Although the gap between the rich and poor widened, Canadians in the poorest income group still saw their income levels rise, albeit minimally."

With all due respect, I believe that the interpretation of the Conference Board of Canada report may be taken two ways. Within the report there is evidence that a percentage of those considered to be poor are able over time to "rise" up out of "poverty." However, the more important details were overlooked in the opinion piece. The facts remain, in Canada and the rest of North America, the gap between the rich and the poor continues to widen.

The actual paper and further references on the Conference Board of Canada website make for some interesting and fairly unbiased reading.

Correct. http://www4.hrsdc.gc.ca/[email protected]?iid=22

[Captain Awesome]

However, the more important details were overlooked in the opinion piece. The facts remain, in Canada and the rest of North America, the gap between the rich and the poor continues to widen.

I think you're misreading the original article, and your article doesn't exactly contradict it in any way. While the income gap might be widening (and all income levels rising although in a different pace), the opposite crowds (lowest income and highest income) are not static - members of the lowest wage crowd eventually move up in income (with 20% of them becoming highest paid employees) while somebody takes place for them at the bottom (new workforce or somebody descending in income level). So, there's always be low income levels, there will always be high income levels, but people move between these classes, rising up in income - at least vast majority is.

While the story you've posted does make sense, the original article debunks the myth that poor people always stay poor - vast majority of them don't, and that low income people can't get ahead - vast majority of them do, with 20% of them becoming millionaires. Hopefully this clears it up.

[hobbyguy]

Interesting that the Fraser Institute has accepted significant $$$ from the Koch brothers.

http://www.vancouverobserver.com/politics/2012/04/25/%E2%80%9Ccharitable%E2%80%9D-fraser-institute-accepted-500k-foreign-funding-oil-billionaires

I think this damages their reputation in terms of providing useful information.

[Poindexter]

That is interesting.

http://news.nationalpost.com/2012/09/18 ... s-to-18th/

Sorry to bust up your love fest but this is an indication that the right is wrong. Canada would be considered Socialist by most Americans.

[coffeeFreak]

It's all about perspective isn't it?

Income inequality in Canada has increased over the past 20 years...

While the poor did not get poorer according to absolute real income levels, they did get poorer in a relative sense. The gap between the real average income of the richest group (fifth quintile) of Canadians and the poorest group (first quintile) grew from $92,300 in 1976 to $117,500 in 2009. Thus, while the poor are minimally better off in an absolute sense, they are significantly worse off in a relative sense...

Who are the at-risk groups for low income?
Low income is more prevalent in certain at-risk groups. The recent House of Commons report on poverty identified 10 groups that were most at risk of experiencing low income: children, lone-parent families (particularly female lone-parent families), women, unattached individuals, seniors, Aboriginal people, people with disabilities, recent immigrants, visible minorities, and low-wage workers.

After 20 years of dramatic reductions, Canada’s elderly poverty rate has been rising since the mid-1990s, a worrisome trend. Among the elderly, the biggest jump occurred in the group of elderly women. Between 2006 and 2009, nearly 128,000 more seniors were said to be living in low income. Of that amount, 70 per cent were women...

http://www.conferenceboard.ca/hcp/hot-topics/caninequality.aspx

[coffeeFreak]

Here's the full report referred to in the original post:

http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/measuring-income-mobility-in-canada.pdf

[Urbane]

I think you're misreading the original article, and your article doesn't exactly contradict it in any way. While the income gap might be widening (and all income levels rising although in a different pace), the opposite crowds (lowest income and highest income) are not static - members of the lowest wage crowd eventually move up in income (with 20% of them becoming highest paid employees) while somebody takes place for them at the bottom (new workforce or somebody descending in income level). So, there's always be low income levels, there will always be high income levels, but people move between these classes, rising up in income - at least vast majority is.

While the story you've posted does make sense, the original article debunks the myth that poor people always stay poor - vast majority of them don't, and that low income people can't get ahead - vast majority of them do, with 20% of them becoming millionaires. Hopefully this clears it up.

Your perspective is bang on. There will always be "a gap between rich and poor" but the same players won't always be in the same positions. It's good news to see that the vast majority in the "poor" category do in fact move up in the world.

[hobbyguy]

What bothers me is that this is smokecreen spun about income stagnation. They are trying to say that because some folks are mobile within the income classes that income stagnation is a myth.

Factor in inflation, and the top 20% quintile has gone nowhere. Factor in the disproprortionate income increases for the top 1-2%, and the picture shows that in fact the top end for the vast majority of Canadians has stagnated.

The proportion of total working person income received relative to corporate profits has fallen dramatically and inversely.

[Urbane]

What bothers me is that this is smokecreen spun about income stagnation. They are trying to say that because some folks are mobile within the income classes that income stagnation is a myth.

Factor in inflation, and the top 20% quintile has gone nowhere. Factor in the disproprortionate income increases for the top 1-2%, and the picture shows that in fact the top end for the vast majority of Canadians has stagnated.

The proportion of total working person income received relative to corporate profits has fallen dramatically and inversely.

While I understand that I also understand that the world has gone through some economic turmoil, particularly since 2008. And as a society we've become so spoiled that we sometimes forget that the standard of living now is far higher than it's ever been in history so "going nowhere" is not all that bad. In fact it's pretty damn good. People are sitting around with their tablets, their cell phones, their nice cars, and their other toys and still feeling a bit hard done by. Seems to me the cup isn't just half full; it's way more than half full for most people.