42% of Canadians now live from paycheck to paycheck. Most Canadians are no longer able to save enough to invest in the stock market, and most shares of stock are owned by the very wealthy. The wealthiest 1% earn 10 times more than the average Canadian.
2013 was a banner year for stocks, which reflect corporate profits. Corporations will have made most of their profits by reducing their wages and increasing their outsourcing abroad. Indeed, middle class wages are lagging and full-time jobs are being replaced with part-time jobs and contract work.
Corporate profits increased throughout the last 5 years of “recovery”. Canadian corporations are sitting on over half a trillion dollars in cash, rather than investing it. Corporate earnings now represent the largest share of GDP — and wages the smallest — ever.
Welcome to the new distribution of wealth in today’s society!
Governments set the rules of the game under the influence of corporate lobbyists and wealthy campaign donors. They lower taxes on the rich and large corporations, depriving the treasury of revenue. Proposals for incentives that encourage more hiring, such as tax breaks for corporations that actually hire people (rather than across the board tax cuts) are rejected. This leads to cuts to federal and provincial budgets, reducing overall demand and keeping unemployment higher than otherwise. And this also keeps wages low both in the private and public sectors. Moreover, to make sure wages stay low, right-wing governments push so-called ‘right-to-work’ legislation that undercut unions and bargaining power.
The tax system is rigged against people whose income comes from wages and salaries. Capital gains and dividends collected primarily by the rich are taxed at a low rate, while most middle class Canadians pay a rate that is two or three times higher. Among the biggest winners are top executives, financial services dealers and traders, and hedge-fund and private-equity managers, whose year-end bonuses are tied to the stock market. Yes, “trickle-down” economics has really turned out to be “trickle up” — irrefutably the most successful “rich getting even richer” scheme of all time!
At no time in our history have so many Canadians shared so little in the greatest economic benefits yielded up yet by the second largest piece of territory in the world. It is unfair and dangerous, but unions like PSAC are fighting this trend through advocacy and support for groups like ACORN, the Canadian Centre for Policy Alternatives, and the Broadbent Institute. Together, we can defeat this greedy logic that hurts the middle class and enriches the few.