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In BC, How Unequal Are We?

Jimmy Pattison 'just doesn't talk about that kind of thing.' This year his wealth grew by $1.25 billion. Third in a series on inequality solutions.

By Andrew MacLeod 28 Jan 2014 | TheTyee.ca

Andrew MacLeod produced this series with funding from The Tyee Solutions Society in collaboration with Tides Canada Initiatives. TCI neither influences nor endorses the particular content of Tyee Solutions Society reporting. Other publications wishing to publish this story or other Tyee Solutions Society-produced articles, please see this website for contacts and information.

MacLeod is The Tyee's Legislative bureau chief in Victoria. Find him on Twitter or reach him here.

The same day that it was reported that Jim Pattison's net worth had reached an estimated $7.39 billion, up $1.25 billion from last year, a man on the street in Victoria asked me to buy him a breakfast sandwich from a fast food joint.

Perhaps in his 60s, the man had a scraggly beard, hair to his shoulders and nicotine-stained fingers. His hand shook as he raised a paper coffee cup to his lips. The one time merchant seaman said he had a place to live at the nearby hospital.

When I told him I was working on a series of articles about inequality, he said Liberals and Conservatives are all the same and that it's tough for socialists to get elected, even though that's what's needed to address the issue.

To say there is inequality in British Columbia and in Canada is to state the obvious. While the wealth of our richest is the stuff of fawning headlines, the stories run beside others about the persistence of child poverty and the continued reliance of many on food banks.

Asked if Pattison, who is fifth on the list of wealthiest Canadians, would talk with me about income and wealth, his assistant Maureen Chant said, "No, he wouldn't... He just doesn't talk about that kind of thing."

Nor did B.C.'s second richest person, yoga clothing retailer Chip Wilson, respond to messages. Wilson reportedly has a net worth of $3.73 billion.

The rest of the top-five richest British Columbians are Mansoor Lalji and family who have $2.56 billion from their Larco Investments Ltd. company, Bob Gaglardi with $2.24 billion from Northland Properties Ltd. and Brandt Louie with $2.18 billion from H. Y. Louie Co. Ltd.

Cash problems

At the other end of the spectrum, a 25-year-old who figures after paying rent he lives on $9 a day through disability payments from the provincial government, was happy to talk. "At the end of the day poverty is a cash problem," he said. "For what you trade in terms of stigmatization and the big brother of government poking into your life all the time, it's a very small amount of money."

We spoke on the phone for about an hour before he asked me not to publish his name saying he feared retribution from the people who run the system. "The rules are so complex ... if they want to do you in they can do you in."

The story of inequality is often told through statistics, but you can see it for yourself pretty much anywhere in the province. A few hours bike ride around British Columbia's capital region, for example, takes me past the gates of waterfront mansions worth tens of millions of dollars, through First Nations communities marked by rundown homes and past a queue of people waiting to get into a downtown shelter for a meal or a place to sleep.

Massive wealth and stark poverty exist side-by-side throughout our province, often within a few blocks of each other. More than one source for this series described following Hastings Street in Vancouver, where both buildings and people become distinctly less shabby as you walk westward.

Within a block you go from payday loan places and shops with bars over their windows to high-end jewelry stores, said Iglika Ivanova, an economist in the B.C. office of the Canadian Centre for Policy Alternatives. "It's so obvious."

In Prince George it's a short drive from the hard scrabble downtown to a bustling mall, then out half an hour to homes by the Mud River that list for more than a million. Kelowna, which boasts winery tourism and some swishy lakefront properties, also has some 2,400 mobile homes.

A discussion guide put together for a Simon Fraser University Public Square on B.C.'s economic future noted the same kind of inequalities. "British Columbia's prosperity is not being shared equally between population groups (notably, Aboriginal groups, low-income families, and new immigrants in low wage jobs)," it found. Job growth is uneven across the province, concentrated more in Metro Vancouver than in rural B.C., and many residents/businesses do not pay their fair share of taxes."

The same goes beyond B.C.'s borders and globally, of course. When I asked author and activist Chris Shaw where he sees inequality, he said, "Where don't you? Racial, gender, economic... it is still, in North America, white males running the world. And, to a large measure, in spite of the suntan of the current president, blowing it up."

It is worth noting that according to Credit Suisse's figures, half the population of the planet have assets worth less than $4,000 (U.S.). A net worth of about $75,000 would put you in the global top 10 per cent and $750,000 in the top one per cent.

As bad as things are for many in B.C., on a global scale many of us are among the world's richest people.

Gap has grown

A BC Stats report released in 2012 discussed income inequality in the province in the wake of the Occupy Movement and an Organization for Economic Cooperation and Development study. It found that inequality had increased in Canada and that among provinces B.C. was the second least equal after taxes.

"Based on data from 2008, the average income of the top 10 [per cent] of Canadians was ten times higher than the bottom 10 [per cent], which is a significant increase from the early 1990s, when the ratio was eight to one," wrote Dan Schrier, a manager at BC Stats.

The OECD, which found inequality had grown in most member countries, attributed the increase to the disparity in wages between high- and low-paid workers, the increase in self-employment, and the drop in redistribution of income through taxes and benefits.

One could also add in the decline of unions. Between 1981 and 2012 British Columbia had the biggest drop in unionization rates in Canada, going from 43 per cent of the workforce to 30 per cent, according to Statistics Canada.

"While tax cuts have benefitted people of all income levels to some extent, they have had less of a positive effect on the lowest income earners," wrote Schrier. "This is because these lower-income individuals pay very few income taxes to begin with and are more reliant on the benefits and services that are paid for with tax revenue."

The one per cent, the people targeted by Occupy, had particularly benefited. "According to the OECD, the richest one per cent of Canadians earned 13.3 [per cent] of total income in the country in 2007, well up from the 8.1 [per cent] share they received in 1980."

582px version of Pigeon Park
Pigeon Park in Vancouver. Photo by Grace Douglas from Your BC: The Tyee's Photo Pool.

The most recent Statistics Canada figures available, based on 2011 tax filers, found that the share of income going to top earners dropped in 2007, 2008 and 2009, then was stable in 2010 and 2011. In 2011, the portion of income going to the top one per cent of earners had dropped to 10.6 per cent.

In B.C., in particular the share going to top earners has decreased in recent years. In 2010 in B.C. the top one per cent received 9.9 per cent of income. In 2011 that dropped to 9.7 per cent.

BC redistributing less wealth

One of the standard measures of inequality is the Gini coefficient. A lower number shows a more equal distribution of income; a score of zero would indicate everyone made exactly the same amount of money. A jurisdiction would have a Gini coefficient of one if all income went to just one person.

"Through the 1980s and 1990s the Gini coefficient of income inequality for British Columbia averaged 0.29, but from 2000 to 2009, it averaged 0.33," wrote Schrier, using data from Statistics Canada. Around 2001, B.C.'s Gini coefficient moved from below the Canadian average to above it.

"Among the provinces, only Alberta registered more after-tax income inequality than BC in 2009," the BC Stats report said.

The statistic is particularly interesting considering B.C. ranks better before money is redistributed through the tax and benefit systems, it noted. "British Columbia ranked fifth and Alberta seventh in terms of inequality when market income is used (i.e., excluding government transfers and before taxes)."

In other words, other provinces have more unequal wages, but do a better job of redistributing money and reducing income inequality. The result is that B.C., with about 13.2 per cent of Canada's population and despite being a "have" province, has 14.6 per cent of the nation's people living in poverty.

582px version of INEQUALITY - ratio of average after tax income, 600px
By this measure, BC is the worst place in Canada for inequality. Source: Canadian Centre for Policy Alternatives BC Office.

"In British Columbia, in 2009, the lowest 20 [per cent] earned just 7.7 [per cent] of what the top 20 [per cent] earned before transfers and taxes," said Schrier's report. "After transfers and taxes, that figure improved to 16.5 [per cent]. However that is well down from the levels of around 22 [per cent] seen in the early 1990s."

It was also the biggest gap between the top 20 per cent and the bottom 20 per cent of any province in Canada.

The challenge, he wrote, is for governments to decide how big a gap between the top and the lowest income earners is acceptable. Social tensions seen in things like the Occupy demonstrations suggest the gap is already too big, he concluded.

"When you look at how much our economy has grown over the last 30 years and how little the incomes in the middle have grown, I think that's problematic," said Iglika Ivanova, an economist in the Canadian Centre for Policy Alternatives' B.C. office.

Social fabric at risk

The SFU discussion guide found inequality poses a major challenge to British Columbia. "Despite the many social and economic advantages British Columbians enjoy, the imbalance in the sharing of wealth creation, and the social inequalities this produces, represents a huge challenge for social cohesion," they found.

"Child poverty, cost of living, affordable housing, and unfair taxation all jeopardize B.C.'s social fabric, especially in the Lower Mainland where housing affordability undermines social equality, restricts the ability of B.C. to attract talent, and is one of the key reasons why people leave the province," it said.

"In addition, the lack of success to date in fully integrating B.C.'s Aboriginal population and new immigrants into the market economy continues to represent a key missed opportunity for the province."

While people making top incomes have more than they could ever need, it's clear those at the bottom are suffering.

There are many people the system fails, said a contact who asked to have his name withheld from publication. "We've created systems where if your mind and body isn't close to the average... we've created situations that will amplify that difference and make things harder than they already are."

He has Asperger's syndrome, an autism spectrum disorder where people have trouble with social interaction and nonverbal communication. He sees the system also hurting people who are weaker, more sensitive or even smarter than the average.

"People will get caught in the gears of the machine and the response is, 'Let's keep the machine running until we crush them,'" he said. "You spend a lot of time feeling suicidal. You don't feel like there's any way to get through it."

You see your freedoms curtailed in ways others don't, he said. "If you're on disability you don't have the rights normal people do," he said. For example, despite Canadians having the right to move between provinces, he can't leave B.C. without risking losing disability payments.

"I'm virtually a prisoner of British Columbia," he said. "It's not the worst prison to be in, but I can't even afford my cell."

There is, by and large, consensus that inequality is bad for everyone in a society. In The Spirit Level British authors Richard Wilkinson and Kate Pickett show that more unequal societies do worse on a whole range of indicators, including life expectancy, mental health, teen pregnancy, violence and crime.

The poor results harm people living in poverty, but also the wealthy, they found.

Nor is massive inequality good for the economy itself. As American political economist Robert Reich put it in his book Aftershock, "At what point does an economy imperil itself politically, as large numbers conclude that the game is rigged against them? Most fundamentally, what and whom is an economy for?"

This article is part of a series for the Tyee Solutions Society looking at the causes, costs and potential solutions for wealth inequality in British Columbia, Canada's most unequal province by some measures.

Tomorrow: The trend towards inequality: What tools does B.C. have to bend it back?  [Tyee]

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