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Amazing what 53 bucks will buy you


 

Everyone got very excited over that census data showing median earnings for individuals had barely moved (after inflation) in the 25 years from 1980 to 2005. Of course, as critics pointed out, there’s a load of qualifiers buried in that shocking result: earnings, rather than total income, including transfers and capital income; individuals, rather than families; endpoint data, rather than longitudinal. Had the study elected instead to track total family income, and had it tracked this data throughout the entire period, it would instead have shown rather robust growth for much of that time, broken by steep declines after the two recessions.

But so what?  I’m not sure why the right was quite so defensive about these numbers. Market earnings don’t tell the whole story, but they do tell us something. They speak volumes about stagnating productivity, for starters. And while taxes and transfers did go a long way to close the gap between rich and poor that would otherwise have opened up in that same period, the wider the disparity in market earnings, the harder the tax-and-transfer system has to work. Past a certain point, something’s got to give: either we give up on trying to keep rich and poor within hailing distance of one another, or we give up on trying to keep tax rates at levels that do not destroy incentives to work, save and invest.

Still… if the median worker essentially has nothing to show for two-and-a-half decades of effort — “25 years, 53 bucks,” the Globe’s front page headline bitterly declared, a reference to the total annual increase in earnings, after inflation, over that interval — it’s hard to square with data showing that  in fact most Canadians got a lot wealthier in the same period.

StatsCan figures show the average net worth of Canadian families of moderate means — that is, in the middle fifth of the wealth distribution — increased by 26% after inflation between 1984 and 2005, driven in part by the real estate boom.

Or take this data on the spread of ownership of everyday household appliances. At least, now they’re everyday: not so long ago many of these were the preserve of a select few. Only 8% of Canadian households had a microwave oven in 1980, for exmple. Now nearly every household does. VCRs, CD players, home computers, to say nothing of such exotic animals as cellular phones and satellite TV — if these were even available in 1980, they would have cost a small fortune. Yet while Canadian workers were supposedly just scraping by, they were also snapping up these once unheard-of luxuries like day-old bread.

I’m not sure what this proves. But if the contention is that the average Canadian is no better off than he was 25 years ago, it just ain’t so.

Spread the wealth

Percentage of households with… 

  1980 1985 1990 1995 2000 2005
Washing machine 64.5 68.8 74.7 77.6 80.1 82.2
Dryer 63.2 67.5 72.9 76.0 78.6 80.4
Dishwasher 28.6 36.6 41.6 47.1 51.7 57.2
2nd refrigerator 10.0 14.9 18.3 19.3 22.8 25.4
Microwave oven 8.0 22.7 68.2 83.4 91.2 94.1
Central air cond’g 5.3 7.5 13.8 13.8 17.2 28.4
2nd phone 33.6 50.0 67.0 74.4 76.6 70.0
Colour TV 81.1 91.2 96.9 98.5 99.4 99.0
2nd colour TV 9.4 21.5 38.9 49.7 57.9 63.7
VCR 23.4 66.2 82.1 90.3 89.1
CD player 8.0 15.5 47.4 74.7 80.4
Computer 10.3 16.2 28.8 55.5 72.0

Source: Statistics Canada


 

Amazing what 53 bucks will buy you

  1. I see a lot of data on families except single income families. Did I miss it? Or are we ignored again?

  2. If median income is not going up, yet the middle is buying up all kinds of appliances and electronics, it must mean that more and more people are using credit, thus, going further and further into debt.

  3. Although more data is always interesting and useful, I do not think that these figures change the debate. The original Census release indicated that median individual earnings did not improve, but that median family earnings rose only because more family members undertook paid employment.

    Figures on household wealth and appliance ownership confirm that family earnings have increased (and that appliances, particularly electronics, have undoubtedly become cheaper in real terms). Emphasizing these figures mainly just shifts the focus from individuals to families, as the National Post tried to do in its Census coverage.

    The fact that more family members are working for pay does not excuse the fact that the median worker’s pay has not increased since 1980. “Stagnating productivity” is not an adequate explanation because labour productivity has not stagnated. While median productivity growth may have been slow, it clearly exceeded 0.1% ($53/$41,348) over the past quarter-century.

  4. In addition to Erin’s comment, we should also point out that simply moving more people from unpaid labour (such as taking care of the house and home, doing their own home/vehicle repairs) to paid labour — while it may increase the measurable productivity of a nation, does not in any means necessarily increase happiness.

    As Macleans’ itself is well aware of, the happiness of people is not determined simply by what they have, but rather in comparison with what their neighbours have and in the freedom and choice that their earnings provide them. With more people in the family having to take up salaried employment, it is obvious that the amount of freedom and choice available to individuals has dropped.

    Of course, Coyne would like to set up his Hobbesian choice of “We either stop trying to support those filthy poor people or we all go bankrupt” but ignores the fact that those filthy poor people don’t go away just because they’re inconvenient. History has shown us repeatedly that the larger and unhappier an underclass becomes, the more likely things are to turn to violence, either in the form of revolt by those at the bottom, or oppression by those at the top.

  5. The average Canadian’s standard of living has gone up, big ticket items like appliances,TVs, cars, can be had, especially for families with two incomes but the cost of living keeps going up too and keeping pace with that, well, if you don’t have a high paying job or an inheritance, you better keep playing your lottery numbers.

  6. Interesting, it looks like TV may have peaked up to 8 years ago. Still, it almost flat lined at total penetration.

  7. I think that we need to talk about regional distribution of this. Most of the people where I live have a phone, a type-writer, a refrigerator, a washing machine near death, a woodstove to heat the house and a small stove. There is one computer in town (which I am currently on) with dial-up. It is in the library (I’m lucky- the librarian was kind enough to give me board after my parents died.) According to all of this, we should all be miserable. In fact, we are happier than any other town I have been to. Because we don’t have colour tvs, etc. We spend time with our neighbours, we read, we do well in school because there’s not much else to do, we win scholarships because thats how you turn a cirle around, and every saturday night we crowd around whoevers tv happens to be getting the best reception, and watch the Habs games. There is nobody in my community who earns more than 20,000 per annum. Theres a lot of poverty, and a lot of domestic violence. But, as I saw when I went to visit UdeM, in cities this is dealt with by the government, by the police. Here, because we are such a close-knit and isolated community, we know when someone has lost their job and when somebody has come home drunk for the third day in a row. We know, and we help however we can, even those of us with nothing. To me, thats the true measure of how rich a community, indeed, a country is- how much you help one-another.

  8. That is an offensively simplistic view to take, Andrew.

    Also, while I’m happy that Marie-Claire as un-materialistic as she is, I wonder whether her comment is entirely relevant.

  9. Yes, I had a point, I just didn’t make it. My point was that in my region, the average people own 1/3 of those things. My point was that this truly isn’t enough data because it doesn’t provide things like regional disparity and single-income families. I just got off on a tangent and neglected it.

  10. I’m always intrigued by the idea that per-person productivity is expected to increase at a constant rate. I’m an accountant; the last major technological breakthrough in my field was 15 years ago. So how do I keep getting more efficient? Work more hours for free?

    The other thing that popped into my head here is that some of the items on the list can now be bought at garage sales & flea markets for next to nothing. My parents had a 2nd refrigerator in the garage that was 30 years old, and was only plugged in when we had company over in the back yard, maybe 15-20 hours in a year. What percentage of 2nd refrigerators are “beer fridges”? Other than maybe the washer, drier & dishwasher, do any of these statistics give any indication of prosperity?

  11. T. Thwin

    -History has shown us repeatedly that the larger and unhappier an underclass becomes, the more likely things are to turn to violence, either in the form of revolt by those at the bottom, or oppression by those at the top.-

    You’re talking about communism right? Some sort of revolution against it? Last time I checked we lived in a (relatively, HRC excepted), free country, where a person could work harder, earn more, and improve their very own standard of living.

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