Jobs data doesn’t say much about the minimum wage (yet) but lots about growing inequality

We’ve had two months of jobs data in Canada since Ontario increased it’s minimum wage from $11.60 to $14 on January 1, 2017. When January’s Labour Force Survey numbers came out and showed some of the biggest month-over-month losses in years, there was a slew of predictable, reflexive commentary blaming Ontario’s minimum wage hike. Now that we have a second month of data that show modest job gains as well as falling unemployment, down to 5.8% nation-wide and 5.5% in Ontario, the same critics are silent. The lesson is that they should have also been silent about January’s numbers.

Simply put, we don’t know enough to lay the blame for good or bad jobs numbers at the feet of a minimum wage hike in Ontario. Both January’s negative data and February’s positive data should give us pause. The monthly jobs data are volatile. The drop in January was so out of line with long-term trends that it raised the eyebrows of nearly all economists. Part of January’s losses are due to the typical rash of post-holiday lay-offs. But these numbers also seem at least in part statistical error rather than a reflection of something happening in the real world, especially when compared with February’s return to the trend of consistent, if modest, job growth.

Unemployment rates across Canada; Ontario is second lowest at 5.5%. Source: Statistics Canada, The Daily for March 9, 2018.

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Jonathan Kay advises the left

Jonathan Kay knows what’s hurting the poor. Is it absurdly low welfare rates and social supports? Perhaps it is lack of access to affordable housing? Poverty wages? Food insecurity? Over-policing? No, says Kay, the honest broker of politics, the inconvenient truth-speaker, it’s the left’s political correctness that’s really keeping the poor down.

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Kay supports this claim with a jumble of obvious facts, unexamined assumptions and misrepresentations held together like the remnants of the fraying neoliberal consensus. In his most recent Walrus editorial, Kay jumps from (1) houses in Vancouver cost too much (true) to (2) it’s all the fault of the Chinese (nope) to (3) the left doesn’t care about class or the poor (wtf), all in the span of under 900 words! Here’s the punchline, complete with the obligatory reference to “things I’ve seen on social media”:

The left now has a golden opportunity to push for bold policies that would go to the heart of income inequality in our class-based society: guaranteed income, universal access to care for those suffering from mental illness, and, yes, tax and regulatory policies that discourage hot money from overinflating local real-estate markets. But from what I’ve read on social media and in Walrus editorial submissions, many activists and pundits seem far more comfortable striking positions on highly compartmentalized identity-politics issues that can be reduced to succinct, tweet-able messages.

For someone who has so much sage advice for the left on class politics, Kay is utterly oblivious to how class operates. Kay castigates Vancouver mayor Gregor Robertson for not speaking out against the real estate bubble ballooning under his watch and blames it on steadfast anti-racism. Is Robertson a bleeding heart liberal hopelessly in the clutches of radical dogmas or is it rather that he is the leader of a party that received hundreds of thousands of dollars in campaign contributions from real estate developers in the city?

There’s no point in citing the innumerable left articles, speeches, rallies, occupations, forums, talks and leaflets on the topics of “socio-economic stratification, poverty, and income inequality” that Kay claims are missing. What better proof that the left has managed to get all of these issues onto the agenda than the fact that clueless elite scribes like Kay are forced to treat them seriously?

Then again, here’s just one example, from this very blog back in 2014 on the same topic of Vancouver’s unaffordable housing:

The growth of inequality, attacks on pensions, increases in lifespans, aggressive tax cuts – all of these factors have moved wealthier Canadian households to look for new investment opportunities. Investment in real estate has been helped by low mortgage rates, a supply of new housing skewed towards small, high-end condominiums as well as existing equity available to those who lucked out and grew rich on the initial housing boom that started in Vancouver in the 1980s.

As absurd as it is to say it explicitly, it’s not a hegemonic anti-racism that’s driving millennials and the poor out of cities like Vancouver. It is the combination of record low interest rates and money pumping pushing up asset prices all over the world. Art auctions are breaking records and condos are selling like hot cakes because the rich have won—they no longer have to make productive investments that will boost the wages of regular folks alongside boosting their wealth. It is also government at all levels completely abandoning the project of house-building. The Liberals in the 1990s announced that the Canadian government was “not in the business of housing” and turned to driving private mortgage finance instead.

It is a global glut of too much money chasing too little tangible wealth. Just by virtue of proximity, money from mainland China plays some role in the housing bubbles in Hong Kong, Sydney or Vancouver. But is money from mainland China pricing people out of New York City? out of London? out of Amsterdam? Everywhere it is the wealthy who are pushing out the poor. Developer-funded crocodile tears, not anti-racism, are stopping meaningful reform that would include progressively taxing wealth, wherever its owners are domiciled.

Kay mentions that the average individual income in Vancouver is $43,000. The average for recent immigrants is about half that. The overall median is closer to $30,000. Here’s an opportunity for class and anti-racist politics; the kind already pushing for a higher minimum wage and pushing back against developers. It’s one where the poor, the working class and the racialized have autonomy over solutions rather than being told inequality is a big problem elites should solve. Maybe Kay’s protests and lamentations about Uberization or union weakness would be more believable if they didn’t come from an avid fan of Uber who “won’t go back to cabs” (and whose big solution is to cash out cabbies with a one-time payment) or someone who has wasted hundreds of column inches attacking unions of all stripes.

The truly blind to the class politics screwing workers and the poor are those like Jonathan Kay whose complaints take political cues from service to elites.

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Will Sanders’ rise be felt in Canada?

Co-written with Derrick O’Keefe and originally published at Ricochet.

Even if he’s really only offering a pragmatic form of social democracy, Sanders has created a political space in the mainstream left that’s sorely missing in Canada. His insurgent campaign for the Democratic Party nomination has put inequality and systemic injustice front and centre in the United States.

Policy proposals aside, merely having the word “socialism” back on the agenda in the United States signals a massive shift. Compare Sanders’ unabashed use of the term to recent NDP history.

Canada’s traditional social democratic party has spent recent years downplaying and scrubbing away the last vestiges of socialism from its public presentation. Under pressure from party leaders and bureaucrats, the NDP removed all but one reference to it from its constitution in 2013. The s-word is now only mentioned in passing in the party preamble.

It’s useful to take a broader view than just the recent botched campaign and the party itself. For years, the NDP’s leadership and top advisors have taken their cues from their counterparts in control of the Democratic Party — an electoral machine that has been effectively captured by a small coterie of the rich and powerful. (more…)

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2015: Podcasting year in review

As 2015 comes to a close, here’s a podcast and a post that’s something in between a best of and a year in review. It’s a look back at some of my interviews from 2015, both in terms of significant subjects and personal favourites. (more…)

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Canada missed the memo: it’s OK to talk about inequality and capitalism

There is no political rocket science to the Oct. 19th election result. Even with our slanted first-past-the-post system, it would have been difficult for Stephen Harper’s Conservatives to squeak out a parliamentary majority, or even minority, given that more than two-thirds of the population wanted him out.

If vague notions of change played the lead role in the long campaign, then the economy wrote the script for much of the rest. The Liberals won, while the others lost, on economic issues.

Since the global crisis of 2007-08, most of us have seen stagnation in incomes and living standards. The past year, with the global resource and commodity price crash, has only made things worse by taking down the last bastions of growth, albeit ones based in the toxic extractive sectors of the Canadian economy.

Together these basic facts, lived every day by millions, made it inevitable that the economy would be the defining issue of the 2015 campaign and key to whether the change vote coalesced around the NDP or the Liberals. People were clearly tired of seeing Harper represent them, but in daily life, they’re tired of seeing their debt, their rent, their children’s tuition and their bills go up, while their jobs disappear or their incomes flatline. (more…)

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Cutting through Canada’s election fog: inequality, climate change and free trade

This week’s podcast is a Canadian Centre for Policy Alternatives double-header. The CCPA has been an invaluable resource for alternative economic and political analysis for decades and I always enjoy highlighting their work. First up, I speak with Seth Klein, the director of the Centre’s British Columbia office, on how inequality and climate, two major issues to which Seth and the CCPA devote considersable effort, have fared in Canada’s election debate so far. Seth also talks about how the platforms of the parties stack up against the Leap Manifesto. The second half of the episode contains my conversation with Scott Sinclair, the CCPA’s chief trade researcher. Scott talks about the freshly-concluded Trans-Pacific Partnership, or TPP, and what this enormous trade pact means for us and our democracy.

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Branko Milanovic on inequality and the new global plutocracy

Last week I interviewed Branko Milanovic, one of the world’s foremost authorities on inequality. Our conversation moved freely from global trends in inequality over the past quarter-century to the rise of a new plutocracy and the threat it poses to democratic governance. I thought it worthwhile to transcribe our chat in full.

A bit more about Branko: he is currently a professor at the CUNY Graduate Centre, where he also heads the Luxembourg Income Study Centre. His most recent book is The Haves and the Have-nots: A Brief and Idiosyncratic History of Global Inequality and he has a great blog worth reading. Here is our conversation, edited lightly for clarity and length:

Michal Rozworski: How has global income inequality evolved recently?

Branko Milanovic: Global income inequality is really defined as inequality between individuals. So, in principle, it’s the same as inequality within a country if you were to assume that the world is one country. Surely we have to allow for differences in price levels – that’s really the important difference between inequality and global inequality because price differences between countries in Africa and, say, Norway are enormous and, obviously, we have to allow for the fact that things are much cheaper in Africa.

Having done all of that, the basic story is that, first, the level of global inequality is extremely high. It’s higher than within any one country, which is not surprising. But what is also interesting is that this level, to any extent we can really determine, has been slightly going down over the past ten years approximately. In other words, all the evidence we have points to a downward trend, except that we are unsure if the trend is larger or smaller. The reason for this is that the relatively poor and populous countries, such as China, India, Indonesia, Vietnam and so on, have now had 15 or 20 years of very high growth rates – higher than the rich countries – and they are the ones pushing inequality down.

The final point is that all this happens while inequality in all the countries I mentioned, as well as in the US and Europe, is going up. (more…)

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Inequality, global and Canadian, with Branko Milanovic and Armine Yalnizyan

 

I have two guests to talking about inequality today. First up is Branko Milanovic, who speaks with me about global inequality as well as the rise of a global plutocracy. One of the world’s foremost experts on inequality, Branko is professor at the CUNY Graduate Centre, where he also heads the local affiliate of the Luxembourg Income Study Centre, former chief economist at the World Bank’s research unit and author of the The Haves and the Have-nots: A Brief and Idiosyncratic History of Global Inequality. He blogs regularly; it’s always interesting.

I’m also happy to have Armine Yalnizyan back on the show as my second guest. Armine is a senior economist at the Centre for Policy Alternatives in Ottawa. The Centre has done extensive research into inequality in Canada and that’s the topic of our conversation. To wit, Armine will be introducing the inaugural Sefton-Williams Memorial Lecture on March 19 in Toronto, which will be given by Miles Corak and also focus on Canadian inequality.

Cartoon by Chris Slane.
Cartoon by Chris Slane.

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Forget income splitting, tax the rich!

For now, I’ll keep double-posting my pieces for Ricochet here. The latest is on income splitting and taxing the rich more generally. The idea is that even though taxing the rich won’t get generate huge revenue, there are lots of other good reasons to do it, like even just slightly shifting the balance of power in the workplace. On the flip side, the income-splitting tax cut does more than just funnel money disproportionately to the rich, it also reinforces 1950s-style gender roles. Here is the piece in full:

Tax may not to be a four-letter word, but neither is it a one-trick pony. Rather than merely being tools to raise government revenue and redistribute income, taxes can affect the distribution of power in the home and at work.

The tax reform centrepiece just introduced by the Conservatives not only cuts the government’s ability to raise revenues, it is also openly touted as a way to reinforce the 1950s nuclear family. Instead of cutting taxes on the wealthy to make the home more unequal, let’s tax them to get some power back in our workplaces.

Leave it to income-splitting Beaver

First, a quick recap. There are two major pieces to the Conservatives’ most recent “tax reform”: income-splitting, or the Family Tax Cut (FTC), and the extension of the Universal Child Care Benefit (UCCB). Income-splitting is a tax cut that allows families where one person earns more to share income with their partner to lower the overall tax bill. Benefits from this are very disproportionately going to go to families earning above the national median.

The extension of the UCCB is an additional cash transfer, although limited to those with children – in other words, new government spending. The upside? It boosts the incomes of the working and middle classes. The downside? It doesn’t satisfy fans of targeted transfers, as it also benefits the wealthy thus wasting resources and it doesn’t satisfy fans of universal programs because it benefits the rich without getting their support for high-quality public services. (more…)

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Is Canada the Sweden of anything?

There was an odd article last week on the explainer site Vox that argued Sweden doesn’t achieve its relative equality with very progressive, “soak the rich” taxation. While Matt Bruenig and Mike Konczal have already provided excellent, US-centred rebuttals to this argument, I thought this would be a good occasion to take a look at some comparative facts about Canadian inequality and overall redistribution.

First, notice that on the chart in the original article, Canada is very close to the US, as being among the “least redistributive”. This goes against the national image of a kinder, gentler capitalism more akin to the various North European countries clustered around the middle and top of the chart.

Source: Vox.
Source: Vox.

The chart, however, is based on an odd measure of redistribution: the percentage of total income tax paid by the richest households (the Vox article doesn’t specify exactly, but it could be this OECD measure of tax revenue paid by the top 10%).  As Bruenig and Konczal both point out, defining the degree of redistribution like this has many problems: for example, it can make a very unequal society with low and flat(ish) taxes appear to be much more redistributive than a fairly equal society with high and progressive taxes. In many ways, the Vox article is simply measuring the degree of inequality in multiple ways rather than relating it to tax progressivity.

In light of this, what does it mean that Canada is right down there clustered with the US as a country that supposedly taxes progressively but doesn’t redistribute? Is this something the chart nevertheless gets right? Is it that while Canada is often presented a kinder, gentler state that can be set alongside its Northern European counterparts (themselves no absolute paragons and eroding slowly), the gap between it and the US is really not that wide? (more…)

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