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Divided wealth

Alberta’s rich get richer as the poor get poorer

Alberta is one of the wealthiest jurisdictions in North America with one of the best-performing economies. The province has the highest average income in the country, low unemployment rates and relatively low levels of poverty. What could possibly be wrong with a system that generates these kinds of statistics?

Well, according to a study released last week by the Parkland Institute and the Alberta College of Social Workers (ACSW), there are some serious problems with the province’s current trajectory: problems that the provincial government is not even acknowledging yet, never mind working to reverse or fix them.

Despite the province’s obvious wealth and economic growth over the last 20 years, not everyone is benefitting equally. In fact, many Albertans are not benefitting at all.

Disparity and inequality are growing faster in Alberta than almost any other province. The result is that today, the province’s rich are richer than anywhere else in the country and our poor are the poorest in Canada. The top half of families in Alberta currently get  87 percent of the earnings in the province, leaving just 13 percent for the bottom half.

The further you break it down, the worse it looks. The top 10 percent of Albertan families get 28 percent of after-tax incomes compared to just 1.7 percent for the bottom 10 percent.  The average income among Alberta’s top one percent of income earners is a whopping $675, 200, which is almost twice as much as the average for the top one percent nationally.  If we look only at Alberta’s CEOs, the median income in 2009 was just under $2.5 million.  For the rest of us in the province, the 2009 median income was only $68 100.

Alberta’s poor find themselves farther below the poverty line than they would if they were anywhere else in Canada and the province’s low minimum wage, inadequate social supports and underfunded social programs make it harder for them to escape poverty than anywhere else in the country.

So why does any of this matter?  As long as the province is doing well economically, what difference does it make how that wealth is divided?

There is a growing consensus among researchers from around the world that the more unequal a society is, the worse off it is on a number of important measures: from health, life expectancy and crime rates, to happiness, sense of community belonging and overall well-being. Beyond the social factors, even groups like the World Bank, the IMF and The Conference Board of Canada are now in agreement that inequality has a tremendously negative impact on economic growth.

A government genuinely interested in the public interest and social and economic well-being would be startled by the current state of and rapid growth in inequality in Alberta and would be working hard to reverse that trend. Before that, however, they would need to clearly understand what’s been driving the growth in disparity over the last 20 years.

Alberta corporations and the wealthy pay the lowest taxes in the country, while Alberta’s poor and middle class pay among the highest.  Our low corporate taxes and flat-rate tax actually contribute to wealth in the province trickling up rather than down.

Our low minimum wage and social supports also mean that once people slip into poverty, it becomes virtually impossible for them to work their way out. Alberta has the highest number of families working full-time all year and accessing food banks on a regular basis. In Alberta, having a job is not a ticket out of poverty.

The government’s dependence on oil and gas revenues for funding programs and infrastructure and the exaggerated boom and bust cycle that causes, further drives inequality. The province’s poor are greatly disadvantaged by both ends of the cycle—they cannot afford food, shelter, and utilities during the booms and are the first ones to lose their jobs and income during the busts. The wealthy, on the other hand, benefit disproportionately at the top of the cycle and are in a much better position to weather the busts without any negative impacts.

Today, the provincial government is actively engaged in the development of a social policy framework, which will ostensibly improve the province’s social programs and support the Premier’s promise to eliminate child poverty in Alberta within five years.  Typically, however, the consultations on the framework do not seem to include taxes, minimum wage, or oil and gas revenues in their scope.

As we prepare to enter yet another oil and gas fuelled boom period, a social policy framework that does not address those key issues will only serve to further inequality and disparity in the province. This will, in turn, further erode the overall social and economic well-being of all Albertan families.

The trends are clear and the research overwhelming: in the wealthiest jurisdiction in the country—where anything is possible—the only thing missing to turn things around and start doing things differently is political will, and the government has shown they will not get that will unless we force them in that direction. V

Ricardo Acuña is the executive director of the Parkland Institute, a non-partisan, public policy research institute housed at the University of Alberta.

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