Amazing what 53 bucks will buy you - Macleans.ca

Amazing what 53 bucks will buy you

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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