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Rich, poor gap widens

Few income gains during past 30 years for families with kids, Ontario study says

Toronto Star, by Rita Daly, Staff Reporter, May 7, 2007

Half of Ontario families raising children have seen their fortunes stagnate or fall behind compared with a decade ago, while the incomes of the richest have soared, says a new study on the growing income gap.

And since 1998, the gap between Ontario's richest and poorest families raising children has widened at a faster pace than the rest of the nation as a whole, says the study by the Canadian Centre for Policy Alternatives being released tomorrow.

As the top 10 per cent of richest families bask in increasingly good fortune, 40 per cent of Ontario's families with children ( more than 600,000 households ) have seen little or no gains in their incomes for the past 30 years, despite being better educated and working longer hours.

"Most Ontario families raising children in the bottom half of the income distribution are struggling with stretching a paycheque that hasn't grown in a generation," says the report.

Meanwhile, "the richest 10 per cent of families never had it so good," the report states.

The Canadian Centre for Policy Alternatives, an independent research institute concerned with social and economic justice issues, released a similar report in March that examined the income gap on a national basis. Both analyses are based on 28 years of Statistics Canada data on families raising children under the age of 18 over approximately three decades, from 1976 to 2004.

In the first two decades, the widening income gap between rich and poor in Ontario generally reflected a pattern across the country.

But the past decade saw something different. Income figures show the growing gap between the richest and poorest hit a record high across the country, with Ontario outpacing the national trend.

The Ontario numbers show that the richest 10 per cent of families raising children - those with earnings of Read More .. than $146,000 in 2004 (not including investments and other assets) - earned 75 times the amount of the poorest 10 per cent. In 1976, the richest earned 27 times as much.

As the richest break away from the pack, those households with incomes less than $56,000 in 2004, earned less or stayed the same, in inflation-adjusted terms, compared to a generation ago, the report states.

The gap narrows considerably in after-tax income, which takes into consideration income tax deductions and any government programs that prop up families with low-incomes. But the report shows even that gap has grown in the last decade. The after-tax income of the richest 10 per cent of families grew from eight to 10 times greater than the poorest 10 per cent nationally since 1998. In Ontario, the income of the richest families grew from eight to 11 times greater than the poorest.

The figures reveal not just a story of income disparity and poverty, but about affordability, said the study's author Armine Yalnizyan, an economist and research director for the Toronto Community Social Planning Council.

"It isn't just keeping up with the Joneses. It isn't just about the granite countertop. It's about where can you afford to live. Then, that has a whole cascading effect on how much you can eat, how much you can save, and what else can you do if your incomes are stagnant," she said.

Tomorrow night a Star-sponsored public forum at the St. Lawrence Centre, the third in a series, is expected to host a lively debate on the issue. Entitled "Your Family Paycheque: Is it Keeping Pace?" the forum, moderated by Toronto Star columnist Thomas Walkom, features Bob Rae, former premier of Ontario, Finn Poschmann, research director for the C.D. Howe Institute, community activist Parbattie Shirley Ramsarran and the Canadian Centre for Policy Alternatives' Yalnizyan.

Cristina Benvenuto, a 34-year-old single parent of three young girls, says she is among the many families unable to get ahead. Nearly half of her $2,500 a month net income goes to rent in a red-hot Toronto housing market, leaving little for food, clothing, childcare, utilities and unforeseen expenses.

"I keep trying to get somewhere but I keep getting stuck," she said.

Her income as a full-time receptionist, and including the National Child Benefit, nets about $30,000 a year, below Statistics Canada's low-income cut-off of $31,865 for a family of four in a city the size of Toronto.

"This all comes down to the government needing to take a look at people's incomes and the issue of affordable housing," she said.