Getting harder to get ahead, report says
Income growth ‘modest’ for Ontario families between 2000 and 2016
The province’s financial watchdog says “it is becoming harder for lower-income Ontarians to move up” the ladder, as salary increases have sputtered in recent years.
In a 49-page report to the legislature on wage growth, distribution, and mobility, the Financial Accountability Office (FAO) found that “between 2000 and 2016, the after-tax income of the median Ontario family grew only modestly.”
“The decline in relative income mobility indicates that the income distribution in Ontario has become more entrenched over the last 35 years,” the FAO concluded Thursday.
“As the share of Ontarians trading places on the income ladder has declined, the differences in income have become more permanent, reinforcing existing income inequalities.”
The report comes after the Progressive Conservative government cancelled a planned $1 increase to the $14-an-hour minimum wage that had been scheduled for Jan. 1.
“It has become more difficult for Ontarians to ‘get ahead’ — that is, move up the income distribution,” the FAO said.
“In this report, upward income mobility is defined as the share of working-age Ontarians who move up at least one income quintile over a five-year period,” the office continued.
“This share declined from 41 per cent in the early 1980s to 32 per cent more recently. The decline was most pronounced for lower-income Ontarians.”
Perhaps not surprisingly, the FAO found the gap between rich and poor is growing and becoming more insurmountable since 2000.
“During this period, the incomes of the poorest 40 per cent of Ontario families increased much more slowly than the incomes of the richest 40 per cent of Ontario families,” the report said. “Families with a higher incidence of low income, particularly working-age people living alone and single-parent families, experienced absolute declines in their real aftertax income.”
Finance Minister Vic Fedeli said the Tories “heard loud and clear that life became harder during 15 years of Liberal government.”
“That is why we are committed to putting more money in peoples’ pockets and creating and protecting jobs in Ontario,” said Fedeli, noting on Jan. 1, the “low income individuals and families tax (LIFT) credit took effect, helping 1.1 million Ontarians.
“The vast majority of those earning $30,000 per year or less will pay no personal income taxes when they file their 2019 tax returns,” the treasurer said, adding the government also extricated Ontario from its capand-trade environmental alliance with Quebec and Ontario.
That should save families about $260 a year on energy costs. NDP Leader Andrea Horwath said the FAO report was “a condemnation of the Liberal government.”
Horwath noted the Liberals were in power from 2003 until 2018, so governed during most of the time that the income gap grew. But Liberal MPP Mitzie Hunter (Scarborough-Guildwood) insisted the study proves her party’s government was “on the right path with increasing the minimum wage,”
“Unfortunately, Doug Ford has systematically targeted low income Ontarians with his austerity cuts while giving tax breaks to the rich,” said Hunter, pointing to other possible PC cuts.
“Education is the biggest equalizer we have in our society. We should be seeing more investments, not less, but Ford has refused to rule out slashing full-day kindergarten. That’s an opportunity to put all four- and five-year-old kids on equal footing and now it’s likely being taken away.”
Green Leader Mike Schreiner said the FAO report is especially “alarming” since along with axing a minimum-wage hike, the Conservatives have scrapped the basic-income pilot project to help those receiving assistance.
“The Ford government’s actions to cancel the minimum wage increase and to cut the basic income pilot will only make inequality worse,” said Schreiner.