Gordon Campbell’s response to the Census inequality findings

Browsing through the letters to the editor in the two big Vancouver dailies this morning, I came across a letter from BC Premier Gordon Campbell responding to the recent Census findings of declining median incomes for workers in this province. The letter was published in both newspapers: a longer version under “Purchasing power and globalization” in the Vancouver Sun and an abridged version under “Rising incomes” in the Province. In the letter, Premier Campbell expresses his concern that median income statistics “don’t tell the full story of the growth and prosperity we’ve experienced in British Columbia over the past seven years” (i.e., since Campbell’s government took over). Campbell’s rebuttal?

While the Statistics Canada figures focus on median income, they do not reflect the disposable income that individuals take home with them. According to BC Stats, personal disposable income per capita in B.C. is up 17.2 per cent since 2000, and by five per cent in the past two years alone. This is the highest growth rate seen in more than 20 years.

Much of that growth in take-home pay can be attributed to the tax cuts brought in under this government.

To his credit, the numbers he quotes seem right according to this BC Stats table. However, bringing up per-capita personal disposable income, which is essentially after-tax income averaged over the whole BC population, only muddles the waters and misses the point. The point, Mr Campbell, is that the economic growth that BC (and Canada as a whole) has enjoyed has been very unevenly distributed. So focusing on the average, which is what a per capita statistic is, does not tell us anything about the earnings of workers or even the general distribution of incomes, regardless of whether we look before or after taxes. The income distribution is highly skewed to the left (i.e. there is a higher concentration of incomes towards the bottom of the distribution) as demonstrated by the median incomes being considerably smaller than the mean (or average) incomes regardless of what category one looks at. Those at the top of the distribution have enjoyed both higher earnings and have disproportionately benefited from the provincial government tax cuts. Is it surprising, then, to find that average after-tax incomes have increased while the median incomes are falling? Not really. Are we leaving too many people behind? You bet!

Instead of patting himself on the back for brining “growth and prosperity” to BC, Premier Campbell would be better advised to start worrying about why it is that in a province that, as he remarks, has seen “record-low unemployment rates” and “more than 420,000 new jobs created since 2001” the median earnings for those working full-time full-year have actually fallen by 3.4% between 2000 and 2005.

5 comments

  • I am reminded of the Socreds’ restraint policies of the early 1980s and then economic-development minister DOn Phillips bragging that NOrthEast Coal was the biggest deal ever in Northeast B.C. A cool economic analysis by UBC Professor RObert C. Allen of the BC Economic POlicy Institute concluded that that project was lowering the average income of British Columbians, a fact obscured by the surge of labour migrants in to the province.

    I am also reminded of Gordon GIbson, who once pointed out to me that the average family in Mississippi had 50% more disposable income than the average family. To which I responded that most of that margin was probably going into health insurance, health expenses, and quite possibly private education, and that most sane and sensible ONtarians would not trade their higher quality of public goods for more disposable income. I still await his rebuttal.

  • Was a time when the average person understood that within an economic system where ownership was concentrated at the top and thus created tributary flows from the bottom up the more the average individual worked and the more of them that did so the wealthier the top got.

    Sans high union density; sans high taxes on capital gains; and sans highly progressive income taxes it does not take genius to square robust job and GDP growth with growing income inequality and stagnant wages.

    In fact I think all of us lefties pointed this out at the time. So we can take some solace in the fact that we were right and the right was wrong.

    Question is can we make this part of the understood common sense again?

    I suspect it depends on whether or not we are coming to bury Cesar or merely grimace at him.

  • Phillip Huggan

    Apart from communism, you can wait for a progressive economist to be the Minister of Finance or PM, and urge prescriptions like indexing the lowest income tax bracket earnings to the spread between the median and mean average Canadian earnings. Whenever Bay St. or, um, 2nd Ave SW, is booming, the loss in revenue shouldn’t be noticed too much.
    I guess you have to have this knowledge in University textbooks and wait a generation…”Walden Two” suggested having skilled persons work as labourers for a week to increase empathy, but leaders like Mao and Stalin got carried away with the concept. Perhaps guided tours and interviews with minimum wage earners once a year?

  • Why always communism, Mao and Stalin? Surely there is more between heaven and earth than that most unholy trinity of argumentation!

    And I hate to be a pill but most of the most successful finance ministers have not been economists–progressive or no.

  • He’s just trying to confuse the matter so that people who don’t understand statistics jargon think he’s addressing the issue. “Let’s talk about disposable income, in my left hand. Now, you won’t notice that my right hand is swapping median with mean so that my trick works out the way I want…”

    Shameful as the subject is, I think you’d have better traction in exposing the misdirection. Nobody likes being duped.

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