The Census on Inequality (Updated Again)
Marc recently trumpeted this blog for being ahead of the public debate on several economic issues. However, we have perhaps been slightly behind the curve in commenting on yesterdayâ€™s release of income statistics from the 2006 Census.
It indicated that, from 1980 through 2005, the median income among full-time CanadianÂ workersÂ remained flat. The median income of the top fifth rose by 16%, as that of the bottom fifth fell by 21%.
In one sense, the release contained relatively little new information. Countless studies have already documented worsening inequality due to rising incomes among the rich, falling incomes among the poor, and stagnant incomes in the middle. A while ago, I heard Lars Osberg observe that the only reason to continue conducting a census is to provide the sample frame for the more frequent studies that unveil new information. On this basis, Osberg published his take on Canadian inequality over the last quarter century a few days before Statistics Canada released the 2006 Census figures.
Nevertheless, yesterdayâ€™s release was significant because it authoritatively confirmed what previous studies found and attracted much-needed media attention to the issue of inequality. Although the press has given Statistics Canadaâ€™s facts substantial coverage, its interpretation of these facts has sometimes missed the mark.
Todayâ€™s National Post coverage consists of Terence Corcoranâ€™s rebuttal of Statistics Canada on the front page and the Fraser Instituteâ€™s rebuttal of Statistics Canada in the business pages. The Corcoran/Fraser Institute line is that, although individual incomes have stagnated, family incomes have increased. However, family incomes are higher only because, on average, more family members are working. While increased employment may be desirable, it hardly excuses stagnant pay rates for workers.
In any case, family incomes have increased proportionally faster at the top end than in the middle or at the bottom. No matter how Corcoran and the Fraser Institute slice it, inequality is getting worse.
They correctly argue that Canadaâ€™s public system of taxes and transfers has mitigated the inequality of employment income emphasized by Statistics Canada. It is odd hearing this argument from people who advocate cutting taxes and shrinking transfer programs. Do Corcoran and the Fraser Institute now support government redistribution to combat inequality?
The Globe and Mailâ€™s front-page headline included, “Society has made great strides in the past generation – just not in wealth creation.” Inside, an op-ed by Don Drummond contended, “Weak overall incomes are a predictable result of Canadaâ€™s lacklustre productivity record in recent decades.”
Although higher productivity would undoubtedly be desirable, productivity is not the problem. The Census indicates that median incomes have increased by only 0.1% since 1980. I am pretty sure that median productivity has increased by more than that since 1980. Canada has created a huge amount of wealth over the past quarter-century. The problem is the grossly unequal distribution of this wealth.
UPDATE (May 3): Todayâ€™s Toronto Star editorial hits the mark.
UPDATE (May 6): I have the following letter to the editor in todayâ€™s National Post.
UPDATED (May 9): In todayâ€™s column, William Watson quotes the following letter and argues that the Post should have taken a different tack on the Census.
Workers’ pay remains stagnant
Tuesday, May 6, 2008
Re: The Non-existent ‘Compassion Gap,’ editorial, May 3. The 2006 Census indicates that the median employment income of full-time Canadian workers has not improved since 1980. The National Post tries to pooh-pooh this striking fact by instead focusing on family income, which has increased only because more family members are doing paid work. While expanded employment is welcome, it does not excuse stagnant pay rates for workers.The median Canadian family has more income (and less leisure time) due to increased employment. The fact remains that Canadian workers have been deprived of the proceeds from a quarter-century of rising labour productivity.
Further, the Post emphasizes that the poorest families’ median employment income has risen by 15% since 1980. This meagre gain of 0.6% per year should not silence the legitimate concern voiced by other Canadian newspapers.Erin Weir, economist, United Steelworkers, TorontoÂ