SOC 1100 DISTRIBUTION OF WEALTH (CH 7)

The Distribution of Wealth

Evidence from various sources demonstrates that a small number of people continue to own or control a very large portion of the wealth in Canada. For example, in 2019, 61-year-old David Thomson and his family were estimated to be worth $36.8 billion. While only number 27 on the Forbes list of the world’s billionaires that year, they were Canada’s wealthiest family. In contrast, in 2016, the average wealth, or net worth (the difference between the total assets owned by a family, including a home, and its debt), for Canadian households was $669 300 (Statistics Canada, 2019c), less than 0.002 percent of the Thomson family’s net worth. This is a huge difference, but we should remember that, included in the Canadian average are the extremely rich, including the Thomson family. People in the bottom fifth of the wealth distribution reported an average net worth of –$1000 (Statistics Canada, 2019c).

These statistics highlight the wealth gap between low-income and very rich Canadian families, such as the Thomsons, the Westons, and the Irvings, who have business holdings spread around the globe as well as in Canada. Together with highly paid CEOs and corporate directors, these wealthy families clearly form a distinct upper class, the haute (high) bourgeoisie in Marx’s terms. By way of example, it would take the average Canadian worker (employed full-time and year-round) nearly 200 years to earn as much as the average annual income of the top 100 CEOs in the country.

At the other end of the wealth scale are the 7 percent of Canadian families (excluding seniors) with low income and no-wage earners who reported a median net worth in 2009 of only $1000. These families, about 1.2 million people in total, typically relied on government transfer payments (for example, employment, welfare, or disability support payments) and had trouble making ends meet. Three out of 10 (29 percent) were at least two months behind in paying bills, and almost one in 10 (8 percent) was at least two months behind on loan payments (Luong, 2011).

Over the long term, the economic growth experienced in Western industrialized countries, along with some income redistribution efforts by governments, have had an equalizing effect on the distribution of household wealth. Wolff (1991), for example, showed that inequality in household wealth decreased between 1920 and the 1970s in Sweden, Britain, and the United States. Although comparable data are not available for Canada for the same period, it is likely that a similar decline occurred here as well. However, Wolff also noted that, in the mid-1970s, wealth inequality began to increase again in the United States and Sweden. It remained constant in Britain. What about Canada?

On average, Canadian families have increased their wealth since the 1970s (Macdonald, 2018; Morissette and Zhang, 2007). However, there is more to this story. Wealth inequality declined between 1970 and 1977, remained steady until 1984, and then increased considerably in the next 20 years. So, back in 1984, the top 10 percent of Canadian families owned 51.8 percent of total family wealth. By 2016, this figure had increased to 67.3 percent (Statistics Canada, 2019c). In other words, the wealth gap between rich and poor families has been growing over the past several decades in Canada. In fact, as of 2016, Canada’s wealthiest 87 families owned more than everyone living in Newfoundland and Labrador, Prince Edward Island, and New Brunswick combined (Macdonald, 2018).

Income Distribution

High-Paying and Low-Paying Occupations

Most people have no contact with the wealthiest families in Canada. We are much more aware of, or perhaps are even members of, a larger, not quite as wealthy but still affluent group of households containing one or more individuals in high-paying occupations. For example, according to 2016 census data, Canadian dentists earned a median income of $98 582 in 2015, while medical specialists earned considerably more ($122 002). Judges earned even more ($259 603), while lawyers had to be content with average yearly earnings of $97 589 (Statistics Canada, 2019d). In contrast, cashiers earned only a fraction of this ($10 054), as did taxi drivers ($13 432), hair stylists and barbers ($16 393), and home childcare providers ($12 688). The low incomes of these service-sector workers reflect, in part, the fact that many are employed part-time.

Using the term class in the Weberian sense, you could label individuals in well-paid managerial and professional occupations as members of an upper-middle class, given their high incomes and their access to and control of material resources through their employment positions. In contrast, retail workers and those employed in some service occupations (for example, food and beverage services, child-care and home-support services) work in the low-paying, insecure occupations that we might describe as the lower working class.

These occupational earning patterns hide large gender differences. Among people working full-time and full-year, women’s earnings were 80 percent of men’s earnings in 2015, a figure that has not changed significantly since 1995 (Krahn, Hughes, and Lowe, 2020: Ch. 6; Statistics Canada, 2019c). Female dentists’ median earnings were 87 percent of their male counterparts’ median earnings in 2015. Among senior managers in finance and communications, women earned 88 percent of what men earned. In the higher education sector, the female–male median earnings ratio was 92 percent. Among lower-paid occupations, female salesclerks earned only 71 percent of what male salesclerks earned, while female general farm workers earned 66 percent of their male counterparts’ earnings (Statistics Canada, 2019b). As these examples demonstrate, the female–male earnings ratio varies considerably by occupation, and tends to be lower in higher status and better paying occupations. However, women also tend to be underrepresented in higher status occupations, which contributes to the broader gender pay gap.

Income Inequality

The 2016 census data discussed above give some indication of the distribution in Canada of employment earnings, the largest component of total income, which also includes income from investments, government assistance, and all other sources. Studies of income tax data show that the level of total income inequality in Canada has increased dramatically over the past few decades.

In 1945, at the end of World War II, the most advantaged 10 percent of Canadians (the top decile) received 37 percent of all income (Yalnizyan, 2010). While this figure fluctuated over the next four decades, income inequality in Canada slowly declined. In 1985, the top decile received 35 percent of all income. However, the long-term trend then reversed, and income inequality increased steadily during the next two decades—in 2016, the top 10 percent received 38.5 percent of all income. In fact, by 2016, the top 1 percent of Canadian income earners were receiving 10.7 percent of all income, up from 7.6 percent 35 years earlier (see Figure 7.2). When income from privately owned corporations (frequently set up by high earners to reduce their taxes) is considered, income inequality is even higher (Wolfson, Veall, and Brooks, 2014).