Income inequality and job losses in Canada's labor market

¶ … social dynamics have resulted in disparities in individual income in several countries .In Canada for example, it has been noted that there is a decline in the size of the middle class and an increase in the gap between the rich and the poor. These changes of course have an effect on the overall health of Canadian society. A recent report indicated that there is a growing gap in the riches of the top ten percent earners and the bottom ten percent. The middle class was also indicated to be declining (Browne, 2008). This is a perfect sign to indicate that Canada has a huge problem which suggests strongly the need for immediate labor reforms.

The reasons for the growing gap

The Canadian manufacturing sector has continued to cut jobs at an alarming rate, a large and increasing number of Canadian workforce are exposed to unstable work conditions with a lot of insecurity. The jobs themselves are low paying and with little or no benefits. The year 2006 saw the average wage of autoworkers per hour was $31.30. The average wage in the Canadian service sector was however noted to be $10.50 per hour.

Downloading of the social as well as housing services

A report of the Task Force on Modernizing Income Security for Working-Age Adults indicated that 22% of the total laid-off individuals were able to enjoy their Employment Insurance in the city of Toronto. Nationwide the eligibility rate stood at about 35% (MISWAA, 2006). Due to the reducing eligibility for the Employment Insurance, the laid off workers are compelled to make use of their life savings or to apply for national social assistance. This in turn puts more pressure on the local municipalities as well as provincial programs that otherwise have the problem of having just a limited amount of budget. The resulting downloading of housing and social programs to the various towns and cities by the previous government systems has lead to a limitation in flexibility in the dealing with the existing need influx. Browne (2008) points out that the provincial government does insist that the best place of fighting the rampant poverty is the labor market (they are in a state of denial).

Inequality

First and foremost, there is income inequality in Canada. The inequality greatly increased from the mid 1980s. The low and middle incomes greatly reduced, at some instances stagnating. This was followed by slow growth. The upper incomes however increased on a rapid rate since the mid-1990s (Gingrich, 2010)

The earnings that the Canadian people get also cause the wide gap between the rich and the poor. Low wages and limited growth in the employment besides the irregular and unstable jobs affects the earnings. There are very few jobs in Canada with career possibilities. This has also affected the earnings of the Canadians. The growing gap between the earnings has been caused by the fact that the Canadian government has allowed the weakening of the tax and transfer system (Gingrich, 2010).The earning gap has also been widened by the fact that most jobs have not been unionized. Education and training is also not improved. There is no efficient early childhood education and the level of family illiteracy is also on the rise. Post secondary education is also not easily accessible and besides, it is not affordable to the poor who are the vast majority of the Canadian population. The barriers to employment are also not looked at (Gingrich, 2010)

Illiteracy among the Canadian people

The Canadian citizens do not know that they have the right to work and form labor unions, the right to adequate living conditions and to the highest attainable standards of physical and mental health.

Poverty

Poverty is also a contributing factor in the wide margin between the rich and the poor in Canada. Women and children are the widely affected. They are denied their basic human right to food, clothing and shelter. Unemployment among the women is also rampant. In Canada the treatment of women, the poor and aboriginals is scathing. There is inadequate housing, high unemployment, and a high suicide rate, lack of safe drinking water and dispossession of aboriginal lands. Approximately a quarter of Aboriginal households are lacking basic amenitiesand Aboriginal women residing on reserves do not have the opportunity to enjoy similar rights as the women who resides off reserves. (Green Left, 1999)

The Canadian government to blame for the huge difference

The government of Canada is also to blame for the massive gap between the rich and the poor in Canada. It cut to unemployment insurance programs and social assistance despite the fact that this has been criticized. The Canadian government has also revoked the Canada Assistance Program which used to ensure national standards for education, health and social assistance. (Green Left, 1999)

Canadian government has not made efforts to ensure that Canadians enjoy the economic and social rights that are guaranteed by the United Nations agreement. Low-income housing should be treated by the government as "a national emergency." The government should also put a national standard for welfare and besides, it should reform the employment insurance program so as to cover more workers. Besides, it should call for more money from all levels of government to combat poverty among women and children (Green Left, 1999)Homelessness which has also been declared a national disaster in Canada's 10 largest cities contributes significantly in the soaring gap between the rich and the poor in Canada. The cuts in provincial social assistance rates and other income assistance are making the payments inadequate for the poor Canadians to cover the rental costs. The number of tenants who pay more than half their income in rent has enlarged by approximately 43% (Green Left, 1999).The considerable reductions in social assistance programs, the unavailability of affordable and appropriate housing and widespread discrimination with respect to housing create obstacles to women escaping domestic violence. there is insufficient lawful protection of women's rights like the pay equity, limited access to civil legal support and insufficient protection from gender bias. (Green Left, 1999).The gap between the rich and the poor is also soaring because vast most of the wealth generated from Canada's recent economic growth goes to the richest Canadians instead of being channeled to the poor Canadians who are the majority of the Canadian population.

The shrinking Middle class

According to Macionis & Gerber (2002), approximately 40 to 50% of the Canadian population belongs to the middle class. Due to its size, it heavily influences the nature of Canadian culture. This class has a considerable level of racial as well as ethnic diversity. This class is never characterized by familiarity and exclusivity with which the upper class carries. Over half of the families in this category are referred to as the "upper-middle" class and is characterized by families having incomes ranging $50,000- $100,000. The salaries of the upper middle class are mainly earned from professional and upper managerial positions (Macionis & Gerber (2002). The rest of the middle class population does work in less prestigious occupations that are white-collar or in highly skilled jobs that are blue-collar. The middle class has been noted be the dominant class in the Calgary Stampede

It has been noted that while persons in emerging countries appear to be doing better (improving), the Canadian middle class appears to be declining. According to Armine Yalnizyan, a distinguished economist at the Canadian Centre for Policy Alternatives, "The middle class is running faster to stay in the same place. And the promise of mobility, that notion that the future will be brighter for our children than for ourselves, appears to be in question" (Yalnizyan,2009b).

Causes

Vanishing of the middle-income jobs

The other reason as to why the middle class is vanishing is that the well-paying jobs that can sustain them are moving elsewhere. According to Statistics Canada (2010), Canada has lost several manufacturing jobs (322,000) in the period 2004-2008. At the same time, more than one out of seven manufacturing jobs does disappear over the period.

Effects of shrinking middle class

Interference with normal family life and poor children grades at school.

Yalnizyan (2009b) points out that the hard work that the declining middle class engage in cuts into their family life. The economist notes this using the case of two-income families that working two hours more than they did work ten years earlier. In the 1970s, the two-income families formed a majority of the population (30%).In the contemporary society however, an excess of 70% of the middle class require more than one income in order to continuing enjoying their middle class style of life. The fact that two earners work for longer hours mean that they have less time for their family. The outcome is that there is less time dedicated to the nurturing of children, and even less time in helping them with their homework. The consequence is poor grades at school. Income is closely related to the level of education. Yalnizyan (2009b) point out that thus is not good for the Canadian society.

Decline in the size of middle-class neighborhoods

Hulchanski (2007) points out that in the period 1970-2000, the number of neighborhoods occupied by the middle class had decline in the city. At the same time, the number of low-income neighborhoods increased. The changes were very significant. The middle-class community for example declined from 66% in the 1970s to a mere 29% in the year 2005. Indeed Hulchanski (2007) noted that one always expects some numbers to rise while others reduce but this case was simply not consistent and was therefore very amazing (p.8). These changes also were observable both in Montreal and Vancouver.

Effect on Suburbia

Barber (2007) noted that the trend noted by Prof. Hulchanski was being replicated in the outer suburbs but at a much lower pace. His inevitable conclusion corresponded to the one by Hulchanski (2007) that the middle-income Toronto households were not just moving outside the city but were in fact disappearing from Toronto altogether!

Conclusion

The Canadian government should work together with the industry in order to notice and minimize this unacceptable trend. This is because they middle class are responsible to a large share of economic growth as well as productivity. The middle class also forms the majority of consumers in most businesses. They will lose their business as a result of lack of customers. The government too might lose its revenue and power as a result social unrest caused by job cuts