Occunomics 101 – The Alberta Advantage: It has not trickled down

23 Nov

The economic recession that began in 2008 affected Canada more gently than any other G7 country, and Alberta, whose economy is overwhelmingly reliant on energy sector commodities, has fared better than the other provinces. This, in theory, makes us one of the most fortunate populations in the world. But for middle and lower income Albertans, life has only become more difficult over recent decades.

John Ralston Saul, the eminent Canadian economic and political thinker, warned that “the exploitation of natural resources does not tend to produce a stable, balanced economy. To the contrary. Commodity markets were and are subject to incessant devastating swings. This sort of economy almost invariably produces an extreme social divide between a few rich and many poor.” The facts support Saul’s assertion, and this social divide is happening at an increasing pace in Alberta.

In fact, while Alberta’s Gross Domestic Product has steadily risen, our disposable income has not kept up. A report published by the Alberta College of Social Workers with the Parkland Institute states that “the middle class is at increasing risk of collapsing into low income; poverty is growing among those who work full-time, full-year, during a period when Alberta experienced greater economic growth more quickly than any other jurisdiction in Canada or the global north.” The ACSW report summarizes that “despite increased hours of work and a significant increase in the intensity of work, many in the middle-income deciles have little to show for their hard work, except fewer hours to enjoy with their families.” It continues, “Albertans have by far the lowest leisure time in the nation” citing 200 hours less per year than the average Canadian.

Of course, this would not be so worrying were it not the case that Alberta’s cost of living is increasing at a staggering rate: 134 per cent from 1985 to 2005, for example. Alberta food banks report a 75% increase in usage since the recession, with November 2011 breaking all records for Canadian food bank usage. Homelessness in Calgary increased by 458 per cent between 2006 and 2008 (the most recent figures). As well, Canadian personal debt is rising while personal savings are falling, as we borrow more to make ends meet. If unchecked, these trends will gradually squeeze more Albertans into poverty.

But if Alberta’s GDP keeps increasing, having more than tripled since 1985, where is the money going? The ratio of the Albertans with income over $100 000 to those who make less than $40 000 has nearly tripled as well, over the same period. What this indicates is that the so-called Alberta Advantage has benefited the wealthy few, while the rest of us are only working harder to get by.

- Arran Fisher

Sources:
Canada’s economic resilience

http://moneymorning.com/2010/08/19/double-dip-recession-6/

GDP growth by province:

http://en.wikipedia.org/wiki/List_of_Canadian_provinces_and_territories_by_gross_domestic_product

J. R. Saul, “Reflections of a Siamese Twin” Ch. 9

Alberta College of Social Workers Policy Framework 2010

http://parklandinstitute.ca/research/summary/acsw_social_policy_framework_2010/

Canadian Consumer Price Index, by city

http://www40.statcan.gc.ca/l01/cst01/econ45a-eng.htm

Alberta food bank usage, Calgary Herald article

http://www.calgaryherald.com/news/calgary/Food+bank+soars+Alberta/5641235/story.html

Canadian food bank usage

http://www.foodbankscanada.ca/hungercount

Canadian personal debt, Statistics Canada
http://www.statcan.gc.ca/pub/75-001-x/commun/4235072-eng.pdf

Calgary Homelessness Statistics

http://www.calgary.ca/CSPS/CNS/Documents/homelessness/2008_count_executive_summary.pdf

Human Resources and Skill Development Canada, Satisfaction in LIfe study

http://www4.hrsdc.gc.ca/.3ndic.1t.4r@-eng.jsp?iid=39

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7 Responses to “Occunomics 101 – The Alberta Advantage: It has not trickled down”

  1. Anonymous December 4, 2011 at 2:11 pm #

    Hi Arran, what a well written article. Aaron

  2. Not so fast November 25, 2011 at 12:53 pm #

    I have a hard time seeing this as I reap the advantage. For example as I was going through University I wanted to be a teacher and at the time the max salary was about $60,000 that has grown to the point now where I am projected to make $98,000 a year just teaching.
    Some areas have trickled down.

    • AFish November 25, 2011 at 5:05 pm #

      Your personal example, of being a member of one of the few unions left in Alberta, although enviable, is hardly the point here. I’m not arguing in this article that no one is getting ahead. I’m pointing out that, as a whole, Albertan society is becoming worse off and that life is getting harder for the middle class to stay solvent and the lower class to not fall into states of poverty. Of course there are exceptions to the trends.

  3. Flawed Math November 24, 2011 at 6:17 pm #

    I think Afish would prefer if the number of people making less than $40,000 annually tripled as well……Than he would make sense

    • eddy83 November 24, 2011 at 7:52 pm #

      Yeah that would be ideal for sure. The author was asking where all the monet went and then offered an answer. What if the people that cracked the $100,000 mark were at $50,000 prior to the period in question then made significant gain has the rest of the province did. Aren’t there some positives to take out of that? Isn’t that a growing middle class?

  4. eddy83 November 24, 2011 at 4:53 pm #

    Doesn’t your last paragraph indicate that GDP has trippled since 1985 and as a result so has the number of people making over $100,000, while holding steady those that make less than $40,000? If the ratio has tripled then does that not mean three times more people have increased their incomes to more than $100,000. Those who were once not wealthy managed to generate wealth over that period?

    • AFish November 24, 2011 at 11:28 pm #

      It’s the ratio that tripled, not the actual populations. The >$100k category is still a very small number compared to the <$40k. The point is that as this ratio increases, it shows that money is being sucked out of the $40k-$100k range and going to the households in the top income bracket, so the middle class is shrinking in population – generally not a good thing for society. This stat was sourced from p. 20 of the ACSW report:

      http://parklandinstitute.ca/research/summary/acsw_social_policy_framework_2010/

      Thanks for asking!

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