Location really matters when talking middle-class incomes

Once again, Ontario—and Toronto—are laggards

by Jason Kirby

Earlier today John Geddes shone a light on the income data underlying Justin Trudeau’s claim that middle class Canadians have been left out of the economic gains generated by free trade and fiscal restraint. As John rightly points out, income figures can be sliced and diced pretty much any which way, and that at their most fundamental, the data show after-tax incomes for the average two-parent family with children have largely kept pace with economic growth.

But I think there is one slice and dice that’s worth a mention when it comes to the Liberals’ political messaging and their intended target. And that’s the widening gap between incomes in Ontario and other parts of the country.

For the sake off a clean chart, let’s focus on Alberta and Ontario. Using the same time frame as in John’s original post, starting in 1998 with the elimination of Canada’s deficit, the average income of a couple with kids in Alberta has risen roughly 45 per cent—well outpacing the 37 per cent growth of Canada’s economy during the same period. In Ontario the respective income gain was less than 23 per cent, the lowest of any province save for Nova Scotia.

Alb-vs-Ont1

In fact, other than B.C. (income growth: 24.5 per cent) and Manitoba (27.4 per cent) every other province saw incomes for two-parent with children households match or exceed GDP growth over that time.

Getting back to the Ontario and Alberta comparison, the gap is even wider when you drill down to the city level. In Toronto, incomes for this group have barely budged for a decade (the most recent Statistics Canada income data were from 2011)…

Toronto-vs-Calgary2

To the extent that Ontario, and Toronto in particular, are seen as key battlegrounds by the Liberals in the next election, Trudeau’s message could have resonance there in a way that it doesn’t in most other parts of the country.




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Location really matters when talking middle-class incomes

  1. Well, it seems that Trudeau wants to use Mcguinty’s economic incompetence as a reason to attack the Harper government.

    • Exactly. Almost a grand with the new ‘Health premium’ (I swear I will not raise taxes!), the HST tax grab, plus a host of other ‘fees’ (like the one to pay for recycling of almost everything), and Ontario became Taxico.

      • Actually McGuinty’s eco fees are pay-as-you-go conservative. A liberal government would’ve pulled the costs of environmental cleanup from general revenues which would fund them progressively. The health tax also caps taxes significantly lower than they would be if taken from general revenues.

        • McSquinty was the furthest thing from a conservative one could find. Now Wynne wants to tax us more to pay for pensions (read: pay for her civil service pensions). Eco fees are like the HST, they hit low to middle income earners the most. And don’t forget how much of Ontario has to pay for garbage pick-up, it’s no longer part of your municipal tax bill (which has also been rising as services were downloaded by the province to the municipalities)

          • Everyone pays eco-fees. They are a flat tax. The HST is also a flat tax, but low-income people get a rebate. Cons favor flat taxes; they are against progressive taxation.

          • No rebate for eco fees mean they hit the lower income groups the hardest. Typical liberalism; make the poor pay for Utopia. But for income, a flat tax, properly executed, isn’t a bad idea. Execution is key – for it to be successful, loopholes and tax write-offs needs to be virtually eliminated. If that doesn’t happen, it’s a mess. But Alberta has a flat tax, and according to the article, they are doing a lot better as middle income earners than those of us in Taxico.

          • Conservatism is all about hitting the lower income groups the hardest (and taxing the rich the least.) Alberta has upward wages because of the tar sands boom. Ontario’s economy is suffering like the economies of most Western countries because we have yet to recover from the 2008 financial meltdown.

          • And like most of the west, we in Taxico are saddled with tax and spend socialist governments. Keep electing them and hoping things will improve is, like Einstein said, insanity.
            The big L liberals I see are all Champagne Socialists and Limousine Liberals.

          • If you want “tax and spend socialist governments” you need to look to northern Europe. Of course, countries like Sweden and Norway have half the debt/GDP we do, and twice the public benefits…

          • The Nordic countries are far more homogeneous than us within their respective boundaries, and that seems to make a difference in the degree of diversity in their politics. They also don’t have to focus on sovereignty issues of the likes Canada and the Provinces must. We could never re-make a Canadian province or the country into a Sweden or Finland, the cultural divide is just too great. For one, Finland is proud of its long gun manufacturing industry.

          • You should always be skeptical of “we can never” claims when someone else is clearly able to do it.

          • Neither Sweden, Finland, Norway or Denmark could be called a paradise, and I have doubts as to how many Canadians are really interested in emulating their societies.

          • Maybe not paradise, but they all do well on quality of life measures, especially compared to the usual analogue, the US.

          • Well at least you didn’t attribute Ontario’s problems to Dutch disease.

          • I would love to know where you live. Alberta’s tar sands are a very small reason the province does well and only someone living elsewhere would make that comment. The ENTIRE province believes in the motto that hard work will allow you to be upwardly mobile. If you can’t get a job in Alberta you really don’t want a job. I know waitresses in Alberta who make 60 to 70K a year. We in the west get tired of listening to people who refuse to relocate to where they can make a good living say that the success of Alberta is due to one community. Explain why the standard of living in Saskatchewan has risen at the same rate?

        • Ron, you are grasping at straws.

    • Or, alternately, it seems that his opposition is using the fact that Alberta has succeeded to ignore the fact that other regions are falling far behind.

  2. What is going on with the Toronto data series? A drop in mean income for two-income households with kids of greater than $10,000 from 2004 to 2005? Given the strength of the economy at that time, I have a hard time believing that such a steep slide could have occurred, putting the accuracy of the rest of the series in question.

    • Before the 2008 manufactured collapse there was indicators in the manufacturing sector that the powers that be were up to no good. A big chunk of TO population works in the manufacturing sector and they were taking the brunt of the set up. All signs right now point to another manufactured collapse early this March 2014 if you play the stocks you should try to minimize your lost now.

      • Good to see you are paying attention.
        Hope & unicorn farts only go so far.

  3. 1) Are those figures inflation adjusted figures and
    2) What proportion of “two-parent families” were 2 income families back in 1998-2002 time frame compared to later?
    3) In terms of productivity gains, how much of the profits from increased labour productivity have gone to labour vs owners/executives? Precious little!

    However you “dice” it… the middle class in Canada is being screwed.

    • FUN with NUMBERS

      “The middle class isn’t a constant though, which is why there’s so much confusion. Back in the early ‘70s, about 60% of all the income earned in Canada went to the middle of the pack. By 2006, that had dropped 7%, which is why we have the term “shrinking middle class.” Yes, it really is shrinking.”

      Money Sense: Are you in the middle class?
      The middle class isn’t fixed. It’s a moving target that appears to be getting smaller and smaller.
      http://www.moneysense.ca/columns/are-you-in-the-middle-class

    • More FUN with NUMBERS

      “- The growth in real average (after-tax, after-transfer) family income from 1976 to 2010 was the smallest in the middle-income group, at seven per cent

      “- The top quintile (top 20 per cent) saw their family income grow by 27 per cent during that time (average after-tax, after-transfer family income of $135,500), compared to 14 per cent for the second-highest quintile (after-tax family income of $73,500)”

      National Post: Income growth for Canadian middle-class families lags behind other groups: report
      http://news.nationalpost.com/2013/07/09/income-growth-for-canadian-middle-class-families-lags-behind-other-groups-report/

  4. How did this issue become a Liberal mainstay when the NDP are the middle class born out of the middle class and most importantly work 24/7 for the middle class. Highlight one middle class Liberal enlighten us.

    • Trudeau has vowed not to reverse any of Harper’s $44.4B/yr in boutique tax cuts that increase the income tax burden of the middle class. Therefore he agrees 100% with Harper’s policies.

      Not only that, all his promises will be 1993 Red-Book-like promises: all lies quickly discarded once getting power. There’s no room for any spending: Harper has broke the bank with his corrupt “starve the beast” agenda.

  5. Does anyone have access to the % of the Canadian population that falls under “two parent families with children”? I’d be curious to see how that’s changed over the years.

    • Depends if you count the government as a parent.

  6. We all know that Dalton McGuinty is a dimwitted clown.
    On the other hand, I think Hudak is just an imbecile.
    These are the kinds of people that are attracted to politics.

  7. How to lie with statistics? Use the mean (as in “average income”) instead of the median (as in “the income of a person who is half way between the poorest and the richest person”). The distribution of income is highly uneven in Canada (and getting more so each year) and so one can increase the “average” income simply by giving more to the richest people and none to anyone else. The “average” income thus increases over time even though the gains are going overwhelmingly to the richest segment of the population – hardly what ordinary people mean when they say that “middle class” incomes are increasing. Either the author does not know this basic statistical fact – in which case, why is Maclean’s allowing him space – or he is purposely ignoring it and thus lying to you.

  8. Ontario is most like the United States in that it has the highest level of financialization of the economy vs. the main street economy that still exists in the rest of the country. Financialization, banksterism, 1%ism, the stuff that Freeland and Summers peddle is the cause of middle class decline in Ontario.

    The Liberals are the party most captured by the ideas of American financialization and banksterism (Freeland, Summers, the whole McGuinty era), the party where the claws of the American Deep State have dug in the deepest in Canada. The Liberals and the mainstream media have the closest ties to the American Deep State because they are the elites of Canada. The Conservatives and NDP still pretty much are comprised of ordinary people from suburbia, non-urban Canada, and the real Main Street economy.

    But banksterism, and the ecosphere of banksterism and the Deep State, and financialization are omnipresent in Toronto.

    The Conservative Party in Canada (and the NDP) are tougher nuts for the American Deep State to crack since their political bases are rooted in people in the real Main Street economy, and not the bankster financialization economy and ecosystem of Toronto which represents the Liberal Party base.

    • Right, all that good clean oil money in AB or SK is just good clean Conservative good ole boy stuff.

      Your off your chump there wheatie boy if you think Calgary, Edmonton or Vancouver[ in the form of mining stock and forestry + oil'n gas] aren’t major players in financial markets in N. America. Who do you think i financing the current US oil boom…Disney? The LPC? The Democrats?

  9. To the extent that Ontario, and Toronto in particular, are seen as key battlegrounds by the Liberals in the next election, Trudeau’s message could have resonance there in a way that it doesn’t in most other parts of the country.

    I certainly hope by “resonance” you mean that Ontario will be looking at the fact that the Liberals have run Ontario into the ground and they should be very wary of a federal party who espouses the exact same policies.

    This article is proof that it would be against Ontario’s interests to have a Liberal federal government. Liberal policies have made Ontario an economic laggard to the rest of the country, so vote Liberal? LOL

  10. “…and that at their most fundamental, the data show after-tax incomes for
    the average two-parent family with children have largely kept pace with
    economic growth.”

    All those other provinces ought to get out right now and develop their oil resources…just look a where that graph takes off in AB. I was living in Edmonton at that point; it directly correlates to the ramping up of the oil sands investment.

    This post highlights the goofiness of using average to compare anything. Even when you draw a circle around two parent families with children you must get a pretty wide range of income disparity. Wealthier or better off people[ even 1%ers] have children too…which is bound to push the average up.
    And how any families in other provinces have good average incomes directly attributable to AB?
    Factor out the oilsands and you get a very different picture. Now whether Trudeau can do anything meaningful to change that picture without a major turn around in the US is another question altogether.

  11. Who knew Ontario has been hit harder by problems in manufacturing than smaller provinces that had less of it, especially if they have oil revenues and the more the better or that politicians who talk about economic problems might do better in places where they actually exist?

    Well, that’s not fair. This article is no worse than most. If you follow the economic debate in the US there is plenty of disagreement but at least it is an economic and political debate. Here we seem to be having a statistical debate.

  12. This is so easily explained that I am sure it will be missed by the “experts.” Both Vancouver and Toronto are the centre of where immigrants both land and settle in both provinces. They both have huge populations of immigrants who do not assimilate but congregate together for generation after generation. Trying to get a start in a huge city like Toronto or Vancouver, without a family history, is very difficult. Tough to go from a refugee to a middle class family in either of these communities. If they move to a smaller community the potential to reach middle class income is so much easier. It is politically incorrect to make the statement but the government and immigration departments need to make a concerted effort to insist that new immigrants are interspersed around the country in smaller communities. They would do better financially and fit into the Canadian culture faster.

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