Toronto at risk of becoming “income inequality capital” of Canada: report

Since 1997 the gap between the richest and poorest in Canada has increasingly widened, a fact underscoring the troubling findings in the United Way’s latest report The Opportunity Equation.

The research targets Toronto as the city where income inequality is most pronounced: It grew at double the national rate of 14 per cent between 1980 and 2005. The city’s income inequality jumped by 31 per cent, ahead of Calgary, 28 per cent; Vancouver, 17 per cent; and Montreal, 15 per cent.

“Because of the concentration of poverty, declining job quality and rising income inequality, we are seeing that Toronto can be a city of opportunity, but only for some. This is cause for concern,” said Susan McIsaac, President and CEO of United Way Toronto

Fairness is being undermined in our city – growing income inequality is creating an uneven playing field for opportunity. Hard work and determination are not a guarantee for success – a person’s background and circumstances have a far greater influence on their future.

It’s a troubling finding that affects every level of society, even the rich who may feel sheltered from the fallout.

Violent crime, for example, has not only been positively correlated with this economic indicator, but also causally linked. This is an important distinction that means the more inequality endemic to a region, the more violent crime will exist within it.

In 1976 the top 20 per cent of income earners took home (after tax) $109,700 a year on average according to Stats Canada. In 2011 that figure grew to $139,400 – a jump of $29,700. In contrast, the bottom 20 per cent of income earners took home only $13,000 a year on average in 1976 and $15,100 in 2011 – a difference of only $2,100.

The economic chasm between these two groups in 1976 and 2011 was $96,700 and $124,300 respectively; meanwhile, the cost of living has risen steadily from 31.1 to 119.9.(CPI), an increase more easily absorbed by the rich than the poor.

The Opportunity Equation sketches a roadmap to address this disparity and, consequently, the societal harm engendered by it. Among the recommendations: making housing affordable, building an effective Labour Market Information system that will promote quality jobs, and improving labour standards to ensure fairness for workers.

Median income has increased in every province except Ontario and British Columbia

The Rise & Fall of Canadian Median Income (2006 - 2012)
(Click image for interactive map)

Research from the Broadbent Institute reveals that the country’s median annual employment income (adjusted for inflation) rose by $1,073 (3.5%) between 2006 and 2012.

Resource producing provinces like Newfoundland and Labrador, Saskatchewan, and Alberta fared the best, while British Columbia and Ontario were the only two provinces that saw decreases.

“There are several factors driving annual employment income. First, annual incomes will rise if pay rates and hourly wages and annual salaries increase. Second, incomes will rise if people are working more hours in the weeks. Third, incomes will rise if well-paid jobs are being created, allowing workers to move from lower-paid to higher-paid jobs,” wrote Andrew Jackson, senior policy advisor at the Broadbent Institute.

Around 1 in 5 people in the Greater Toronto Area are precariously employed and this could be one of the factors suppressing income growth according to Jackson. Low wages can also have a stagnating trickle-down effect on Ontario’s interconnected economy.

“You have two options here: either you cut your spending, which means you’re contributing less to the economy today, or you borrow money in order to make up for lost income. That just means you’re going to have to pay it back later on down the road,” said Gareth Watson, Director at wealth management firm Richardson GMP.