Are We Becoming Two Societies? Income Polarization and the Myth of the Declining Middle Class in Canada

That the rich are getting richer and the poor at best breaking even is now almost a truism in Canada. It is also widely agreed that, in this country as elsewhere in the industrialized world, with incomes becoming steadily more polarized, the middle class is gradually vanishing. But the facts tell a different story.

In this volume of the C.D. Howe Institute's "The Social Policy Challenge" series, economists Charles Beach, from Queen's University in Kingston, Ontario, and George Slotsve, from Vanderbilt University in Nashville, Tennessee, take a hard look at the statistics of Canadian income distributions. They find that, in fact, there has been much less polarization of incomes than public discussion of the issue would suggest. And what there has been is all but completely explained by cyclical factors: when the unemployment rate rises, so does inequality, but when the unemployment rate falls, inequality falls too. There is almost no long-term trend toward income polarization, and for some categories of income earners, notably women, polarization has actually fallen.

The volume also includes comments by economists Chris Sarlo from Nipissing University in North Bay, Ontario, and Alan Harrison from McMaster University in Hamilton, Ontario, both of whom agree with Beach and Slotsve that, to paraphrase Mark Twain, reports of the demise of the middle class have been greatly exaggerated.