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BC families losing ground to widening gap

Study reveals 30-year decline in incomes for all but the richest.

Iglika Ivanovaby the Canadian Centre for Policy Alternatives

VANCOUVER, March 10, 2009 — A new study reveals that BC's poor and middle class families are in worse financial shape than their parents' generation. The study, released today by the Canadian Centre for Policy Alternatives, finds that fully 60 percent of families with children are earning less than their counterparts in the late 1970s, while incomes for the wealthiest 10 percent have increased dramatically. The result is a widening gap between the rich and the rest of the population.

Among the study's key findings:

• Between 1976 and 2006, real earnings (before taxes and transfers) decreased for the bottom 60 percent of BC families with children — the worst performance in Canada along with Newfoundland.

• The poorest 10 percent (or decile) were hit hardest, with earnings falling by 74 percent. However, even the sixth decile saw their annual earnings fall from $70,000 on average in 1976 to $65,000 in 2006.

• After-tax income also dropped for the bottom 60 percent of BC families, unlike in any other province, where stronger tax and transfer systems helped compensate for the loss in earnings.

• The income gap has widened to the point that the top 10 percent of BC families now earn more than the entire bottom half of families.

The study focused on families with children under 18: these families make up nearly half of the population, and are the main factor in determining the success of the next generation.

"Many recent studies and media reports have focused on the worsening situation for poor people in BC, and economists have warned that this could deteriorate even further in the recession," says report author Iglika Ivanova. "But our study shows that the middle class is vulnerable too — and much more so than in the rest of Canada."

"These findings point to a disturbing growth of inequality in this province," Ivanova says, "and they help explain why even during our recent economic boom, many people have found it hard to get ahead. This study shows us that economic growth does not automatically translate into higher incomes for most people, especially for those at the lower end of the scale."

"We can't blame these figures on the current recession," she says. "The most recent year for which data is available is 2006, when the BC economy was still thriving."

The study, BC's Growing Gap: Family Income Inequality 1976-2006, outlines concrete policy recommendations for reversing the trend of increasing income inequality and protecting British Columbians from the most severe impacts of the recession. Measures include making the tax and transfer system fairer, expanding public services and social programs for all citizens, adopting a comprehensive poverty reduction plan and improving conditions for low-wage workers. The study analyzed custom data supplied by Statistics Canada.

The study, BC's Growing Gap: Family Income Inequality 1976-2006, is available on the CCPA's website, www.policyalternatives.ca. Author: Iglika Ivanova, economist and Public Interest Researcher, CCPA. For more information or to arrange an interview, contact Sarah Leavitt at 604-801-5121, x233.

Links and sources
  BC's Growing Gap: Family Income Inequality, 1976-2006t, by Iglika Ivanova, Canadian Centre for Policy Alternatives, March 2009
  BC's Growing Gap: Family Income Inequality, 1976-2006t, by Iglika Ivanova, Canadian Centre for Policy Alternatives, March 2009: summary

Posted: March 11, 2009

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