(The following article is from the August 1-31, 2007 issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St. Unit 502, Hamilton, ON, L8P 2H3.)
PV Vancouver Bureau
Real wages for Canadian workers have been stagnant for the past 30 years, despite economic growth and productivity gains. That's the conclusion of the a new study from the Canadian Centre for Policy Alternatives, which says that if workers' real wages had increased to reflect improved productivity and economic growth, they could be earning an average of $10,000 more each year on their paycheques (in 2005 dollars).
Rising Profit Shares, Falling Wage Shares (see http://www.growinggap.ca) finds that Canada's economy grew steadily and workers' productivity improved by 51 per cent in the past 30 years, but workers' average real wages have been stuck in a holding pattern.
The study finds that Canadian workers' wage share of the economy is now the lowest in 40 years. Labour compensation as a share of national income is now at about 63%, a drastic fall from the 1992 level of just under 70%.
Instead, corporations have been banking the benefits of economic growth and improved productivity.
"Corporate profit shares are the highest they've been in 40 years ? and we're not talking peanuts here," says CCPA senior economist Ellen Russell. "In 2005, corporations banked $130 billion more in gross profits than they would have if the profit share had remained at 1991 levels. Sharing those earnings with workers could have gone a long way to reducing Canada's growing income gap." Looking at the figures another way, Canadian families are putting in more work time, but 80% of them (those earning under $100,000) are getting a smaller share of the economy, while the richest 10% of families get richer.
Another recent CCPA study, The Rich and the Rest of Us: The Changing Face of Canada's Growing Gap, looks at the earnings and after--tax incomes of Canadian families raising children under 18, comparing families in the late 1970s and those in the early 2000s. The study found that in 2004, the richest 10% of families earned 82 times more than the poorest 10% - almost triple the ratio of 1976, when they earned 31 times more. In after?tax terms the gap is at a 30-year high.
Between 1976-79 the bottom half earned 27% of total earnings. Between 2001?04 that dropped to 20.5%, though they worked more. Up to 80% of families lost ground or stayed put compared to the previous generation, in both earnings and after-tax terms.
All but the richest families are working more weeks and hours in the paid workforce (200 hours more on average since 1996), yet only the richest 10% saw a significant increase in their earnings - a rise of 30%.
The studies disprove the argument by bourgeois economists that "a rising tide lifts all boats."
"Productivity gains are important because they are closely connected with changes in real wages over the long run," Statistics Canada claimed in a June 2007 report.
But as Russell points out, "Canadians are constantly being told they need to improve their productivity and grow the economy - which is exactly what they've done ? but their paycheques aren't growing to reflect their work efforts."
Statistics Canada reports that Canadian companies posted a record operating profit of $63.8 billion in the first three months of 2007, as rising commodity prices boosted results in the petroleum, coal and metal-related industries. Corporate profits rose 13.0% during the January-March quarter, following a dip of 0.8% in the fourth quarter of 2006. This raised their share of nominal GDP to 13.9%, slightly below the record set at the end of 2005, but well above the historical average of 10.3%.
However, there is some bad news for the ultra-rich. It seems the year 2006 saw a temporary halt to the run of ever-escalating salaries for CEOs in Canada. Robert Gratton of Power Corp. took home $173 million in 2004, and Goldcorp's Robert McEwen pulled in $95 million in 2003. But the top earner for 2006, Research In Motion's Jim Balsillie, took home a mere $54 million, enough to top the list in only one of the previous six years.