Income equality is on the rise

Sonya Khanna

Business Editor

According to the Conference Board of Canada, since the mid-1990’s income inequality in Canada has been rising at an alarming pace compared to the U.S.

The Board reported that Canada has had the fourth-largest increase in income inequality among its peers.

Although the United States currently stands as having the largest income gap between rich and poor, the gap in Canada continues to grow at a dishearteningly faster rate.

“High inequality both raises a moral question about fairness and can contribute to social tensions,” said Anne Golden, President and CEO of the Conference Board. “In Canada, the gap between the rich and poor has widened over two decades, especially compared to our peer countries.”

Canada was one of the ten out of seventeen peer countries to display growth in income inequality between the mid-1990s to the late-2000s. Income inequality remained steady in Japan and Norway, and declined in the remaining five countries.

Although Sweden, Finland and Denmark displayed the largest growth in income inequality during this time period, these countries are considered to have relatively low inequality.

The Gini index, which is a globally recognized and commonly used tool for measuring income disparities, rose in Canada from 0.293 in the mid 1990s, to 0.320 in the late 2000s.

A Gini index of 0 indicates equal distribution of income in a particular economy, while 1 would indicate that one person has all of the income. The Gini index rose from 0.361 to 0.378 in the U.S. during the same period.

To assess whether global income disparity has increased, the Conference Board analyzed the income gap between rich and poor countries, the overall world Gini index measure and income inequality within all countries. Global inequality grew through the later decades of the twentieth century and into the early-2000s.

According to the Board, 22 per cent of people live in countries where the income inequality level is stable, while 71 per cent experience increasing inequality in their country.

Countries with highest inequality are generally clustered in South America and southern Africa.

On paper, the average Canadian is better off than in years past. Average income in 1976 was $51,000, with a 17 per cent increase to $59,700 by 2009, adjusted for inflation. Although these are optimistic figures, average income taken at face value is not necessarily an optimal measure of how the majority of the population is doing.

Some analysts place greater importance on using the median income of individuals to determine true income disparities.

The gap between the medium and average income has been growing in Canada, suggesting that incoming growth is distributed unequally.

While soft viagra the richest Canadians have increased their share of the national income, both the poorest and the middle-income Canadians lost share. The growth in the share of income distributed to the rich is due to growth in the demand for highly skilled labour and the loss of demand for low-skilled industries because of gains in more heavily skills-intensive exports.