Pushing back on inequality
Things have been getting better in Ontario over the past few years — for those who were doing OK in the first place. For those who were already struggling, it’s another story. They’ve actually been slipping backwards.
Stripped of the economic jargon, that’s the basic finding of a new report from the Canadian Centre for Policy Alternatives.
It confirms what was already known from other studies: that income inequality has been getting worse over the past decade and a half. And it provides more evidence that the Wynne government is on the right track with its important reform of the province’s labour laws.
The key factor in growing inequality has been the dramatic increase in so-called precarious work — often low-paid, contract, and part-time work. As the CCPA’s senior economist, Sheila Block, documents in her report, it has resulted in essentially two separate labour markets in Ontario.
For those in the lower rungs of the workforce, it means they are earning less on average than they did back in 2000. The post-recession recovery since 2008 hasn’t helped them, either. Those in the bottom 40 per cent of earners have seen their incomes actually drop over the past decade.
Those making higher incomes, on the other hand, have benefited from the province’s growing prosperity. And the more they were making to begin with, the bigger their gains have been.
In other words, the comfortable and the rich have been getting richer while the poor are struggling along, trapped in usually non-unionized jobs that don’t pay them a living wage or provide any security for the future.
Even worse, as Block writes, the trends in Ontario “were dramatically worse than in the national picture.” That’s largely because the province’s traditional manufacturing base has struggled and Ontario didn’t benefit from the resource boom of the 2000s as much as provinces like Alberta and Newfoundland did.
Governments have largely been impotent in the face of these powerful trends. They’ve pointed, with reason, at factors like globalization and automation to explain the growing income inequality that has eroded the social compact built in the decades following the Second World War. Those at the bottom can no longer count on sharing in the general prosperity of society as a whole.
This has all sorts of bad implications for social solidarity and political life; the rise of Donald Trump on the back of economic angst in the United States is only the most dramatic example.
So it has been encouraging to see Ontario’s Liberal government attempt to tackle the problem with a series of reforms set out in Bill 148, the Fair Workplaces, Better Jobs Act.
The measures are designed to promote decent work by, among other things, making it easier to form unions, guaranteeing minimum vacation entitlements, requiring companies to give longer notice before scheduling shifts and providing for better enforcement of the labour code.
And, most controversially, the government is raising Ontario’s minimum wage from the current $11.40 an hour to $14 on Jan.1 and then $15 a year later. It’s a significant increase and, as could be predicted, business groups are pushing back. They argue that a higher minimum wage will add significantly to their costs and force some employers to cut jobs.
In fact, the evidence points mostly in the other direction. Recent experience in several American states shows that substantial hikes in the minimum wage haven’t led to job losses, as a group of 53 economists pointed out in a letter supporting the Wynne government’s move. And a higher minimum wage has economic benefits as well, by increasing the purchasing power of those most likely to spend any extra earnings.
Just as important, the labour reforms and wage increases in Bill 148 are an appropriate and overdue response to the changes in Ontario’s labour market that are behind the troubling increase in income inequality.
Governments have stood on the sidelines for too long while lower-income workers have lost ground. It’s high time they leaned against the trend toward inequality and took steps to make sure everyone shares in growing prosperity.
A new study of income inequality provides more evidence that the government is on the right track with its reform of Ontario labour law