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Best of 2011: Glittering Vancouver is now the poverty capital of Canada

This dubious distinction points up how severe income inequality has become in Canada and the U.S. New evidence shows the terrible toll on people and economies such widening gaps can have.

Vancouver, as seen from Queen Elizabeth Park.

Vancouver, as seen from Queen Elizabeth Park. Flickr

Riotous times in Vancouver.

Riotous times in Vancouver. Wikipedia

Editor's Note: In the run-up to the new year, Crosscut is sharing ten days of its best stories from 2011, each with a different theme. We started things off yesterday with a pair of articles about public spaces in the Northwest — Lawrence Cheek's Why does Seattle have so many bleak public spaces? and Mark Hinshaw's James Corner's waterfront plans: Get the editing pencil

Today, as so many readers find themselves en route to their holiday destinations, we feature stories from beyond the Northwest — and, in fact, the United States. The best Crosscut coverage of the Americas. 

Tangled up in its green lifestyle, towering beauty, and mining-headquarters millions, Vancouver has a new and dubious honor: it's the poverty capital of Canada. We have the highest share of our population in the lowest income bracket compared to any other city in Canada.

It’s a reflection of the gap between rich and poor that has been growing faster in Canada than in the U.S. since the mid-1990s — especially in B.C. Within Canada, low income rates rose higher in B.C. than in any province except Alberta in the latest recession, according to a new report from the Conference Board of Canada, which typically focuses on business and productivity issues. Vancouver is one of only three cities in Canada whose low income rates didn’t go down between 2000 and 2009. BC's child poverty rate is still the highest in Canada for 8th year in a row. And Vancouver, by one measure, is the third least affordable city in the world when it comes to housing.

Aside from the obvious moral questions of fairness, high inequality can diminish economic growth if a country is not fully using the skills and capabilities of all its citizens, or if it undermines social cohesion and increases social tensions. The World Economic Forum’s latest assembly of global experts recently listed inequality as one of the five leading challenges facing the world over the next 12-18 months.

Broadcaster Bill Moyers, in a much-clicked interview on Crosscut, is also sounding the alarm on this topic: “Today it’s the staggering inequality between top and bottom that threatens the fabric of our country. One of the greatest of our justices, the late Louis Brandeis, warned that 'You can have wealth concentrated in the hands of a few, or democracy, but you cannot have both.'  Now the Supreme Court has opened the floodgates for millionaires and billionaires and giant corporations to pour unlimited amounts of cash into our elections, consolidating their hold on the political process and the corporate state.”

The underlying assumption of every current political leader’s desperate quest for job creation is that a rising economic tide floats all boats. Actually, not. In Canada, the Conference Board study notes that the gap between the real average income of the richest group (top 20 percent) of Canadians and the poorest group (bottom 20 percent) grew from $92,300 to $117,500 in the last three decades. “Thus, while the poor are minimally better off in an absolute sense, they are significantly worse off in a relative sense,” says the board’s report. Median incomes in Canada (half of the people are above, half below, corrected for inflation) have grown by a mere 5.5% in 33 years. The typical Canadian’s economic fortunes have basically flatlined for three decades.

By contrast, the richest 1 percent of the population (average income $405,000) took home almost a third of all the growth in incomes in Canada from 1998-2007, mostly due to lavish corporate compensation packages. To cite just one extreme example: the founder of Shaw Cable, one of Canada’s protected telecom giants, recently retired with a $6-million-a-year pension. In 17 hours he will collect the maximum yearly retirement benefit for a pensioner collecting her Canada Pension Plan ($11,520). In the U.S. today, the wealthiest 1 percent of Americans have a greater collective net worth than the bottom 90 percent.

Explanations range from market forces and globalization to dwindling unionization rates, stagnating minimum wages, and reduced personal and corporate income taxes.


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Comments:

Posted Fri, Dec 23, 8:28 a.m. Inappropriate

Two comments on this piece:

1) The Sound Transit apologists point to Vancouver’s grade-separated rail as a shining example of what we supposedly “need” around here. This piece illustrates that populist arguments for light rail (i.e., it supposedly helps poor people get to jobs, it will increase the economic pie, it allows the poor to do without vehicles which allows them to pull themselves up by their bootstraps, etc.) lack merit. Vancouver has a growing wealth disparity, and light rail isn’t curbing that bad economic trend. Light rail is a boon to contractors and lawyers, and the property developers near stations . . . period.

2) Here the piece veers off into LaLa Land, when it purports to describe economic effects of increasing regressive taxes:

In Vancouver, one intriguing explanation for the recent referendum defeat of the Harmonized Sales Tax (HST) is that lower-income voters were fighting back against the growing income split. A key feature of the revenue-neutral tax was that it would shift some of the tax burden from businesses to consumers.

By all accounts this would stimulate the economy, as evidenced by the implementation of similar taxes in the vast majority of countries in the world. That, in turn, would lead to more jobs for everyone, according to virtually all the economists commenting on it.

In Seattle we have the most regressive taxing regime in the country, primarily due to the very heavy state/local sales tax rate of 9.5%. That heavy regressive tax burden on people and families here does not lead to “more jobs for everyone”. In the 2000 – 2010 period the private sector around here lost lots of jobs. Downtown saw a 15 percent loss. The rest of the region didn’t do well either (9 percent loss city-wide, 4 percent loss for King County, and a 2 percent loss for the Puget Sound region). Public sector employment has benefited somewhat from our high regressive taxes though. Government sector employment in the 2000 – 2010 period increased by 4 percent downtown, 2 percent city-wide, 7 percent in King County and 16 percent for the Puget Sound region. Those figures come from here:

http://downtownseattle.com/pdf_files/resources/Workforce_7.11.11.pdf

Ladner’s broad assertion about the efficacy of more regressive taxing is shown to be flat wrong by what’s actually going on here, and in other West Coast cities. In LA and SF the state/local sales tax rate is near this region's, and underemployment/unemployment rates there are very high as well.

crossrip

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