When the leaders of the world’s most powerful economies meet at the Group of 20 summit in St. Petersburg, Russia, on Wednesday and Thursday, they face an economic puzzle only half-solved. Co-ordinated monetary and fiscal stimulus by the G20 in 2008 and 2009 narrowly prevented a repeat of the Great Depression. However, almost five years after the onset of the global financial crisis, the world economy remains mired in slow growth and high unemployment.
As Coyne himself agrees, top incomes (incomes of the top 20%) rose much faster than those of middle and lower income groups for two of the last three decades. Things got worse over the 1980s and 1990s, and then there was a change, of sorts.
I attended the annual meeting of the Canadian Medical Association (CMA) as a representative of Canadian Doctors for Medicare last year. The meeting was not at all what I'd expected.
The CMA, as a professional association representing doctors, has often been seen — fairly or unfairly — as working primarily for the interests of the physicians it represents with patients and health equity appearing at times to be an afterthought. This impression was particularly prevalent during the presidencies of Brian Day (2007-8) and Robert Ouellet, (2008-9), both vocal advocates for privatization (and owners of private, for-profit health care facilities) who used their tenure to advocate for greater private payment for essential health services.
Last year the Metcalf Foundation released a report on working poverty in Toronto. It found that 113,000 people were living in working poverty in the Toronto region in 2005, a 42% increase from 2000. The report's findings indicate that people living in working poverty most commonly work in sales and service occupations; work comparable hours and weeks as the rest of the working population; are over-represented by immigrants; and are only slightly less-educated than the rest of the working age population.
Legislated employment standards are a cornerstone of a strong, healthy society, as well as a robust, thriving economy. They ensure that everyone who works earns a minimum wage for their labour, and that nobody is subjected to inhumane working conditions or unduly harsh treatment at the hands of their employer. It is because of employment standards that workers in Canada have the right to rest periods during and between shifts, to maximum work hours each day and week, to extra pay for working on public holidays, and to a couple of weeks of paid vacation every year. In short, employment standards are there to shield workers – especially non-union workers – against the natural tendency of the labour market to gravitate towards overwork and underpay.
Here are five important takeaways from today’s Cabinet shuffle. As the old saying goes, 'plus ca change, plus c'est la même chose'.
1. Economic (In)action Plan
Canadians hoping the government would signal willingness to address pressing economic concerns such as growing inequality, rising youth unemployment, a manufacturing crisis, and the rise of precarious work will be disappointed.
Posted by NationBuilder Support · June 27, 2013 8:00 PM
Last September, the Broadbent Institute issued a major discussion paper, Towards a More Equal Canada, on rising economic inequality. We followed up in April with a brief to the Commons finance committee on what income tax and transfer changes could promote a fairer Canada.
Extreme economic inequality undermines democracy and the common good. Very unequal societies do much worse in terms of social and economic performance, in health and life expectancy, social mobility (equality of opportunity for children), crime levels, the quality of democracy, and levels of social trust.
While it is true that rising inequality is due in significant part to economic factors such as globalization and technological change, it is equally true that some advanced countries have remained much more equal than others. In the final analysis, the level of inequality in a nation is a matter of political choice.
Research shows Canada used to do quite well at striking a balance between a growing market economy and a fair distribution of the fruits of growth. But cuts to social programs and public services as well as changes to income support programs and personal income tax since the mid-1990s have compounded inequality.
Recent income tax changes have disproportionately favoured the rich. Providing a basic income-tested guarantee to all citizens through a fairer personal income tax system — a negative income tax — would be a powerful force for greater equality.
Our brief to the finance committee argued we should start by significantly increasing the federal Working Income Tax Benefit, which provides a very modest tax credit to Canadians who work but still have very low incomes.
The greatest gap in Canadian income support programs is for workers and families who do not qualify for welfare but remain in poverty since they are employed in precarious and low-paid jobs.
More than one-third of working Canadians do not have permanent, full-time paid jobs. Many fall below the poverty line due to low hourly wages and/or not enough weeks of work in a year.
The working poor and near poor — who move in and out of low-paid jobs but often fail to attain a decent standard of living — is disproportionately made up of recent immigrants, especially those belonging to racial minorities, persons with disabilities, female single parents, the single near-elderly, aboriginal Canadians, and young people trying to get into secure employment.
Credit should be given to the present federal government for creating the Working Income Tax Benefit, a new form of benefit which in the U.S. and elsewhere has reduced poverty while promoting employment.
But the benefit is modest (less than $1,000 for a single person and less than $1,800 for a family) and is lost completely at low levels of employment income ($18,000 for a single person, $27,000 for a family).
The maximum benefit should be increased significantly and phased out more slowly as income rises so recipients are always better off if they find more work or better-paying jobs.
Increases to the Working Income Tax Benefit should be matched by incremental increases in minimum wages to ensure supplements for the working poor do not become subsidies to low-wage employers. Minimum wage levels should ensure a single person working full-time for a full year does not live in poverty.
Improving conditions for low-wage workers will also involve raising minimum employment standards for hours of work, rights of part-time workers, pay and employment equity, enforcing such standards, facilitating access to unionization, and greatly expanding training for unemployed and under-employed workers.
Hopefully, the Commons finance committee will be able to achieve all-party agreement to assist the working poor by expanding the Working Income Tax Benefit. This would be an incremental but real step towards a more comprehensive negative income tax system.
Harvard University economist Gregory Mankiw, Chairman of the Council of Economic Advisers under United States President George W. Bush and, more recently, a key economic adviser to Republican Presidential candidate Mitt Romney, mounts a spirited defence of the very rich in an article to be published in the next issue of the Journal of Economic Perspectives.
Mankiw’s central argument, recently highlighted by Chrystia Freeland, is that very high incomes reflect exceptional productive contributions by highly talented individuals which benefit the rest of society.
President Obama went to Austin, Texas, last week in pursuit of an industrial and employment revival. He wants to launch manufacturing institutes to foster American innovation and job creation.
Republicans responded by ridiculing the president, in the same arrogant way that the blooded aristocrats on the British television series Downton Abbey scorned a chauffeur who sought to marry into the patrician Crawley family. "No opportunity for the downtrodden!" the GOP and wealthy vow.
Brian Lee Crowley’s recent column in the Globe and Mail shows that he's a glass-half-full kinda guy. He says we shouldn't be worried about unemployment because a) it's old-fashioned, b) Boomers had it worse (and now they're getting old) c) we're doing better than the U.S., and d) it's really only young people and immigrants that are unemployed.
This is a relief.
So I shouldn't worry that the Statistics Canada Labour Force Survey indicates that real average hourly wages have risen by only twenty cents between 2009 and 2012 (an annualized growth rate of 0.3%). Or, that at the same time, real median hourly wages have actually fallen, indicating that any wage growth has been limited to a few at the top end.