We can all rest easy. Despite many studies showing increased income inequality and a shrinking middle class in Canada, a rags-to-riches story is more likely to happen here than in the “land of opportunity.”
University of Ottawa professor Miles Corak, a social policy economist and former director of family and labour research at Statistics Canada, and his co-authors Lori Curtis (Professor of Economics, University of Waterloo) and Shelley Phipps (Professor of Economics, Dalhousie University) found that Canadians are three times more economically mobile than those in the US. The difference is largely due to those at the very top and the very bottom of the income distribution. In Economic Mobility, Family Background, and the Well-Being of Children in the United States and Canada, the three researchers found that social supports such as the Child Tax Credit, paid parental leave benefits, and schools funded through provincial income taxes help ensure that children receive better care and schooling than in the US, where these supports are absent and schools are funded through local property taxes, leaving poor neighbourhoods with failing schools. With sky-high tuition fees at universities, the richest Americans can buy their children the best educations and tutors. These differences between rich and poor mean that if you’re born poor in the US, you tend to stay poor; this also applies to the 1%–the very top of the income pyramid. For example, although “the average Canadian child is not as affluent as the average American, the poorest Canadian is not as poor in an absolute sense as Americans at the bottom of the income distribution.” This may help explain why discussions of class are more prevalent in the American literature and popular press.
The authors caution that rising income inequality rates in Canada could erode the high rate of economic mobility that we see now. Indeed, a look at their graphs shows that we still have issues: 15% our poorest children may still grow up to have incomes in the lowest decile (Figure 3, p7), but they have a better chance at the 7th, 8th, and 9th deciles than they do in the US. More Canadian children are born in the lower income deciles than American children (Figure 8, p33). But Table 1 (p21) shows some clear differences in the characteristics of families and parents. In Canada, 2.1% of children are born to teenage mothers; in the US, it’s 8.3%. In Canada, 14.9% of mothers are single compared to 22.1% in the US. Far more mothers and lone mothers in Canada have completed some post-secondary education or a post-secondary certificate (but oddly, more American mothers have completed degrees). Health problems among the poorest mothers are also more prevalent in the US, likely due to the cost of health care. As the authors suggest, Canadians must protect policies such as paid parental leave, the right to return to their jobs after the birth of a child, tax-transfer programs that help reduce the severity of poverty, and funding for schools through provincial income tax, ensuring a more equal distribution of resources across municipalities and neighbourhoods. Although we have fewer barriers to health care, we need to ensure the lower-income population has sufficient knowledge on navigating the health care system and can pay for prescription medication.
Corak, Curtis and Phipps write that “The citizens of both countries have a similar understanding of a successful life, one that is rooted in individual aspirations and freedom. They also have similar views on how these goals should be attained, but with one important exception: Americans differ in that they are more likely to see the State hindering rather than helping the attainment of these goals. Yet, at the same time the citizens of both countries recognize the need for public policy to contribute to reaching this ideal, with Americans believing more than Canadians that a whole host of interventions would be effective in improving the prospects for economic mobility. One interpretation of these findings – an interpretation that only becomes evident in a comparative context – is that in some sense this need is going unmet in the United States.”