Inequality by government

Many object to Income inequality. They should instead object to governments who create it, as do ours. Much if not most of the inequality in Canada as elsewhere comes courtesy of governments. If governments wanted to reduce income inequality, as they should, they should start by cleaning house.

For starters, governments should apply their much-touted principle of “equal pay for work of equal value” to their own employees. As numerous analyses of the Canadian workforce have shown, government workers get paid between 20- and 25-per-cent more in wages and benefits than their counterparts doing the same work in the private sector. In the case of federal civil servants, the topup is 33 per cent. Moreover, public servants are granted job security, more secure pensions and other intangibles.

Next, governments should apply the “equal pay for work of equal value” principle indirectly, too, through the industries that they regulate. The federal government alone boasts of regulating 18,000 employers in everything from the air, sea and rail transportation to financial industries. These employers’ 900,000 employees — six per cent of the workforce — also enjoy compensation beyond the reach of most employees in the unregulated, freemarket economy. Employees in sectors regulated by provinces and municipalities further mock the principle of equal pay for work of equal value.

The best-remunerated employees in Canada, according to Statistics Canada’s classification system, are workers for gas, electricity, water and other utilities. On average — counting blue-collar repairmen and truck drivers as well as white-collar managers and secretaries — the highly regulated utility sector compensates its employees with an average wage exceeding $40 per hour. In contrast, the worst remunerated are those sectors that are least regulated — the retail sector, where employees average under $17 per hour, and accommodation and food services, which receive just over $14.