Thursday, December 27, 2012

Ed Broadbent on rising inequality

The vast majority of middle- and lower-income working Canadians have a minimal chance of suddenly vaulting into the layer of corporate executives and leading professionals who comprise most of the top 1 per cent

The situation changed fundamentally in the 1960s and ’70s, and not just because of economic growth. While unions continued to improve wages and working conditions, government invested massively in education at all levels, as well as in other public domains, with the clear goal of equalizing opportunities. Post-secondary education of all kinds became an affordable reality — and with all these changes came increased expectations for parents and kids from all families.
The political decisions and investments we made decades ago not only in public education but in health care, pensions, employment insurance and progressive income taxes made all the difference. By reducing real inequalities in life we laid the foundations for a society with genuine equality of opportunity — one where it didn’t matter that much on which side of the tracks you were born.

But we have recently been moving in the opposite direction, toward a less equal society. We are moving away from equality-promoting public services and social programs and toward tax cuts most beneficial to the affluent. This important shift in public policy came as middle-class jobs were disappearing and as earnings in the market place were becoming more unequal.

We do not yet know just how much rising inequality in the 1980s and 1990s will ultimately affect longer-term life chances. But we do know that in recent decades we have become more unequal more rapidly than most other OECD countries. We also know that today’s university students must pay thousands more in fees than students did in the 1960s and 1970s. And their multi-thousand-dollar debts upon graduation vastly exceed those of my generation.

We know that children from low-income families start at a significant disadvantage in life, partly because of poor access to food and housing and partly because their parents lack time and resources. This disadvantage can be partially offset by high-quality child care and early learning programs, but these are thin on the ground in much of Canada despite the fact that the proportion of children living in poverty is much higher than it was in the 1960s and 1970s.

Michael Veall, past president of the Canadian Economics Association, tells us in a recent paper that 70 per cent of this elite group stay where they are from year to year. In fact, turnover at the top is lower than it used to be. But at the other end of the ladder there has been a great deal of movement in recent years — in both directions: not just out of poverty but into it. According to Statistics Canada, almost one in five Canadians (17.3 per cent) lived in poverty in at least one year between 2005 and 2010. 

It’s bad enough that there are so many poor Canadians at any given time, but these figures show working people move in and out of poverty. Some will lose their jobs. Some may be lucky enough to find good and steady work. But even many of those who have a job stay among the working poor and many will remain well short of a middle-class standard of living for their entire lives. While this is particularly true of many aboriginal people, recent immigrants, single parents and people with disabilities, it’s also true of many others. This is why we need strong public programs that reduce inequalities at birth and preserve a real equality of opportunity.

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