Income inequality in Canada has hit the highest level ever recorded. This is done as wealth becomes increasingly concentrated in fewer hands. This is recorded as per what the Canada’s statistics agency said. The gap in the share of disposable income is between the richest two-fifths of Canadians. Plus, the bottom two-fifths grew to 47 percentage points. This happened in the second quarter of 2024 as per what the Statistics Canada reported on Thursday.
This is recorded as per the widest gap that was recorded since 1999, when Statistics Canada first started collecting such data. The gap was driven by the top 20 percent of income earners. This was seen as per the largest increase that was recorded in their share of disposable income and the report said just that. Plus, the increase was driven largely by investment gains, which the statistics agency attributed to a very high range of interest rates.
“While higher interest rates can lead to increased borrowing costs for households, they can also lead to higher yields on saving and investment accounts,” the report said.
“Lower income households are more likely to have a limited capacity to take advantage of these higher returns, as on average they have fewer resources available for saving and investment.”
Define What Is Income Inequality
Income inequality is known to refer how unevenly income is distributed throughout a population. The less equal the distribution, the greater the income inequality. The concept of income inequality is often accompanied by wealth inequality. This is known to be the uneven distribution of wealth. Plus, the populations can be divided up in different ways. This part of the income inequality concept is important to show different levels and forms of income inequality. This includes such as the inequality in income which is seen in gender or race. Along with it, different measures, such as the Gini Index, can be used to analyze the level of income inequality in a population.
Causes of Inequality In Income
Below stated are the causes of inequality in come. Read on.
Globalization
The increase in trade among nations resulted in the move of manufacturing and other jobs by corporations. This was done in the U.S. to countries where labor costs were cheaper. For working-class and middle-class Americans, this meant to be very secure. It was even generational, jobs and income disappeared.
Advances in Technology
While it is a boon in many ways, certain workplace technological advancements came through. This is related to that such as automation. This has led to the loss of jobs for blue-collar workers and lower wages for less-educated workers.
Gender and Race Bias
Income disparities have always been eminently visible for women and people of color. It is widely acknowledged that, for example, male employees typically earn more than female employees. What’s sad is that it occurs in the same job positions. In terms of race, white males earn more than non-white males.
Education
Workers with less than a high school education experience less growth in wages. This is regarded to be those with college educations and post-graduate degrees. The announcements of multi-million dollar salaries and bonuses. This had existed even in troubling economic times. Other references, refer to going to C-Suite executives drives this income disparity home.
Economic Conditions
When economic conditions weaken, financial turmoil, unemployment, slowing business investment, and more can affect incomes.
Taxation
Although high-income earners pay a larger percentage of their income in taxes than lower-income earners, federal taxation has not put the brakes on increasing income inequality. This might occur due to certain tax policies. For example, for those related to corporate taxation, the capital gains tax rates, and income tax cuts. This benefit those with higher income more than those with lower income.
What Did Finance Minister Chrystia Freeland Say On This Matter?
Upon being asked about the rising income inequality in Canada, Finance Minister Chrystia Freeland said the Liberal government has been focused on bringing forward policies. This was in many sectors such as childcare and dental care programs. This was brough in effectively to help middle class and lower-income Canadians.
“We are working very, very hard to lean against this tendency in the global economy towards more inequality,” she told reporters at a press conference on Thursday.
“We’re leaning against it with very specific policies designed to support middle-class Canadians and people working hard to join the middle class.”
However, the conservative Leader Pierre Poilievre blamed Liberal policies for the widening wealth and income gaps.
“Today, StatsCanada reported that the gap between rich and poor is at its highest level in recorded history, after NDP-Liberal money printing inflated the assets of the super rich while inflating the cost of living for everyone else,” he told reporters at a press conference.