Over the last few decades, times have been tough for Canadian workers. We have consistently heard of the dire economic woes we are facing from business groups and governments.
We have constantly heard of debt crisis and deficit crunches from our governments who as it seems are always broke and initiating cuts to services. As far as a raise it concerned, forget it. Times are just too tough. Most of us workers just consider ourselves lucky to keep somewhere near the cost of living from year to year, but workers who comprise the bottom 50% of wage earners have had no hope of doing even that.
Real average wages in Canada have grown only 8% since 1997, and most of this growth can be attributed to workers on the higher end of the wage scale. The wages of those workers outside the top 50% of the income scale have been flat or falling all along. Average median wages for workers have not kept up with inflation since at least 2008.
The real questions are:
- Why is this happening?
- Can anything be done to fix it?
The answers? It depends on who you ask.
Why is This Happening? What Governments and Business Tell Us
Governments and business groups say that the Canadian economy is fragile and damaged. To justify this, they will talk about the 2008 crash, the ensuing recession, government debt, falling oil prices, and any other economic emergency they can point a finger at.
They tell us to prepare for cuts and tighten our belts. Yet at the same time, they lower taxes on corporations and the wealthy – as they have done for decades – because this will eventually “fix” the problem.
Really? They’ve been saying that for years, and (insert throat clearing), we’re still waiting.
The Real Reason for Stagnating Wages
The economy is growing just fine and has been the entire time.
The economy has grown a whopping 30%, indexed to inflation, from 1999 to 2013, yet wages have only grown 8%, with the bottom half of workers seeing none of this growth, and the bottom 80% seeing very little. It’s not a lack of wealth or economic growth that is squeezing workers and underfunding governments, it is corporate greed and fundamentally flawed government economic policy.
Wages have flatlined because and governments are broke because our federal and provincial governments have bought into the fairy tales of “trickle down” economics, globalization, and the austerity agenda.
“Trickle Down” Economics
We’ve heard of the flawed theory of “trickle down” economics. It maintains that if governments cut taxes for corporations and the wealthy, they will “create jobs” and more money will be circulated through the economy, creating more opportunity and wealth for everyone.
Of course, as we know from thirty years of economic data, the exact opposite is true. Since the 1980s, when governments began to implement this flawed theory, the rich have gotten richer by sucking up a bigger and bigger share of the economy, without the rest of us getting our fair share of the wealth that we as workers create.
Corporate taxes in Canada have been cut in half since the 1980s, and it’s the wealthy, and not workers, who have benefited.
Our federal and provincial governments have bought into the nonsense that in the “new global economy,” wages must be kept low in order to be competitive in the world marketplace. This has led to a war by governments on unions and labour standards, while workers have produced more value for less wages. The extra wealth created from this short changing of workers has not made us more competitive, it has gone into the pockets of the wealthy through corporate profits.
Globalization has also brought about trade agreements between nations that are designed to give multi-national corporations more power over governments and citizens, and to drive down labour standards.
The truth is that we’ve had a global economy for hundreds of years where the rich and large businesses, supported by governments, traveled throughout the world and took advantage of poorer nations while abusing their own citizens at home in the process. Computers, the internet and cell phones have not made this any different.
“Globalization” is actually a very old concept. There’s nothing “new” about it.
The Austerity Agenda
Our government has also bought into the idea of austerity, which is being peddled by the corporate right-wing and their supporters at the World Bank and the International Monetary Fund.
Austerity argues that growth and prosperity can be increased by slashing government spending, attacking workers rights, and gutting social programs. The real question is: prosperity for whom? The Harper Conservatives are big fans of the austerity agenda. Just look at what they have done to cut Employment Insurance, raise the retirement age and weaken the rights of workers.
The free market fantasies of trickledown economics, globalization, and the austerity agenda being implemented by governments have created a Canada where rising income inequality is allowing the rich to get richer on the backs of our stagnating wages, and causing public sectors to go broke because of reduced corporate taxes and workers’ wages not keeping up with inflation.
What Can be Done to Fix It?
Canadian workers need a raise!
Canadians have to stop supporting governments that want to force the kind of profit-driven growth that is only good for corporations and the rich, and instead elect political leadership that understands the need for wage-led economic growth that benefits everyone.
We need to raise the minimum wage to $15 an hour and stop subsidizing corporate profits by keeping hard working citizens in poverty. A low minimum wage acts as an anchor for all wages in the economy. Declining minimum wages since the 1970s, in real terms, has contributed to keeping all wages artificially low.
Just as a low minimum wage is an anchor on all wages, a living minimum wage is a balloon that lifts all wages and produces a fairer more equal economy for everyone. We must strengthen labour laws across the board and encourage the growth of unions. Better labour standards and a strong union movement do more than anything else to increase pay and benefits and encourage the kind of wage led economic growth that is good for all of society, and not just the rich.
Wage led economic growth lets workers receive a fair share of the growth in our economy. It leads to balanced budgets and better government programs as incomes keep pace with real growth and tax revenue increases as workers make more money, while corporations and the very rich hoard less.
Wage led economic growth puts money in our pockets and increases consumer demand which, in turn, promotes more growth and a cycle of prosperity that will begin to break the current cycle of inequality.
We need corporations to pay their fair share of taxes, because our lives are worth more than their profits. We need to put decent and fair wages ahead of corporate greed. We need a Canada and an economy that works not just for the wealthy, but for everyone.