[Incomes4] Top half of Canadians hold 94.4 percent of wealth

[raccoon@freelives.ca]

Tuesday, January 14, 2003  
 Top half of Canadians hold 94.4 percent of wealth
New findings confirm growing gap in Canadian society

Dateline: Monday, January 13, 2003

by Steve Kerstetter, Canadian Centre for Policy Alternatives
The gap between the rich and poor in Canada, in relative terms, rivals
anything seen in the Third World.

Canada's richest person, former newspaper magnate Kenneth Thomson, and his
immediate family were worth about $17 billion in 1999, according to the
annual compilation of billionaires by Forbes magazine. The family fortune
made Thomson the 15th richest person in the world, and put him well ahead
of the eight other Canadian billionaires.

In sharp contrast, there were many thousands of Canadians with little more
than the clothes on their back, from the homeless people in Vancouver to
the young people in St. John's forced to live on room-and-board welfare
budgets of only $93 a month in 1999 while they looked for jobs.

The gap between Kenneth Thomson and the poorest of Canada's poor is vast,
to be sure, but great wealth and great poverty are far more commonplace in
this country than most Canadians might imagine. Statistics Canada's most
recent survey of assets, debts and wealth shows literally millions of
families and individuals living on the brink of financial disaster, while
others have managed to accumulate huge slices of the wealth pie.
All in all, Canadians had total personal wealth of more than $2.4 trillion
in 1999, or an average of $199,664 for each family unit. The actual
distribution of wealth, however, was anything but equitable.

The wealthiest 10 percent of family units in Canada held 53 percent of the
personal wealth, and the top 50 percent controlled an almost unbelievable
94.4 percent of the wealth. That left only 5.6 percent to be shared among
the bottom 50 percent.
This skewed distribution of wealth is shown in the accompanying table,
drawn from StatsCan's Survey of Financial Security. It breaks down the
country's 12 million family units into deciles or 10 groups of 1.2 million
each, and then ranks them from the poorest 10 percent at the top of the
table to the richest 10 percent at the bottom.

The poorest 10 percent of families had debts that were higher than their
assets, and wound up nearly $8.7 billion in the hole as a group with a
nominal 0.4 percent of the country's personal wealth. Meanwhile, the
richest 10 percent of family units held aggregate wealth of nearly $1.3
trillion or 53 percent of all personal wealth. Average wealth in this group
was $1,059,423.

The contrast between the haves and have-nots is just as shocking when
family units in Canada are split right down the middle, as shown in the
summary data on the final two lines of the table. The poorest five groups
had aggregate wealth of $137 billion, or 5.6 percent of the personal
wealth, while the richest five groups had aggregate wealth of $2.3
trillion, or 94.4 percent of the total. It was therefore primarily the
great amount of wealth within the richer half that raised the national
average to $199,664.

These statistics add to the long-standing concerns of the CCPA and many
other social policy organizations about the extent of economic inequality
in Canada. They also underline the precarious financial position of a
surprisingly large portion of the population.

The family units in the two poorest groups would be considered poor by any
reasonable measure of poverty. People in the very poorest group had debts
that outweighed their assets, and people in the second poorest had net
wealth that worked out to a mere $3,445, on average. Family units in the
third, fourth, and fifth groups were noticeably better off, but they would
still be at considerable risk of poverty if the breadwinner in the family
died or was unable to work, or if the family split up because of a marriage
breakdown.

These findings, derived from the StatsCan survey and also from special data
runs commissioned and paid for by the CCPA, raise a host of questions about
the social, economic, and political nature of modern-day Canadian life. The
StatsCan Survey of Financial Security is well named because it puts the
focus not on wealth for wealth's sake, but on its potential to tide
Canadians over the financial crises that so many people face at various
times in their lives.

Losing a job, losing a spouse or partner, or coping with a disability or
prolonged illness can be an enormous financial strain. That's why we have a
variety of social programs such as unemployment insurance, welfare, and
workers' compensation. Sadly, our safety net for people in need is weaker
and more tattered than it was a generation ago. Many people have had to
fall back on their own financial resources, and all too often those
resources are inadequate.

Financial insecurity may actually be the norm these days, and financial
security the exception to the rule. Half of all family units in Canada had
wealth of less than $81,000 in 1999. That may sound like a lot, but much of
that wealth was tied up in housing, cars, and other material assets that
are not readily converted into cash to meet a financial emergency. Only a
minority of family units had ample cash on hand or other financial assets
large enough to tide them over for more than a few months.

This raises the philosophical question about what degree of inequality, if
any, is normal or unavoidable in Canada or in any other democratic country.
Democracies presume the equality of all their citizens in political terms,
and that equality is enshrined in the principle of one person, one vote.
But economic equality is an entirely different matter. Given that money
talks and opens doors and influences other people, there are obvious
problems with an economy that has so much wealth packed away in so few
pockets.


At some point, the concentration of wealth impinges on a country's
political and social life. We all have a vote, but the wealthy are most
often the movers and shakers, with the rest of us little more than
21st-century serfs.

Governments would do well to ponder whether their policies in recent times
have led Canada on a path away from the "just society" espoused by Pierre
Elliott Trudeau. The current Liberal government in Ottawa, as well as
provincial governments, may also want to reflect on the long-term political
ramifications of helping the 10 percent or 20 percent of families in Canada
who don't really need help, and thereby alienating the great masses of the
population who have been able to scrape together only a tiny portion of the
country's personal wealth.

Governments didn't listen to the CCPA or other social policy groups when it
came to dealing with their deficits or reallocating money from their budget
surpluses, and they could also choose not to listen to similar suggestions
and proposals about redistributing wealth. When it comes to the issue of
wealth and its current mal-distribution, however, there are many more
Canadians who potentially could be rallied to the cause of social justice.

Collectively, 50 percent of Canadian families, at last count, shared less
than 6 percent of the country's total personal wealth. That large number of
Canadians may not constitute a majority when translated into eligible
voters, but it should be more than enough to worry any government that
continues to pander to the wealthy and forsake the poor.
Steve Kerstetter is a social policy consultant and a CCPA research
associate. He was formerly the director of the Canadian Council of Welfare,
a citizens' advisory group to the federal government. This article was
excerpted from his recent CCPA report, "Rags and Riches: Inequality in
Canada."