Study reveals growing income gap in Saskatchewan - Labour Day 2009

Labour Day is a national holiday to celebrate workers’ economic and social achievements. On the one hand, workers in Saskatchewan have much to celebrate: they continue to be a fundamental driver of the economic and social life of our province. Our labour creates the infrastructure, services and goods that support our communities. We contribute to the economy through our taxes and we spend most of our wages locally.

But this Labour Day, Saskatchewan’s working families are faced with some stark facts about how they have fared from 1976 to 2006. The Canadian Centre for Policy Alternatives (CCPA) Saskatchewan Office has just released the report Boom and Bust: The Growing Income Gap in Saskatchewan. It analyzes Saskatchewan family earnings from 1976 to 2006 and reveals that thousands of low and middle income families have failed to thrive during these years of neoliberal economic policies.

Even though the overall economic pie has been growing, the slices for families raising children, the cohort in the study, showed that income of the bottom half of earners has remained the same, or even worse, decreased in size.

The benefits of the larger pie have gone almost exclusively to the richest 10 per cent of families.

For the half of Saskatchewan families with children that were the least well off, median earnings and after-tax income were actually lower in real terms in 2006 than they were in 1976. And their share of total earnings and after-tax income was lower in 2006 than in 1976. In contrast, the richest 10 per cent of families increased both their real income and their share of total income.

Through periods of both bust and boom in Saskatchewan’s economy, the income gap has widened. Income inequality reached an unprecedented level in 2006.

The data also shows that families are employed more weeks in 2006 as compared to 1976, yet only the richest 10 per cent have made gains in income.

So why does income inequality matter and why should we care that inequality is increasing?

The CCPA study, authored by retired sociology and social studies professor Paul Gingrich from the University of Regina, argues:

The economic costs of poverty are staggering, for taxpaying households and for governments.

• An Ontario report The Cost of Poverty reveals that in real terms poverty costs every household in Ontario from $2,299 to $2,895 every year. The Ontario government loses $10 to 13 billion a year due to poverty, between 10 and 16 per cent of the provincial budget.
• Treating the symptoms of poverty is expensive. Consider the incremental costs to the health system that result from the lower health status of those who are poor, the costs to the justice system, and the costs of government social transfers, when thousands are living on the margins.
• The social costs of poverty are well-known. Societies that allow their social capital to decline face growing incidence of social dysfunctions. When such conditions become endemic, breaking the cycle is extremely difficult, which in turn discourages new capital investment, perpetuating a negative cycle.

The latest international research based on United Nations data sources demonstrate that social problems are related to the distribution of wealth in a society, not to its overall wealth.

• The growing gap in income inequality results in more social problems like mental illness, substance abuse, teen pregnancy, male violence, homicide, incarceration and shortened life expectancy.

Gross income inequalities stand in the way of a vibrant democratic system.

• Frank Cunningham, professor of philosophy and political science at the University of Toronto, sees three attitudinal trends emerging from the growing gap:
• Inequalities foster elitism and resentment. The well off resist progressive change and exert disproportionate influence in the political system.
• As the most well off continue to succeed, they are encouraged ‘to leave the boat’. They isolate themselves from the rest of society physically and psychologically and resist economic measures that are fundamentally redistributive.
• Poor families are threatened with becoming beggars and become dependent on the charity of the well off and of government transfers. These conditions lead to disillusionment, despair, cynicism and low participation in the political system among those at the bottom of the social ladder.

Inequality reduces the life chances and opportunities for children.

• There are too many children trapped in poverty; their full potential to contribute economically and civically is lost. There are also intergenerational and opportunity costs: consider how much productivity and tax revenues society loses when children of successive generations fail to escape poverty.

The findings of this study are critical food for thought and action for governments and communities. Without unions, the gap between rich and poor would be much worse. Unions help reduce the gap by giving workers a vehicle to negotiate better wages, benefits and protections.

This Labour Day let’s celebrate the efforts that the union movement makes to build a more caring and sharing society.

Larry Hubich, SFL president

To read the full the full study, visit www.policyalternatives.ca and www.growinggap.ca