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July/August 2013 Edition


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Income & the Cost of Living
When will we reach the tipping point?

Note: all charts sourced or taken from Tracking the Trends 2011 (Edmonton Social Planning Council).

The number of Canadians living on the edge is worrisome - about 50% of Canadians live pay check to pay check. That's a lot of people who will be hard pressed to persevere through an emergency, the loss of a job, a costly health condition, and so forth.

My read on the data suggests that many, if not most, of these folks are currently living above the poverty line, but because of high debt, low or no savings, and insecure employment, are not that far away from losing everything.

If the above statistic rings true for Edmonton, this means close to 500,000 people are experiencing some form of economic vulnerability.

This indicates to me that it is no longer sufficient for us to just talk about those living below the poverty line -- about 120,000 people in Edmonton. We have many, many more living on the edge. In Alberta -- and I imagine most places in Canada -- the cost of housing, food, and clothing has far outpaced the growth in wages/income for most citizens.

Here in Edmonton the increase in rents and food since 2000 have far outpaced the growth in income among most local citizens, as evidenced in the two charts below:

Think about the rate of growth in the above expenses and then compare these costs with the chart below:

While incomes have been increasing, the rate of growth since 1999 in Median After Tax Income does not come close to addressing the escalation of rental and food costs. This impacts people's ability to maintain, much less increase, a reasonable net worth or to have sufficient discretionary income to participate fully in the economy.

One can easily argue that high debt rates among Canadians has a clear connection to a weakening of Canadian's capacity to fully fund their spending through income they earn.

In reality there is a minority of Canadians who are seeing steady and in some cases strong increases to their net worth over time.  Take a look at the chart and table below.

The graphic depiction above tells quite a story in terms of whose incomes/net worth in Canada are growing. Quite simply, the more you make or are worth, the faster the pace of growth since 1984. For example, the bottom 10% saw a 357% reduction in their net worth between 1984 and 2005, whereas the top 10% experienced a 123% increase. If you follow the right hand column in the table below, you can see that, without exception, growth in net worth rises with each step up the Decile ladder, which gives some credence to the old adage: it takes money to make money.

This little article is not about painting "woe is me" or "greedy rich" imagery. My concern is about the sustainability of the patterns we can see in the few charts above. I wonder and I worry about what will happen when the divide between those who are wealthy and those who are not will become so great that we will all run the risk of economic disaster and social unrest.

At some point the majority of Canadians will not be able to participate optimally in the economy as consumers, which will impact business, impact tax revenues, and eventually threaten the wealthy as well. 

We need an economy that works to ensure equitable participation in generating income and engaging in consumerism. Clearly the minimum wage will not accomplish that. We need more jobs that pay a living wage and corporate profits that benefit shareholders AND serve to strengthen community health and well-being. The lack of the latter will not create, much less sustain, a robust marketplace.


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Recommended Resources
Edmonton Social Planning Council 

Alberta’s Office of Statistics and Information 

Alberta Association for Services for Children and Families 

Mashable (Social Media)

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