There's much we can do to combat poverty
Enforcing current laws would help
TORONTO STAR Sep. 30, 2006. 08:43 AM
THOMAS WALKOM
This newspaper has launched an ad campaign inviting readers to ask why (among other
things) so much poverty exists in Canada. They may find the answer unsettling.
At one level, poverty is a deliberate policy. The working poor are poor mainly because
their employers don't want to pay them very much. This cheap wage policy is aided and
abetted by governments in a host of ways — by making it difficult to unionize low-wage
workers, by scaling back unemployment benefits, by failing to enforce even the weak
labour standards that do exist.
This is not to say that poverty is easy to eliminate. The poor, as someone once noted, will
always be with us. But recent studies show that the scale of inequality in North America
has accelerated dramatically over the past 25 years.
Writing in the latest edition of the journal Healthcare Policy, University of British
Columbia economist Robert Evans points out that over this period, most of the
economic gains recorded in Canada were appropriated by the super-rich. Between 1976
and 1990, average per capita income in Canada barely budged. But over the same
period, the top 0.01 per cent of earners saw their incomes more than double.
To Evans, the trend corresponds with the rise of a "corporate kleptocracy" — highly paid
CEOs and other senior executives who milk the profits from the firms they run, leaving
little or nothing to top up the wages of those at the bottom.
The growing influence of the super-rich, he argues, helps to explain the success over the
past two decades of what he calls the elite agenda: lower taxes for the well-to-do, smaller
government and reduced social spending.
All of this directly affects the working poor. If, thanks to the "elite agenda," it is near
impossible for most workers to collect unemployment benefits (as it has been since the
mid-'90s), the pool of workers competing for low-wage jobs grows — which in turn keeps
those wages down.
In effect, there are now two types of workers in Canada. The lucky ones have full-time,
often unionized, jobs with good wages and benefits such as pensions. The less fortunate
make do with non-standard work. They may work at two or three part-time jobs; they may
be temporary workers, contract workers or those who, while doing the work of normal
corporate employees, are listed on the books as self-employed.
In the past, the term "self-employed" was usually applied to well-paid professionals like
doctors and lawyers. Now, all kinds of low-wage workers — from delivery people to
television researchers — are treated by their bosses as self-employed. The reason? An
employer does not have to pay employment insurance or Canada Pension Plan
premiums for self-employed workers. Minimum wage and maximum hours of work laws
do not apply to such workers. Nor are they entitled to the vacation or overtime pay that
regular employees must receive by law. Unionization is near impossible.
Theoretically, bosses are not supposed to skirt Ontario's Employment Standards Act by
arbitrarily reclassifying their workers as self-employed. But plenty do. Sometimes they are
brazen. Sometimes they are sly; they fire well-paid unionized workers, contract out their
jobs to another firm and let that firm break the law.
As Toronto's Workers' Action Centre notes, the Ontario government itself estimates that
one in three employers in the province violates the Employment Standards Act. Yet, there
is no serious attempt to enforce the law. The labour ministry is understaffed. Even when it
finds an infraction, it rarely prosecutes offending employers.
All of this underlines the fact that poverty can be combated if people wish to do so. As
Evans points out, Canada's spectacular growth in income inequality was not the
inevitable result of globalization or some other alleged iron law. In France and Japan, for
example, the gap between rich and poor did not widen over this period.
Rather, the exacerbation of poverty within Canada is the result of deliberate actions that
can be rectified. Just enforcing employment standards laws would help. Strengthening
them by, for instance, making it easier for those in non-standard jobs to unionize would
bring up wages.
Stricter government regulation could eliminate the wink-and-nudge practices that typify
corporate executive compensation schemes — schemes that provide lots of lolly to the
kleptocrats at the top while leaving employees at the bottom vulnerable to the grim world
of non-standard work.
Why are there so many poor people in such a rich country? Because we allow it. We do
not have to.