[LINK] "U.S. income gap a danger to Canada: TD"
The Toronto Star's Madhavi Acharya-Tom Yew describes a recent report from TD Economics, The Case for Leaning Against Income Inequality in Canada, suggesting that rising income inequality in the United States poses a threat to Canada. High levels of economic inequality in the United States can easily be catching.
Income inequality has been relatively flat since 2000, but that may also be as a result of the boom in resources and real estate prices. These forces, Alexander believes, have been keeping incomes and wealth for middle-income Canadians buoyant.
“I’m worried that if the real estate and commodity booms don’t persist - and we know that booms don’t last forever - that when that dissipates, we’re going to see middle-income Canadians under more pressure.”
Because our economies are so closely integrated, Canadians companies face increasing pressure from employers in the U.S., where some workers are paid much less, the TD report said.
“When our employers sit down and think about their wage scales for the coming year, they look at their competitors in the United States and they can see the cost of doing business there is much lower. What’s an employer to do? They have to stay in business and it creates really pressure,” Alexander said.
New investment in the automotive sector, for instance, has gone to the southern U.S. and Mexico, where workers earn less than their Canadian counterparts.
At the same time, the persistence of low productivity in Canada’s economy means that incomes aren’t rising as quickly as they could be, the report notes.
Income inequality has been relatively flat since 2000, but that may also be as a result of the boom in resources and real estate prices. These forces, Alexander believes, have been keeping incomes and wealth for middle-income Canadians buoyant.
“I’m worried that if the real estate and commodity booms don’t persist - and we know that booms don’t last forever - that when that dissipates, we’re going to see middle-income Canadians under more pressure.”
Because our economies are so closely integrated, Canadians companies face increasing pressure from employers in the U.S., where some workers are paid much less, the TD report said.
“When our employers sit down and think about their wage scales for the coming year, they look at their competitors in the United States and they can see the cost of doing business there is much lower. What’s an employer to do? They have to stay in business and it creates really pressure,” Alexander said.
New investment in the automotive sector, for instance, has gone to the southern U.S. and Mexico, where workers earn less than their Canadian counterparts.
At the same time, the persistence of low productivity in Canada’s economy means that incomes aren’t rising as quickly as they could be, the report notes.