Income Mobility, the Rich and Poor in Canada

One set of government statistics shows that the average incomes of Canadians in the lowest quintile of the distribution, the “poor”, remained constant during the period from 1990 to 2009. Another set of government statistics indicates that, over the same period, the “poor” enjoyed a 180% increase in income. Similarly different results exist for the “middle class” and the “rich”. This study explains the reasons for this difference and questions the merit of the present practice of using only the information about the constancy of incomes of the poor in the design of government policies for the creation of a fair distribution of income.The main explanation of the different results about incomes is that the traditional measure of income equality uses snapshots of incomes of the population every year, which causes different people to constitute the poor, middle class and rich at any given time period. On the other hand, the mobility statistics trace through time the incomes of a given set of people. These data show that 87% of Canadians who were poor in 1990 had much higher incomes 19 years later, reflecting their well-known move along the age-income profile or escaping temporary low incomes caused by unemployment, illnesses and similar influences.The study also discusses the characteristics of the rich in Canada, how they earn their income and how they spend it. Canada's rich are mostly professionals in business, health-care, sports and entertainment They earn their income by selling their services to willing buyers. The billionaires similarly earned their wealth in this way. They spend much of it on charitable causes. The incomes of professionals has increased along with globalization of markets for products and labour as well as higher incomes of the production of these professionals. The growth in their incomes reflects their participation in global markets for their skills