Maybe it's the same sort of morbid fascination that causes people to slow their cars down as they drive by an accident scene. I don't know, but that's as good as guess as any to explain my interest whenever Statistics Canada releases their latest figures on the distribution of wealth in Canada.
These aren't annual reports, and in fact they don't seem to be released with any pattern or regularity; they are more like a mechanic giving a car a 10,000 mile kick of the tires than a regular tune-up. They don't usually enter the world of predicting how the motor will turn over in the future, but they sure give you a good idea of what your present circumstances are and how that compares to past performance.
I know before I even read one of these things my place in the bottom quarter of the chart isn't going to have changed from decade to decade. I never was in what would be called a high income profession before going off work, and now that I'm on a fixed income there's no way I'm going to be climbing the ladder to a higher rung.
What these reports are good for is giving an overview of how evenly distributed our so-called economic boom is spread across the population at large, and what changes, if any, have taken place over the years. The study, "Revisiting Wealth Inequity" that was released yesterday, was part of an overall report, Perspectives On Labour And Income published in the Statistics Canada publication The Daily.
Now usually I content myself with just reading the highlights of these reports as they are reported in the press, but this year I was curious enough about it to check out the link above. I was happy to find that the authors of the report, René Morissette and Xuelin Zhang, didn't subscribe to the theory that unintelligibility equates to proof of intelligence and had written the report in clear and straightforward language.
While the purpose was to compare the dispersal of wealth among Canadians, and analyse how it broke down along various criteria over the past three decades, it also provided other interesting information that I hadn't considered. For example, how do you define wealth? We all have an idea of what it means in our heads — visions of splendid houses and fancy this and fancy that.
But for a report like this you need something a little more concrete; a formula that allows you to come up with an absolute figure. In this case it's a simple matter of deducting one's total debts from one's total assets and the resulting figure equals a person's true wealth. Items that are excluded from the assets side of the ledger because of either their depreciative qualities or the fact that they had been excluded from one year's survey were personal contents of a residence and income from private employee pension plans.
While I can see that the latter could play a significant role if it were factored into somebody's assets, because that information hadn't been collected in 1984 (the first year used in the study for comparison purposes), it had to be omitted from the other two years for the sake of balance.
From personal experience the only way I could see private pension plans changing the results would be to further increase the gap between the lowest and the highest brackets. Usually the higher your income the greater the chance of having a high-return private pension plan.
The first thing the report tells us (all figures have been adjusted for inflation) is that from 1984 to 2005 the median wealth of Canadians rose by 26%. Now that sounds promising until you read the "but", which says that for the top 20% of families the median rose from $336,000 in 1984 to $551,000 in 2005, but for the bottom 20% the median, which had been zero in 1984, had fallen to (-$1,000) by 2005.
Unfortunately these figures are borne out by the even more depressing details of how the distribution of wealth has changed in the same time period. In 1984 the top 10% of families owned 52% of the wealth in Canada, while the lower 50% controlled only 5%. (This table provides a complete breakdown of the distribution of wealth over the periods in question.) By 2005 the upper 10% had increased their share to 58% while the lower 90% either remained the same or dropped.
So although the average wealth had increased over the course of time, it was simply a matter of the rich getting richer. Unfortunately it was also a matter of more people becoming poorer. The percentage of people with zero or negative wealth increased from 18% in 1984 having zero wealth to 24% in 2005 and 11% being in the negative to 14% in the same period.
The report also breaks down the results even further by age and gender. These statistics substantiate quite a few commonly held beliefs: young people aged 24 to 35 saw their median wealth drop by 50% in the period covered by the study. Those in the next age bracket, 35 to 54, who had a university degree saw their income rise by 39%. (By thirty-five most former university graduates would have paid off their student loans, which until that time would have obviously affected their total wealth.)
Those without a degree were in the same boat as the people in the lower age bracket. If that isn't proof of the difference a degree can have on your earning power and your ability to generate sufficient income to accumulate real assets, I don't know what is. It's also a pretty strong argument in favour of ensuring universal access to higher education through grants and loans.
If we limit higher education to those who already have sufficient wealth to pay for their children's education than we are ensuring that this financial disparity will continue, and only increase with time. As fewer people are able to attend post-secondary school, the fewer people who accumulate sufficient wealth to send their children to school, and so on. It's pretty hard to argue with numbers that show an almost 90% disparity in wealth between university and non-university graduates in the same age range when discussing the merits of ensuring everybody capable and wanting it receive a post-secondary education. It may not guarantee a better standing of living but it sure doesn't hurt.
This study also offers proof, for those who still need it, of the difficulties faced by a single woman. A woman on her own, even if she is not a single mother, is the most financially vulnerable individual in society. Over 40% of them are low income and have insufficient wealth to remove themselves from those circumstances. In other words they have no disposable assets that would allow them to change their situation.
With so many single women falling into the low-income category, is it any wonder that there are still so many concerns about women not receiving equal pay as men? It also substantiates the claims that more day care spaces are needed to help single women with families get meaningful employment. Offering them $100 a moth towards paying for day care as the Conservative Party has done with their Day Care program is as insulting as it is useless. This is especially true as it comes in the form of a non-refundable tax credit that is only of use if you have a high enough taxable income to warrant using it and don't really need it.
In the preamble to the study the authors state that wealth allows us access to economic resources in times of need. It also allows a person the freedom to make choices on how they are going to live their lives. With sufficient wealth you can take early retirement, start your own business, and generally buy your freedom.
But for about 85% of the population few of those opportunities exist, and for almost 40% the idea is so far from reality they can barely even dream about it. While we are fed the myth as young people that anybody can grow up to be successful and wealthy, the statistics of the last twenty-one years dispute that idea. Since 1984 until present, the top ten percent of the population have increased their grip on their share of the wealth from 52% to 58%. That may not sound like much, but remember that factors in inflation and population growth, so it is larger than it appears at first glance.
I have no problem with people accumulating personal wealth — there has to be some reward for giving up the best years of your life. What I do have a problem with is the fact that more and more of the wealth is ending up in the hands of fewer and fewer people. There is something decidedly unfair about the fact that too many people at the end of the day are going to end up with nothing to show for their labour.
We need to ensure that there are sufficient safeguards in place to guarantee everyone's peace of mind that even without financial means they will not be denied opportunities for education, assistance with day care, and other essential services that only money can buy. Then maybe the gap between the wealthiest and the poorest won't matter as much.
Until that time, don't let anyone tell you we live in an equal opportunity society – one only needs to look at the numbers to see how wrong that is. Like the old Woody Guthrie song says, "If you ain't got the Do Re Me boy, if you ain't got the Do Re Me, It doesn't matter who you are, you won't get very far, if you ain't got the Do Re Me".