Are the Rich Really Getting Richer?

Since the Occupy Wall Street movement of 2011 – 2012, the growing income gap between the richest people and the poorest has become a very hot topic for the media. The general perspective on the matter is that the rich are receiving an ever-increasing share of the total income, while everyone else’s share is decreasing. The CBC, however, recently shared the results of a new Statistics Canada report which indicates that the share of income held by the top 1% of Canadians is at a six-year low. The report detailed that the richest 1% held 10.3% of total income in 2012, down from 12.1% in 2006, and that the minimum income to be in the top 1% was $215,000. The CBC also indicated that compared to the US, where the top 1% of earners had about 19.3% of the total income in 2012, the numbers for Canada were relatively low. So is this really a good thing for the rest of the 99%?

It is obvious that when the share of income of the top 1% decreases, the share of the rest of the 99% increases. However, if the rich are getting less money, the poor are not necessarily getting more money. The rich can very well lose money without everyone else gaining from it. So when the rich, and especially the top 1%, are getting a smaller percentage of the total wealth, income inequality is in fact decreasing, but that also generally means that the rich are becoming poorer without the poor becoming richer. Basically, the fact that the top 1% is getting a smaller share of total income has little relevance to the rest of the 99% whatsoever. The ideal situation would be if income inequality decreased because the poor were getting a higher income, rather than the rich having a smaller income.

In addition, splitting the population into the top 1% and the bottom 99% is ridiculous, because it does not take into account the many people who just miss the 1% cut-off but whose income is still extremely high compared to the rest of Canadians. The Broadbent Institute, a left-leaning think tank, compared instead the top 10% of Canadians with the bottom 10% and found that the top 10% of Canadians held 47.9% of total wealth (with wealth being defined as income minus expenses) while the wealth of the poorest 10% was slightly negative (-0.2 %), since their debts outweighed their income. If we really want a more egalitarian society, we and the media should really pay more attention on reducing the debts of the poor, rather than the losses and gains of the rich.