Poor get poorer, rich not so rich

                  New report shows all Canadian incomes declining

                                 By Elaine Carey
                          Toronto Star Demographics Reporter

                  Most Canadian families are slipping down the income ladder,
                  and the odds of climbing up have all but disappeared, a new
                  report says.

                  ``We are witnessing a slide to the bottom, with fewer
                  opportunities to get ahead,'' says the report's author,
economist
                  Armine Yalnizyan.

                  During the '90s, the proportion of families at the bottom
income
                  level surged dramatically, while the proportion in the
middle and
                  top income categories has dropped - along with average
                  after-tax incomes.

                  The ``grand social experiment'' of the '90s - to
emphasize market
                  solutions over government intervention in the economy - has
                  been a dismal failure, concludes the study released today by
                  the Canadian Centre for Social Justice, an economic think
tank.

                  ``The promise of the last generation was, `If you work
harder
                  you'll get ahead,' '' Yalnizyan said in an interview.
``But over the
                  '90s, the restructuring of the workplace is such that
economic
                  growth does not translate into more prosperity for the vast
                  majority of Canadians.''

                  In 1989, 30 per cent of families had an income of less than
                  $35,038 after taxes. But in 1997, after adjusting for
inflation, a
                  full 37 per cent had less than that threshold.

                  The number of families at the very bottom of the economic
                  ladder grew even faster. The poorest families - those
earning
                  less than $11,567 after taxes and transfer payments -
swelled
                  from 10 per cent of all families to 14 per cent. The
earned income
                  in this group dropped from an average $3,731 to $1,255.

                  ``By any definition of poverty, the poor are getting
poorer, and
                  there are more poor families among us,'' concludes the
study,
                  funded by the Atkinson Foundation.

                  The rich aren't getting richer, either. The top 10 per
cent of
                  families had an average income of $144,700 in 1989. In 1997,
                  they earned about $8,300 less. But rich families lose
                  proportionately less when bad times hit and are the first
group
                  to benefit from a recovery, the report says.

                  Tax cuts aren't the answer, because taxes aren't the
problem,
                  Yalnizyan said. Cuts don't help the growing number of poor
                  families who don't have enough income to tax, and reduced
                  government revenue means basics like health care and
                  education suffer.

                  The report is a follow-up to a study released 15 months
ago that
                  exposed a growing gap between the rich and the poor.

                  This study found two distinct phases in the decade.
During the
                  1989-1993 recession, the income gap between rich and poor
                  grew. But government actions closed the after-tax gap.

                  The opposite happened during the 1994-97 recovery period.
                  While average income went up, the after-tax gap between rich
                  and poor grew at the fastest rate since the '70s.

                  Ontario has the biggest gap between rich and poor, and that
                  disparity has widened faster than elsewhere.

                  Cuts in taxes and transfer payments since the mid-'90s have
                  benefited only the richest 10 per cent of families - the
one group
                  with a lower income-tax rate in 1997 than in 1994. The
poorest 10
                  per cent, meanwhile, paid more taxes and got fewer income
                  supports. That led to a net loss of 12 per cent in average
                  after-tax income - the biggest loss of any income group -
mainly
                  because employment insurance and welfare were reduced.

                  ``Getting tough on the poor didn't seem to help anybody,''
                  Yalnizyan said. ``At the same time, we're stripping the
social
                  services that make life a lot more secure for everyone.''

                  Families are working harder and earning less in real
dollars,
                  which ``fuels a sense of desperation that, `The only way I'm
                  going to get ahead is by tax cuts,' '' she said. ``At
least, that's
                  how it's been spun.''

                  What's needed instead, the study concludes, is job growth,
                  better wages, family services and supports for the poorest
                  families.




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