The earnings gap between the rich and the poor is widening in Canada, with incomes among recent immigrants showing especially dramatic declines in recent years, according to sweeping new census data.
Earnings among the richest fifth of Canadians grew 16.4 per cent between 1980 and 2005 while the poorest fifth of the population saw earnings tumble 20.6 per cent over the 25-year time period, Statistics Canada said in its 2006 census release on income and earnings. Earnings among people in the middle stagnated.
That earnings didn't budge for middle income earners was particularly surprising, given that the economy has generally expanded over the past quarter century, said one business professor.
“It's not just that there's inequality growing. We knew that. But that the middle income earner is flat-lining over a long period of time – that's stunning to me,” said Tony Frost, professor at the Richard Ivey School of Business at the University of Western Ontario, who'd previously figured the middle class was moving up.
He gives two main reasons for the overall income disparity: globalization – or a bigger labour pool that's keeping Canadian wages down – and sea changes in the work-force, which now gives greater rewards to people with higher education and specialized skills.
Recent immigrants have lost much ground compared to their Canadian-born counterparts over the past quarter century. One reason for the chasm, more recently, may be that so many newcomers arrived with IT degrees, said Statscan director of income statistics Sylvie Michaud.
“Part of the difference seems to relate to the education they came with,” she said in an interview. “A number came with an IT diploma or an engineering degree related to the high-tech sector. And there's been a slowdown in employment in that sector.”
Web designers and developers, for example, saw wages slide between 2000 and 2005, “and there's a higher proportion of immigrants who came in these categories.”
In 1980, recent immigrant men with some employment income earned 85 cents for each dollar received by Canadian-born men. By 2005 though, the ratio had dropped to 63 cents, the report said. Recent immigrant women saw earnings slide to just 56 cents from 85 cents.
Earnings disparities between recent immigrants and Canadian-born workers increased not only during the two previous decades, but also between 2000 and 2005, the report said.
On average, salaries haven't changed much over the past quarter century. Median earnings of Canadians who work full time edged to $41,401 in 2005 from $41,348 in 1980, measured in constant dollars.
At the top end, a growing number of Canadians have become high earners. The rapid growth among those at the top means an increasing proportion of Canadians have become “high earners” over the past quarter century.
In 1980, 3.4 per cent of full-time earners garnered $100,000 or more, when measured in 2005 constant dollars. By 2005, that proportion had almost doubled to 6.5 per cent, Statscan said.
There's a clear link between higher education and strong earnings. People with a university degree account for 57 per cent of those who received at least $100,000 in 2005, and about two thirds of those who earned at least $150,000 – even though they represented a quarter of full-time earners.
Families, meantime, are earning more than individuals, “mainly due to the increasing participation of female partners in the labour market.”
Working couples with children had the highest earnings of all family types in 2005, with a 20.6-per-cent jump from 1980.
Single moms still have the lowest incomes of all family types, but their lot is improving. Single mother household incomes rose 26.4 per cent over 25 years, while families headed by men fell 4.1 per cent.
Senior couples are faring better, with median income soaring 55.8 per cent from 1980.
In one reversal from 1980, there are now more lower-income children than there are seniors.
