April 30, 2014

By Margaret H Johnson

The Centre for Policy Alternatives released a report entitled Outrageous Fortune Documenting Canada’s Wealth Gap recently that confirms in statistics what we already knew by intuition. The rich are indeed getting richer.

They make a clear distinction in this report between wealth and income gaps and find that Canada's wealth gap is bigger than its income gap. Not only does Canada’s richest 20% of families take almost 50% of all income, but they also lay claim to 70% of the wealth.

The report also provides an analysis of the 86 wealthiest Canadian families, finding that they held the same amount of wealth in 2012 as the bottom 11.4 million Canadians combined. The wealthy 86 families represented 0.002% of Canadians, but they held the same amount of wealth as the bottom 34% of the population.

Let’s stop for a moment. The figure is 0.002% of all Canadians own $180 billion of the wealth in Canada…

According to the report, over a 13-year period, wealth has increased in Canada, but the overwhelming majority of the increase (66%) in wealth has gone to the wealthiest 20%.

In other words, for every new dollar of real wealth generated in Canada since 1999, 66 cents of that dollar has gone to the wealthiest 20% of families. This left 23 cents for the upper middle class and 10 cents for the bottom 60% of Canadian families.

The lower middle class barely registered gains in wealth, while the poorest fifth of Canadians were stuck in a net debt position, owing more than they own.

Now, I’ve been saying this for years. The $518 billion worth of debt (excluding mortgages) as reported by the Bank of Canada in April 2014, is likely owed by the bottom 60% of Canadian families. This tends to explain the reason why the debt levels keep going up. In 1990 the total consumer debt levels were $100 billion. Today they are over $500 billion.

Wealth inequality is a huge problem in Canada. The stressful levels of increasing debt are a significant part of the financial picture that shed light on the anxiety that ripples throughout today’s working families.

We hear a lot about child poverty, but it is not just the question of child poverty in Canada but family poverty.

Dennis Raphael, PhD, a professor of health policy and management at York University in Toronto, mentioned in a paper published in January 2014 that we have to commit ourselves to reducing existing power imbalances “…and provide the benefits and supports necessary to avoid poverty. These solutions have been adapted in most wealthy developed countries, and not surprisingly, their child and family poverty rates are lower than is the case in Canada.”

The report on the ostentatious wealth of 86 Canadians provides insight into the underlying causes of the growing dependency upon credit and the resulting anguish of long term consumer debt by the majority of Canadians – the bottom 60%.

Being a debtor or deep in debt is not a character flaw of some type. It is a statement that, for the majority of Canadians, they need a bigger piece of the economic pie. This would help reduce the silent but painful dependency upon credit and finally help them get out of debt.