The 150th anniversary of Confederation this year should be more than an occasion for self-congratulatory celebrations and parties. It should also be a time to reflect on some of the enduring themes which have shaped the nation we have become and are becoming. One of those themes- the role of ethnic and religious diversity in Canada- was brought forcefully to the attention of Canadians by the slaying of six Muslims at a mosque in Quebec City on January 29. On March 23 the House of Commons responded to this horrific crime by giving second reading to M-103, a private member’s motion condemning Islamophobia.
In February 1865, during the debate on Confederation in the legislature of the Province of Canada, George-Etienne Cartier also wrestled with the issue of diversity and Canadian nationality. In Europe the rise of ethnic nationalism had recently led to the formation of the modern states of Italy and Germany. Cartier challenged those who argued, based on these examples, that the Confederation project could not succeed “because Lower Canada was in great part French and Catholic, and Upper Canada was British and Protestant and the Lower Provinces were mixed.” On the contrary, he asserted, the diverse ethnic and religious communities in the new nation were potentially a source of strength rather than a weakness.
The Canadian nationality he envisioned would be “a political nationality with which neither the national origin, nor the religion of any individual, would interfere.” It would be a nationality based not on common blood or common worship, but on common institutions of representative and responsible government, legal traditions inherited from the United Kingdom and France and the inheritance of a vast geographic domain. This would be a common enterprise to which all racial and religious communities could contribute drawing from the best elements of their heritages. “I view the diversity of races in British North America in this way:” Cartier said. “We are of different races, not for the purpose of warring against each other, but in order to compete and emulate for the general welfare…We are placed like great families beside each other, and our contact produces a healthy spirit of emulation. It is a benefit rather than otherwise that we have a diversity of races.” The diverse communities represented in the new nation would compete, not for supremacy, but to show what each could contribute to the building of a distinct new nation.
Cartier did not mention indigenous Canadians in this passage. But respect for their languages and cultures and confidence in what they could contribute to this emerging Canadian political nationality is implicit in the ideal he described. Today’s Canada, with large numbers of citizens from almost every nationality and religious tradition on the globe, comes closer to meeting Cartier’s vision than at any time in our history.
But, as the recent event in Quebec City reminds us, our progress towards that ideal has been neither uninterrupted nor irreversible. Too often we have warred against each other on the basis of race and religion. Too often we have attempted to impose cultural uniformity on indigenous Canadians. In both World Wars of the last century we interned long-time residents of this country and seized their property based on their national origin rather than their personal conduct. A referendum seeking a mandate to negotiate the dissolution of Canada to carve out from it a majority French- Canadian nation was only narrowly defeated as recently as 1995.
Just as citizens of the United States of America pledge allegiance to their flag as representing the ideal rather than the actual republic- “one nation, indivisible, under God, with liberty and justice for all” so Cartier’s vision of the Canada of the future remains an ideal as yet unattained but always demanding our “true patriot love.” Let 2017 be a year when each Canadian, regardless of our religious beliefs or how long we and our ancestors have been here or where they came from originally, accept Cartier’s challenge to uphold and contribute to the achievement of the new nationality he envisioned 152 years ago.

The metaphor of a marriage is often used to describe the union of the British North American provinces of Canada, New Brunswick and Nova Scotia. Perhaps fewer Canadians know that an actual marriage was a key factor in initiating the events which led to Confederation and to one of its essential features, federalism.
Georges Etienne Cartier believed that the new nation could overcome the ethnic, religious and sectional divisions which had plagued the former United Province of Canada. His view rested, ironically, not on the wider union with the Maritime Provinces, but on the division of the old province of Canada into the new provinces of Quebec and Ontario.
The man who set the process in motion towards this settlement was George Brown. His marriage to Anne Nelson whom he met during a trip to Scotland taken in 1862 to restore his health encouraged Brown along this path. After a whirlwind courtship, the couple married in November 1862. Their union was a happy one, and a daughter, Margaret, was born in January 1864.
Brown had led the Upper Canadian majority party, the Clear Grits, (ancestors of today’s Liberals) since 1857, but he had been a force in politics since founding the Toronto Globe in 1844. Brown’s whole career had been dedicated to freeing the Protestant majority of Upper Canada from what he perceived as the domination of the French and Catholic majority in Lower Canada.
At the time of the Upper and Lower Canada union in 1840, the majority of the population lived in Lower Canada, but both sections were given an equal number of seats in the Legislative Assembly. By the early 1850s, however, Upper Canada’s population had outstripped that of Lower Canada. By keeping most francophone Quebeckers united under his leadership and forming an alliance with John A. Macdonald’s Upper Canadian Conservatives, Georges Etienne Cartier had managed to prevent Brown and his Lower Canadian allies from forming a government throughout most of the pre-Confederation period. Cartier used his power to aid the Catholic minority in Upper Canada and to frustrate Protestant attempts to enforce a policy of the separation of church and state and the creation of a secular public education system.
Brown and his party responded by calling for “Rep by Pop” or representation by population. This step would have increased the number of members from Upper Canada at the expense of the French Canadian majority in Lower Canada.
By the early 1860s, even with equal representation from Upper and Lower Canada, the Macdonald-Cartier alliance could no longer elect enough members in Upper Canada to stay in office. But no other combination could command a stable majority in the Canadian legislature.
Following his return to Canada in early 1863, Brown was returned to the legislature in a by-election. Colleagues immediately noticed that the uncompromising zealot whom they had known before his marriage had become much more open to compromise within his own party and with his political rivals. They attributed this change to the influence of the sociable and well-educated Anne who had studied extensively in Europe and spoke both French and German fluently. Brown wrote to her daily from the Legislature about the political issues of the day, and he heeded her advice.
By early 1864, the Canadian legislature had reached deadlock. In March Brown moved to establish a select committee to undertake a non-partisan study of constitutional solutions. This motion was adopted in mid-May. On June 14, just as the latest Cartier-Macdonald ministry was about to be defeated, the committee, by a majority of 12 to 3, reported “in favour of changes in the direction of a federated system applied either to Canada alone or to the whole British North American provinces.” The Lower Canadian members from all parties supported the report, and of the Upper Canadian leaders, only the Catholic Reformer John Sandfield Macdonald and John A. Macdonald were opposed.
A new coalition government was formed to settle the constitutional issues between Upper and Lower Canada. Brown, Cartier and MacDonald all joined a new government that adopted representation by population in the federal House of Commons, equal representation for Ontario and Quebec in the Senate, guarantees for minority language and educational rights, and separate provincial governments. The new nation was to be a federal state. Each province controlled legislation dealing with education, property and civil rights, while the federal government was responsible for economic, external and military policy, the criminal code, and inter-provincial transportation and trade. The federal government had the power to disallow any provincial legislation which impinged on minority rights or its powers.
Both Cartier and Brown were taking political risks in endorsing this program. Brown had to accept a religiously-based educational system and French civil law in Quebec and educational guarantees for the Catholic minority in Upper Canada. Cartier conceded more seats for Ontario than Quebec in a federal parliament that would also include the two Maritime Provinces with Protestant and English-speaking majorities. When Brown defended his bargain in the Parliament of Canada in February 1865, he made this explicit: “This scheme can be carried, and no scheme can be that has not the support of both sections of the province.”
Unfortunately for Brown, his expectation that his party would dominate the new federal House of Commons was disappointed. Based on that assumption he had happily accepted Macdonald’s insistence on a constitution in which the federal government would be dominant and the provincial governments subordinate. However, the Ontario Liberals under Brown’s old lieutenant, Oliver Mowat, soon became the party of provincial rights, and a sympathetic British Judicial Committee of the Privy Council successfully eroded the dominant constitutional position of the federal government through a series of interpretations of the British North America Act.
So, while George Brown’s personal life worked out as happily as he could have wished, the Canadian federalism he parented took a turn neither he, Macdonald or Cartier had anticipated. As in the domestic sphere even successful political marriages have unexpected surprises.

Confederation was meant to be not just a political but an economic union. The purpose of this economic union was the creation of an integrated east-west national economy. One hundred and fifty years later this remains an ideal rather than an achievement.
Only recently have the provinces reached an agreement to make the free movement of people, goods and services across provincial and territorial boundaries the norm with a limited number of exceptions. The British Columbia and Quebec governments are currently threatening to use provincial regulatory powers to prevent the construction of inter-provincial energy pipelines across their borders to the east and west coasts.
This resistance to national infrastructure projects and reluctance to promote the free flow of goods and services between the provinces and territories would have shocked and disappointed the Fathers of Confederation, particularly the Minister of Finance for the then Province of Canada, Alexander Tilloch Galt of Sherbrooke. One of the prime factors driving Confederation was the 1865 American abrogation of the Reciprocity Treaty between the United States and the British North American colonies. This treaty had been ratified in 1854 for a ten-year term with either party able to abrogate it with one-year’s notice after that time. Growing protectionist sentiment in the USA and the supply of British-made warships to the Confederacy during the American Civil War were the main reasons for the American decision to abrogate the treaty.
All the British North American colonies had prospered under the treaty and the impending loss of free trade in natural products with the USA turned the minds of the colonists to expanding their trade with each other and with the United Kingdom to offset the loss of free access to American markets. To this economic imperative for a British North American east-west economy was added the threat of military invasion. In the spring of 1866 there were abortive Fenian invasions of New Brunswick and Upper and Lower Canada by American Irish nationalists, attempting to annex those colonies to the USA by force.
One of these Fenian armies crossed the border at St. Alban’s, Vermont near Galt’s constituency in the Eastern Townships. But even before the abrogation of the Reciprocity Agreement took effect and more than a full year before the Fenian invasions, Galt had argued for a strong federal government with “all the large sources of revenue” to provide for the common defence and undertake large public works to bind the original Confederation partners and later British Columbia and the Northwest Territories of the Hudson Bay Company together including a transcontinental railway line completely north of the American border.
The first step in this massive infrastructure program was an Intercolonial Railway from Halifax to Rivière du Loup through the North Shore of New Brunswick. It was not completed until 1876. The Canadian Pacific Railway from southern Ontario to the west coast was begun almost a decade later and was completed only in 1885. Political union could not long have been maintained without a transcontinental east-west transportation system. An economic union and an integrated national economy became possible only once that system was in place.
The mixture of political and economic imperatives motivating Confederation is illustrated by the route of the Intercolonial Railway. Instead of crossing New Brunswick through the populous St. John River valley, it went up the more sparsely populated east coast of that province to make it more difficult for American invaders to sever the rail link between the Maritimes and Quebec. Once completed, in recognition of the non-commercial character of the Intercolonial Railway’s route, the government-owned line adopted a policy of setting freight rates low enough to build traffic and encourage trade between the Maritime Provinces and Quebec and Ontario.
So important did Galt consider a strong federal government with a monopoly on the main sources of revenue for the building up of a transcontinental economic union that he intended that per capita federal grants to the provinces would be their main source of revenue. The one source of revenue he placed in the provinces’ hands, the power of direct taxation (income and sales taxes), was for the purpose of restraining rather than encouraging large expenditures by the provinces. He believed such taxes would be so unpopular that any province levelling them would risk defeat at the polls. In his words, “If the men in power find that they are required, by means of direct taxation, to procure the funds necessary to administer the local affairs…they will pause before they enter on any career of extravagance.”
On the other hand, Galt saw an expansive role for the national government in undertaking the works necessary to build up a national economy. “One of the first acts of the General Government of the United Provinces,” following the construction of the Intercolonial Railway he told the legislature of the Province of Canada in February 1865 , “will be to enter into public obligations for the purpose of opening up and developing [the Northwest] and of making it a source of strength instead of a burden to us and to the Mother Country… The country”, he declared, “desires and cries for “ measures “whereby its internal prosperity, peace and happiness may be developed and maintained.” It was a noble vision calling on the people of the new nation to forswear narrow parochial interests to build a great political and economic union. It still meets with resistance and foot-dragging from those with narrower and less ambitious motives.

According to exit polls, 81% of white evangelicals voted for Donald Trump for President in 2016. This did not simply reflect disproportionate support for Republicans among this group. Even when Trump was competing against other Republicans in the later primary states such as Florida, Ohio and Pennsylvania, his share of the vote among white evangelical voters exceeded his support among those who were not members of this demographic group. Many of the most prominent white evangelical leaders encouraged their followers to vote for Trump in the primaries. Even more did so after he became the Republican nominee. A number of important white evangelical leaders opposed Trump, but they were clearly not as politically influential as those who supported him.
At first glance, this enthusiastic support from so many white evangelical leaders and rank and file voters seems bizarre, if not inexplicable. Remember, we are talking about a man who seldom attends church, boasts of his libertine lifestyle, was credibly accused of sexual assault by several women and shamelessly repeated vicious lies about his political rivals (even to the point of accusing Ted Cruz’s father of being part of the conspiracy to kill President Kennedy). In addition to these disquieting aspects of his character, the essence of his campaign was to promote fear of and hatred for Mexican immigrants, Muslims, environmentalists and supporters of trade agreements, a message profoundly at odds with Christ’s Golden Rule.
There is an explanation, however. In part it lies with a progressive narrowing of the focus of the political issues many white evangelical Christians have come to consider of primary importance. Making abortion illegal, often even in cases of rape or incest, and preventing same-sex marriages from becoming legal have come for many evangelical Christians to mark the beginning and the end of their agenda as Christians in public life. Once Trump promised to appoint pro-life and anti-same sex marriage judges to the Supreme Court, many evangelical leaders and the vast majority of their followers were all-too-willing to turn a blind eye to or dismiss as unimportant the many elements of his character, message and policies which were so profoundly anti-Christian.
Unfortunately, I believe this is only a manifestation of a deeper problem. For the past several weeks I have been participating in rehearsals for a play our Church is presented on the evening of Maundy Thursday during Holy Week. Re-reading the accounts of Holy Week in the Gospels it is hard not to be struck by the parallel between the fear and hatred motivating the conduct of the white evangelical leaders supporting Trump and that of the Jewish religious leaders who called for Christ’s execution. Just as Trump supporters in 2016 feared changing social and religious norms and hated and feared those accepting and promoting them, the high priests saw Christ as a dangerous heretic and blasphemer challenging important dogmas and orthodoxies. That fear and hatred led them to demand his execution, even if it meant freeing a convicted robber and murderer.
The Bible warns us strongly against succumbing to the temptation to confuse religious zeal with the human tendency to fear and hate those who differ from us. 2nd Timothy 1:7 tells us that “God hath not given us the spirit of fear, but of power and of love, and of a sound mind.” This echoes the teaching of the Old Testament prophet, Micah, that what God requires is not zeal in persecuting our enemies but “to do justice and to love kindness and to walk humbly with thy God.” Similarly, in the Gospel of Matthew, Christ teaches that the two essential commandments are to love God with all our heart and soul and mind and strength and to love our neighbour as our self.”
Why is it important to resist appeals to protect us from those we fear? The English writer, George Orwell summed it up well in his 1945 essay about ideological thinking based on fear and hatred. Once these emotions gain control over our political thinking, Orwell warned, “the sense of reality becomes unhinged and…the sense of right and wrong becomes unhinged also.” Later, in the same essay, Orwell goes on to point out that the fears and hatreds against which he warns, “are part of the make-up of most of us whether we like it or not. Whether it is possible to get rid of them I do not know, but I do believe that it is possible to struggle against them, and that this is essentially a moral effort.”
Evangelical white Christian leaders who found neither Trump nor Clinton worthy of their support as Christians could have written in another candidate for president or simply refrained from voting for that office. Why did so many of them choose to enthusiastically vote for and support Trump? The answer is that they were not able or willing to make the moral effort Orwell spoke of to recognize that the essence of Trump’s message represents open contempt for some of the central teachings of the faith they espouse.
Just how far the spirit of fear and hatred has corrupted so many white American evangelical leaders and their flocks can be illustrated by comparing two messages. The first was a summary of Christian teaching expressed in a popular song of the mid 1950’s, whose chorus went “Have faith, hope and charity. That’s the way to live successfully. How do I know? The Bible tells me so.” The second, implicitly endorsed by 80% of white Evangelical voters in November 2016 has changed to something like this: “Have fear, selfishness and hate. That’s the way to be truly great. How do I know? Don Trump tells me so.”

The first two articles in this series made the following points:
1) Between 1990 and 2000 market and disposable income inequality in Canada rose significantly, poverty rates rose or remained stable for persons under age 65, the real incomes of the poorest 10% fell, and the only significant gains in real incomes were experienced by the richest ten per cent. However, between 2000 and 2014 market and disposable income inequality declined slightly, poverty rates for the non-elderly, particularly children, declined significantly and substantial real increases in disposable income were experienced throughout the income distribution with the poorest ten percent recording the largest percentage gain.
2) This reversal challenges the belief among many politicians and much of the public at large that high levels of poverty and rising inequality are inevitable.
3) A large part of the explanation for the positive trends in these indicators after the millennium were real increases of 25% or more in minimum hourly wages in eight of the ten provinces, significant increases in income-tested child benefits and modest enrichment of welfare and Employment Insurance benefits. The previous decade had witnessed only small increases in real minimum wages and cuts to real welfare and EI benefits.
4) Both Conservative and Liberal federal governments and provincial governments of all political stripes participated in these policy reversals, although the Harper minority Conservative government did so reluctantly in its 2009 budget under threat of defeat in the House of Commons by the combined Opposition parties.
5) Thus real disposable income gains throughout the income distribution and further progress against inequality and poverty among non-elderly Canadians and their children does not require the election of new parties or even radical new policies. Instead, it requires building on the policies which, since the year 2000 have already reduced child poverty in Canada to an all-time low, provided significant real income gains to those at the bottom and in the middle as well as those at the top of the income distribution and stopped and slightly reversed rising market and disposable income inequality.
But most non-elderly Canadians, even those in the bottom half of the income distribution, are not minimum wage workers. Nor do they depend on government benefits for most of their income. They will escape poverty and add to their real disposable incomes by finding entry-level low paying jobs, hanging on to them and gradually earning more as they gain work experience. It is important to avoid structuring income support programs for this group in such a way that they provide a disincentive to take such jobs. Between 1986 and 1992 real welfare benefits in Ontario increased much more than median and minimum wages. As well-paying jobs became harder to find in the aftermath of the 1990-1991 recession, the share of Ontario’s non-elderly population depending on welfare rose from 5.8% in March 1986 to 14.5% in March 1994. The backlash was swift and substantial. Nominal welfare benefits in Ontario were cut by 20% in late 1995 and frozen at these reduced levels for several years, further reducing their purchasing power in inflation-adjusted dollars.
Fortunately, since that time policy makers have found ways to improve the real incomes of households at the bottom of the income without creating such disincentives to taking low-paid jobs. The first major new tool was an expansion of benefits to families with children through income-tested refundable tax credits under the National Child Benefit (NCB) and associated provincial and territorial programs beginning in 1997. Unlike welfare benefits which are reduced in most provinces almost immediately when the recipient begins earning income, refundable tax credits retain their maximum value until families have reasonably adequate incomes from other sources. They then are gradually reduced over a wide range of income and provide no benefits only to families with children at the top of the income distribution. They thus provide no disincentive to take entry-level jobs. These benefits have been progressively enriched in real terms since 1997 in what Ken Battle of the Caledon Institute has aptly described as a policy of “relentless incrementalism.”
In 2007, a decade after the introduction of the National Child Benefit, the Harper government introduced a small program called the Working Income Tax Benefit (WITB) which actually provides a positive incentive to take low paid entry level employment. In 2015 when annual earnings exceeded a base level of $3000, single persons were eligible to receive 25 cents for every dollar they earned between $3000 and $7060 producing a maximum benefit of $1015. This benefit remained at that level up to earnings of $11,525. It was then reduced by 15% for every dollar earned between $11,525 and $18,292 where the benefit was reduced to zero. For families the maximum benefit was $1844 for earnings between $10,376 and $15,915. At earnings of $28,209 the benefit fell to zero.
Contrast the niggardliness of this program with the Canada Child Benefit- the Trudeau government’s successor program to the NCB introduced this July. It pays maximum benefits of $6400 for each child under age 6 and $5400 for each child aged 6-17. These tax-free benefits do not begin to phase out until net family income exceeds $30,000. A family with two children aged 6-17 would receive a maximum of $10,800 in benefits which would not be reduced to zero until its net income reached $171,579.
As of 2014 the low income rate for children under age 18 was 8.5% and for all adults aged 18-64 it was 10.0%. But for single adults living alone in this age group it was 31.2%. Clearly the latter group should be the focus of the next major initiatives in incomes policy. I would suggest a threefold strategy to address the situation of employable non-elderly singles.
1) The provinces and territories should increase their real welfare benefits so that incomes available to non-employed single employable persons from all sources at least reach a level of $1000 per month.
2) To prevent this increase from creating disincentives to take entry-level jobs, provinces and territories should continue to increase real adult minimum hourly wages until they reach half average hourly wages and then index them at that level. For example, as of 2014 the average hourly wage in Ontario was $24.82 while the adult minimum hourly wage averaged $10.75 (43.3% of the average hourly wage). This policy should also reduce market income inequality.
3) To address the needs of working single adults who cannot obtain full-time employment, the federal government should substantially increase the scope and generosity of the WITB, particularly for single persons. I would propose that the maximum benefit be raised from $1015 to $3000, that it not begin to phase out until net incomes exceed $20,000 and that it not be completely phased out until net incomes reach $35,000. The maximum family benefit should also increase from its current level of $1844 to $3000 and should not begin to phase out until net family incomes exceed $28,000. This would mean that it would be reduced to zero at a net family income of $43,000. The program should then be indexed to inflation.
These steps combined with the recent enrichment of the federal child tax benefit should significantly improve the disposable incomes of the bottom half of the income distribution while improving incentives to take up low paid work. If necessary they should be financed by increasing taxes on those in the top fifth of the income distribution which will also improve disposable income inequality.

My article, “It’s time to tackle inequality and poverty in Canada”, pointed out that between 2000 and 2014 market and disposable income inequality declined slightly in Canada, poverty rates for the non-elderly fell significantly and all parts of the income distribution experienced substantial real gains in disposable income with the poorest tenth posting the largest percentage gain. All these results reversed the trends in these indicators between 1990 and 2000.
This article will attempt to briefly explain what caused this reversal. A final article will draw out the policy implications for future efforts to reduce income inequality and poverty.
I begin by identifying some key factors which contributed to the rising levels of inequality and poverty among the non-elderly in the 1990’s. Those under age 65 at the bottom of the income distribution depend on Social Assistance (SA) and Employment Insurance (EI) to maintain their incomes when they are unable to find paid work or if their paid work is interrupted by unemployment.
Between 1990 and 2000 the population aged 25-64 increased by 13.9%. But total inflation-adjusted benefits received by them from SA and EI fell by 14.2%. A third major program important for this group- the real hourly minimum wages set by provincial and territorial governments increased more than inflation in most provinces. But the share of males 25-64 with any earnings fell from 89.9% to 87.6% and male real median earned incomes fell for the 35-44, the 45-54 and the 55-64 age groups. Given these conditions it is little wonder that income inequality and poverty among the non-elderly rose during this period and that disposable household incomes in the bottom half of the income distribution either fell or grew much less than for those at the top.
Contrast this with what happened between 2000 and 2014. Real benefits from SA and EI both rose. And steady incremental increases in real income-tested child benefits and the introduction of a refundable Working Income Tax Benefit (WITB) resulted in a 36.3% increase in total transfers to a 25-64 population which increased by only 16.3%. After 2004 real minimum hourly wages also increased by at least 16.2% in every province other than British Columbia with gains equalling or exceeding 25.5% in eight of the ten provinces. The share of males 25-64 with employment income held steady at 87.6% and male real median earnings increased in the 35-44, 45-54 and 55-64 age groups. Real median female earnings increased by at least 18% in all three of these age groups and the share of women aged 25-64 with earnings rose from 75.4% to 78.8%.
In short, whereas in the 1990’s governments of all political stripes had cut important benefits to the poor and the bottom half of the income distribution, after 2000 they substantially increased them. Moreover, they delivered a larger share of those benefits in the form of income-tested refundable tax credits. Unlike increased welfare payments these present no disincentive to earn and, in the case of the WITB actually provide an incentive to take low-paying jobs. The incentive to take entry-level jobs was further buttressed by substantial real increases in minimum wages in almost every province. The result was lower income inequality, lower poverty rates, particularly for children and substantial real increases in disposable incomes in the bottom half of the income distribution.
The implications of this analysis for future policy initiatives to address income inequality and poverty and to improve real incomes for the bottom 50% of the population will be examined in detail in the final instalment in this series next week.

Many people believe that income and wealth inequality and poverty are serious and growing problems in Canada. But the perception that the situation has only gone from bad to worse over the past several years, instead of stirring a demand for action, has left many Canadian resigned to the belief that nothing can or will be done by governments to improve the situation, or at least prevent it from getting worse.
Advocates for the poor and the middle class and for reducing income and wealth inequality often inadvertently feed this sense of resignation. Because they fear that governments will act only if they believe a situation is both bad and constantly worsening, they fall into the trap of downplaying or denying any evidence of improvement. In doing so they fail to see the opposite danger- that politicians and much of the public at large will conclude that high poverty and rising inequality are inevitable; that no improvement is possible.
My purpose in this article and its successors is to challenge that sense of resignation. High levels of poverty, real income gains only for those at the top and steadily rising inequality are not inevitable. And combatting them does not require a revolution or radical new policies that Canadian governments would never adopt. Instead it requires building on policies that since the year 2000 have already significantly reduced poverty in Canada, provided significant real disposable income gains to those at the bottom and in the middle as well as to those at the top of the income distribution and stopped and even slightly reversed the increase in both market and disposable income inequality in Canada.
In this article I will summarize and document that improvement. I am not the first to notice the change that has occurred in poverty and inequality trends since 2000. Important recent evidence for them appears in a collection of essays: Income Inequality: The Canadian Story edited by David Green, France St-Hilaire and W. Craig Riddell published this February by the Institute for Research on Public Policy (IRPP). Most of their data goes only to the year 2011. More recent data releases from Statistics Canada have enabled me to carry the analysis forward to 2014.
So what does that evidence show? Bear with me for some brief statistical analysis.
From 1990 to 2000 income inequality in Canada for all sources of income other than from government (market income inequality) rose by 8.9%. Income inequality for all sources of income including government transfer payments such as Child benefits, Employment Insurance and Social Assistance and after deducting income taxes (disposable income inequality), rose slightly more, by 10.8%. From 2000 to 2014 market income inequality fell by 2.7% and disposable income inequality fell by 1.9%.
There is no official measure of poverty for Canada as a whole. The measure of low income with the longest history of data collection is the 1992 base post-income tax Low Income Cut-offs. Using this measure the low income rate for children under age 18 living changed little between 1990 and 2000, dipping from 14.0% to 13.9%. The rate for all persons 18-64 rose from 11.2% to 12.9%. Between 2000 and 2014 the rate for children fell sharply from 13.9% to an all-time low of 8.5%. The rate for persons aged 18-64 fell from 12.9% to 10.0%.
After deducting income taxes and adjusting for inflation household incomes fell by 9.3% for the poorest ten per cent of Canadians between 1990 and 2000 and increased by only 0.5% to 6.6% for those in the second to the eighth deciles. Between 2000 and 2014 real disposable incomes rose by 34.0% for the poorest ten per cent of Canadians and by 23.5% to 25.0% for those in the second to the eighth deciles. Between 1990 and 2000 the top ten per cent of households experienced an increase of 20.9% in their real disposable incomes. This dipped to an increase of 19.9% between 2000 and 2014.
To sum up, between 1990 and 2000 market and disposable income inequality rose significantly, poverty rates rose or remained stable for persons under age 65, the real incomes of the poorest ten per cent fell, and the only large gains in real incomes were experienced by the richest ten per cent of households.
However, between 2000 and 2014 market and disposable income inequality declined slightly, poverty rates declined significantly for the non-elderly and significant real increases in disposable incomes were experienced throughout the income distribution with the poorest experiencing the largest percentage gain.
The IRPP argues that a key factor in the stability in household income inequality after 2000 was the Alberta oil boom which raised the wages of low-skilled workers in that province even in occupations not directly related to the resource sector. They contrast this with Ontario where, they allege, that those at the bottom of the earnings distribution did not experience real wage increases since 2000, leading to a rise in inequality in that province.
If the Alberta oil boom was not just one reason, but the main explanation for the stability in adjusted market income inequality among Canadian households since 2000 there is little to learn from that improvement. Worse, with the sharp drop in world oil prices over the past two years, we are likely to soon see a reversal of the progress made from 2000 to 2014.
Fortunately, it appears that the progress made from 2000 to 2014, reflected more than a cyclical boom in world oil prices.
Why do I say that? The simple fact that, contrary to what the IRPP suggests, Ontario also experienced the same trend reversal I n market income inequality between 1990 and 2000 and 2000 and 2014 as did the country as a whole. Adjusted market income inequality rose by 15.3% in Ontario in the 1990’s and has declined by 1.8% since 2000. After declines or small gains between 1990 and 2000, disposable incomes for the poorest five deciles of the Ontario income distribution rose significantly from 2000 to 2014.
In the article to follow I will explain the factors which led to the reversal of the negative trends in inequality, poverty among the non-elderly and real incomes for the bottom half of the income distribution which had marked the 1990’s. My concluding article will suggest a strategy for building on the improvements that have occurred since the millennium.

In 1967 the Boston Red Sox made it to the World Series for the first time since 1946. Their ace pitcher was Jim Lonberg . He won two games for the Red Sox over the St. Louis Cardinals in the early part of the series and was brought back on only two days rest to try to win Game 7. This time the Cardinal batters got to him and the Red Sox had to wait 37 more years to win a World Series.
This year’s Lonberg is Corey Kluber of the Cleveland Indians. He is coming back on short rest tonight to try to win his third game of this World Series. Will his fate be that of Lonberg giving the Chicago Cubs their first World Series win since 1908? Stay tuned.

My spouse, Martha, and I were out grocery shopping the day after the Blue Jays were eliminated by Cleveland. She wondered aloud why the Blue Jays hitters had been so ineffective in the series. My response was that the approach which had served them well against Texas played into the strength of the Cleveland pitchers.
Against Texas the Blue Jays faced pitchers who struggled with their “command”, baseball lingo for the ability to throw ball to a particular spot. It made sense against such pitchers to take pitches, even fall behind in the count and then foul off pitches in or close to the strike zone until they got a pitch they could handle or drew walks.
Most Cleveland pitchers, however, had the ability to put the ball where they wanted to. The Blue Jays hitters continued to take the first pitch or two, which were often hittable strikes, and then panicked and chased pitches out of the strike zone. They did try to avoid pulling the ball and many of their hits were up the middle or to the opposite field. But this sound strategy was undermined by failing to foul off borderline pitches when they got behind in the count as they had against Texas. Instead, they either let them go (often for called strikes) or tried to hit them fair, producing swinging strikes or weak grounders.
In other words the Blue Jays needed to be more aggressive early in the count and more patient after they fell behind in the count. The superb control of the Cleveland pitchers allowed them to take full advantage of this passivity, followed by impatience.

Can government policies improve living standards for the poor and the less well off? If so, which policies are the most effective in doing so? I intend to address these questions in the Canadian context in a series of blogs over the next few weeks.
However, as a lead-in to those posts, today’s blog examines these issues in the American context using recently-released data for the year 2015 from the USA Census Bureau.
The American data show remarkable progress between 2013 and 2015 in reducing poverty, creating full-time year-round jobs, improving health insurance coverage for the non-elderly population and increasing real household incomes in the middle of the income distribution. These improvements come after long periods of stagnation or deterioration in all these indicators.
The data reveal that between 2013 and 2015:
• The official US poverty rate fell by 1.3 percentage points – the largest two-year decline since 1998-2000. Using the US supplemental poverty measure which, like Canadian low income measures, counts refundable tax credits as income, the decline was 1.5 percentage points.
• The number of people with full-time year-round jobs increased by 5,250,000 or 5.0%. In the previous 13 years the increase in such jobs was only 4, 541,000 or 4.5%.
• The real median household income (the income where half of households have a higher income and half a lower income after adjusting for inflation) rose by 3.7%, after declining 8.5% between 2000 and 2013.
Moreover, between 2010 (when the first provisions of the Affordable Care Act, or Obamacare as it is popularly known, began to take effect) and 2015 the percentage of the non-elderly population not covered by health insurance fell from 18.3% to an all-time low of 10.5%. Almost all the 65- plus population has been covered by the federal Medicare program since the mid 1960’s. Between 1999 and 2010 the percentage of the non-elderly population not covered by health insurance rose from 15.3% to 18.3%.
Which policy initiatives contributed to these improved outcomes for the bottom half of the American income distribution?
Health Insurance Coverage
Three elements of the Affordable Care Act (ACA) explain the entire improvement in health care coverage for the non-elderly population since 2010. The first, which took effect in March of that year, permitted parents to cover all their adult children between the ages of 19 and 26 under their own health insurance policies. Previously, this had only been permitted for students in this age group. The other two elements took effect in 2013. The first encouraged states to expand eligibility for their income-tested Medicaid health insurance programs from those with incomes under the poverty line to those with incomes up to 138% of the poverty line. This was done by promising to pay all additional costs of the expanded eligibility through 2016 and 90% of the additional costs in all subsequent years. The second offered persons with incomes between 138% and 400% of the poverty line federal premium tax credits and cost-sharing deductions to subsidize the purchase of approved individual and family health insurance coverage directly from insurance companies for those not covered by employer-sponsored plans at their workplace.
Increases in Medicaid coverage and coverage under non-employer private health insurance plans accounted for all the reduction in the rate of non-coverage among non-elderly Americans between 2013 and 2015. The uncovered rate would have been cut even further had twenty-three states, including two of the three states with the largest uncovered populations (Texas and Florida), chosen not to expand Medicaid eligibility to 138% of the poverty line by January 1, 2015. In the TV series, Friday Night Lights, two low income Texas brothers without health insurance allowed their body shop to be used by car thieves to pay for hospital care for the wife of the older brother, who was experiencing pregnancy complications. This fictional, but plausible, situation illustrates one of potential consequences of being without health care coverage. Unexpected out-of-pocket health care costs are also one of main causes of bankruptcy in the US.
Poverty and Real Median Household Incomes
A classic policy to increase real incomes in the bottom half of the income distribution is to increase the hourly minimum wage more than the rate of inflation. However, changes in the federal minimum wage in the US require approval by the House of Representatives. Since 2010, when the Republicans gained a majority in this chamber of Congress, they have resisted any increases in the minimum wage, leaving it frozen at $7.25 an hour. States can have a minimum wage higher than the federal minimum wage, but 18 states, including some of those with the largest populations such as Texas, Pennsylvania, Georgia, North Carolina and Virginia have rejected this option.
However, since 2013, 18 states, the District of Columbia and several cities have raised their minimum wages above the federal minimum by more than the rate of inflation. These increases contributed to the gains in real median household income and the reductions in poverty noted earlier.
Two extensions of federal income-tested refundable tax credits in 2013 (originally passed as temporary stimulus measures) also reduced post-income tax poverty. These were the Child Tax Credit introduced in 2009 and enrichments to the Earned Income Tax Credit for families with dependent children which took effect that same year. Using the US Supplemental Poverty Measure (SPM), the Census Bureau estimates that these two extensions reduced the overall SPM poverty rate by a full percentage point between 2009 and 2015 and the child poverty rate by 2.5 percentage points.
Of course much of the improvement recorded in poverty rates, and real median household incomes recorded between 2013 and 2015 reflects the strong increases during that period in full-time full year employment which cannot easily be directly attributed to government policy. However the role of enriched federal government refundable tax credits and increases in several state and city real minimum wages also played an important role in these gains. And, as already noted, the sharp declines in the share of the non-elderly population not covered by health insurance can be entirely attributed to provisions designed for that purpose in the Affordable Care Act of 2010.
In short, well-designed government policies such as real minimum wage increases, enriched income-tested refundable tax credits which are an incentive to work and the provisions of the Affordable Care Act to provide health care coverage to low and moderate income households can significantly reduce poverty and improve living standards for the bottom half of the income distribution, especially in the context of strengthening labour markets.
While universal health care coverage has long been a reality in Canada, has the bottom half of the income distribution experienced similar improvements in poverty rates and real median incomes in recent years? If so, what roles have government policies played? Stay tuned as I examine these questions in future blogs using comparable Canadian data up to 2014 from Statistics Canada.