The Canadian Dream is alive and well.



Nine out of 10 people in the lowest income group are moving up the pay ladder within 10 years according to a study released by the public policy think-tank the Fraser Institute.

“I think the findings are pretty telling… after 19 years, one of every four in the low income group reach the very top income group,” Charles Lammam, director of fiscal studies at the Fraser Institute and co-author of the recently released report Measuring Income Mobility in Canada. “It’s a natural progression most Canadians experience over their lives, people can and they do make themselves better off by completing and continuing their education, acquiring job skills and gaining work and life experience.”

While the concept of bettering oneself over the course of one’s life isn’t exactly new, Lammam points out that the data – collected via StatsCan from nearly one million Canadians based on their income in 1993 and following their progress after five, 10 and 19 years – shows the trademarks of a dynamic economy.

“When people talk about things like inequality they implicitly assume that people at the bottom and the top today are the same people that are going to be there in five, 10, 20 years from now,” he says. “Our data clearly shows that they’re not, there’s a lot of movement up and down the income ladder.”

He points out that the findings have implications reaching into the policy-making sphere, noting discussions around the minimum wage or tax policy.

Alexandre Laurin, director of research and an expert on fiscal and tax policy at the non-partisan think-tank C.D. Howe, agrees, saying that it’s important to look at these issues through a lifetime lens.

“A cross section is not exactly how people live their lives,” says Laurin.

He points to consumption taxes – like HST and GST.

“We tax analysts always say ‘well those taxes are more regressive because it’s a single rate and as a percentage of income they will effect more of the low income earners (who) consume more of their income and save less – so that’s why we need the GST or HST tax credit,’ ” says Laurin. “But if you look throughout (one’s) lifetime, if people don’t always stay (in the income group) where they are now, is it really that regressive?”

The same goes for redistribution of income policies set up to equalize income like social security, he says.

“When we look at one year we’re thinking ‘oh my god it’s so great, it’s a great redistribution to Canadians,’ ” says Laurin. “But if you model someone throughout his or her lifetime, what these studies find a lot of the time is because of you age or income one year you may be a recipient of a lot of transfers but other years you’re not going to get those transfers and someone else will.”

Granted, says Lammam, about two per cent of those in the lowest income group never better their situation or climb the income ladder.

“There are some at risk factors that put someone at that state where they’re persistently stuck in low income,” says the co-author of the study pointing to elements like not finishing high school, drugs and addiction or severe physical or mental disabilities – all of which can make it hard for these Canadians to maintain stable employment.

“But there are some societies like Haiti, Brazil and Peru – that have these caste systems that make inequalities really bad,” says Lammam. “In Canada, if you’re born in some income class, you can move out of it – that’s why Canada is so great, you can change your life’s circumstances.”

