The Widening Wealth Gap

The wealth gap is a term used to describe the phenomenon of inequality amongst classes of people.  In Canada, class is determined by one’s income, assets and overall wealth accumulation and then one is categorized into high, middle or lower class. Those living in lower class or poverty can also be considered living below the low income cut off (LICO) as revealed by Statistics Canada (2015). LICO was an income threshold created to describe those that will spend 20% more of their income on the basic necessities of living like food, shelter and clothing (Statistics Canada, 2015). Interestingly, there is not a threshold to be considered a high income earner.  Statistics Canada calculates a median income for each province and those earning well-above the median income, by Canadian social norms, could be considered a high income earner.

Inequality between classes is not limited to income alone. Inequality can be determined by looking at health outcomes, educational background, race, gender, family size, disabilities, mental health challenges, geographical location, and access to opportunity, overall asset accumulation, social inclusion, among many others and reviewing what the disparities are within categories and between the three classes. Research is also expanding to determine why fewer Canadians are holding more of Canada’s wealth while more individuals are falling below the poverty line. A wealth gap is a detriment to every society as all forms of inequality are. A society cannot fully thrive or work at its highest capacity when most of the individuals, as determined by a wealth gap, do not have access to the same educational and employment opportunities, health outcomes,  income and political decision making power.

In April 2014, Canadian Centre for Policy Alternatives (CCPA) produced a report titled “Outrageous Fortune” to document the urgency of this phenomenon in our current social landscape. CCPA stated that the richest 20% of Canadians hold 70% of Canada’s wealth, and that income inequality amongst the various classes in Canada has continued to increase at a startling rate.  To put this into further perspective, CCPA illustrated that the wealthiest 86 Canadians held the same wealth as the bottom 10.1 million Canadians  and between 2005-2012 the top 10% of Canadians saw their median net worth grow by 42% while the bottom 10% of the country saw their median net worth shrink by 150% (2014). Many might wonder why this gap is such a problem especially when living in Canada where access to free education and higher paying employment is an “equal opportunity” for everyone; however, increasing statistics such as this prove that “equal opportunity” is more of an illusion than a democratic right for many.

According to a research article titled “Consumption, income, and wealth inequality in Canada” (2010) the wealth gap has many negative effects on Canadians when those with lower incomes tend to work longer hours for lower wages, are the first to experience unemployment in a recession and experience instability in wages, have less education than their wealthier counterparts and therefore less choice in their line of work, poorer health outcomes and these numbers can differentiate depending on race and gender (2010). Although interestingly, more females than males are now graduating from post-secondary institutions and yet still make less wages overall than their male counterparts. Trends like this are alarming but can offer insight into how our overall social structure is effective for some groups of people and not effective for others.

The concept of a widening wealth gap is not a new one. A review of income and wealth written in 1988 by the Economic Council of Canada illustrated the very same concept of an increase in wealth inequality that we are still seeing today.  They discussed the high numbers of single-elderly-females living in poverty and single-parent households headed by females as at-risk groups for poverty. These two same trends remain true today and due to the feminization of poverty and the fact that more single-parent households headed by females are raising children while living in poverty, can be directly correlated to the increase in inter-generational poverty which describes that children growing up in poverty are more likely to live and raise their children in poverty as well (Statistics Canada, 2014).  As seen within this research from 1988 to now, various trends and the types of groups categorized as living in poverty remains much the same which means that moving out of poverty still remains a difficult task for many.

Canada has a threshold of what is deemed a low income but not a threshold for what is considered to be a high income or what a person needs to have to be considered a wealthy person beyond social norms; assets, accumulation of goods and items, prestige and more. When discussing matters of poverty as a society we often provide bottom lines, but the opposite is true when discussing matters of wealth.  An example of this can be seen within minimum wage discussions. Advocates argue that increasing the minimum wage or calculating a living wage for Canadians will decrease the effects of poverty in their lives and while this may be true and a great solution for a period of time, within our capitalist system the basic economic concepts of supply and demand would illustrate that as income and spending increases the cost of goods and services increases, so we have a constant push and pull to increase wages for low income earners while battling the market as wealth accumulates and the minimum wage push ultimately becomes ineffective.

Canada needs an uprising within the low income community. If we want to increase minimum wage then we should also do so while simultaneously imposing maximum thresholds as well. Civilizations survived long before currency existed and at one time the work we completed was to survive and share our resources with each other, yet the accumulation of and the need for more wealth, goods, power and control has become a large motivator behind decision making today. We can’t eliminate poverty and bridge the gap between social classes if we don’t also fix the disease of greed as well.

Within an oppressive and integrated social system, members do not often have the option of free choice and for many, the system appears to be inflexible to change. This type of thinking can lead to a further exploitive society in which separation of people breeds a false consciousness and the cycle of oppression continues.  With fewer individuals keeping the wealth to and for themselves while hosting the idea that we all constantly need more for ourselves, class inequality within a capitalist market has never been more apparent or useful for the wealthy than it is today. Without a change in the way we think, live and spend our money, this widening wealth gap will continue to grow. We all require a total revolution. We need to bring accumulation to a level of controlled measure, eliminate the motivation of needing more and learn to share resources with one another. Only then can we finally begin to create a new culture founded on things of value beyond the material which is crucial to eliminating the wealth gap and building equitable communities. Disempower the individual agenda.  Sharing is caring.

Jaclyn is graduate of the University of Western Ontario and has been working in the not-for-profit sector in London since 2008 in the area of housing, community development and most recently, at risk populations.

For more information:

Brzozowski, M., & Gervais, M. &  Klein, P., & Suzuki, M. Consumption, income, and wealth inequality in Canada. Review of Economic Dynamics, 13, 52-75.

Government of Canada (2015). Statistics Canada.  Low income cut-offs retrieved from http://www.statcan.gc.ca/pub/75f0002m/2012002/lico-sfr-eng.htm

Macdonald, D (2014). Canadian Centre for Policy Alternatives. Outrageous Fortune retrieved from https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2014/04/Outrageous_Fortune.pdf

Messinger, H.  The Size and distribution of the Poverty Gap in Canada: A Micro Analysis of Variations among Demographic Groups. Economic Council of Canada, 34, 1-14.