Compared to the U.S., why is Canada's economic playing field more level? Or is it?

September 4, 2007 9:20 AM

Compared to the U.S., why is Canada's economic playing field more level? Or is it?

I recently returned from vacationing in two major Canadian cities and was struck by how few "bad" neighborhoods seemed to exist, and how few extravagantly wealthy neighborhoods existed. People-watching (clothing, interactions, cars, outside appearances) led me also to think that there was less distinction between socioeconomic classes. Granted, my vacation was only week-long.

Since I returned to the US and remarked about this to friends, they've all said it's due to Canada's more socialist bent. But when pressed, they had no objective data for how that translated into what I'd observed, nor had they visited Canada.

What are some specific, concrete factors which might explain a more level economic playing field in Canada, or am I mistakenly generalizing about the whole thing? Is rural Canada the same way, or just the cities? I'd be especially interested in hearing from folks who've lived in both countries.

Thanks!

posted by deern the headlice to Travel & Transportation (21 answers total)

Higher taxes in Canada help to redistribute wealth to lower economic levels through the provision of social services, particularly public education and free health care.

Tax policy results in exactly the effects you saw -- fewer utterly destitute people (though there are some) and fewer extravagantly wealthy people (though again, there are some).

Of course, such a policy has any number of knock-on effects, the merits of which have been debated and will continue to be debated for years to come.
posted by modernnomad at 9:25 AM on September 4, 2007

And distinct differences between neighbourhoods still exist -- in Toronto, compare Jane/Finch to Forest Hill for about as stark a difference as you can get in Canada.
posted by modernnomad at 9:26 AM on September 4, 2007

What modernnomad waid.
posted by furtive at 9:39 AM on September 4, 2007

To really get a sense of the disparity here, take a bus from Vancouver's Downtown Eastside up through to Kerrisdale. You'll go from being among the poorest people in Canada to being among the wealthiest.

As a migrant from the Canadian working class to the middle or even upper middle class, I can tell you that there are a lot of differences between classes. However, although I know these differences aren't as acute as in the UK, I am not sure how they compare to those in the US. When I read Limbo by Alfred Lubrano, it rang true for me, even though it was US American.
posted by acoutu at 9:48 AM on September 4, 2007

Some of it is surely just your perceptions -- you just happened not to go into a very wealthy enclave, or you didn't recognize it as one because the very high real estate prices in, say, Toronto mean that very well-off people live in what look like nicely kept middle-class houses (ie, Chaplin Crescent area between Davisville and Eglinton).

But Canada really does have less income inequality than the US, probably because of greater income redistribution, so there's that too.
posted by ROU_Xenophobe at 9:55 AM on September 4, 2007

Does Canada get fewer poor immigrants (proportionally)?

If the U.S. is a popular destination for poor immigrants from around the world, but Canada not as much (again, accounting for Canada's smaller absolute size), then this would affect each country's overall levels of income inequality.

Anyway, if true this could be an aggravating factor when combined with less income redistribution in the U.S.
posted by chinston at 10:02 AM on September 4, 2007

The racial dynamic is different in Canada. We don't have one group fleeing from another group, leaving neglected areas behind. You can certainly see a large difference in economic prospects between native reservations and the rest of Canada. But the native reservations aren't in urban areas.

Plus, there's only two or three big cities attracting the educated and artsy from the smaller centers, and as places for corporations to locate. Those are forces that help support the urban cores.

I always find it amusing when journalists discussing rising violence problems in Toronto insist on euphemistically calling Jane-Finch or other areas like it the "inner city". When they talk about the need for more social support for "inner city youth" or "urban youth". Jane-Finch is a 20 minute subway ride and a 40 minute bus ride away from the core of Toronto. It's highrise and stripmall, 60's era sprawl.
posted by TimTypeZed at 10:07 AM on September 4, 2007

Does Canada get fewer poor immigrants (proportionally)?

Fewer illegal ones, yes.
posted by Reggie Digest at 10:07 AM on September 4, 2007

You can certainly see a large difference in economic prospects between native reservations and the rest of Canada.

No so much. Not on an American rich-vs-poor scale, anyway. Many reserves are getting pretty suburban-looking, and even the worst ones aren't too remarkably worse-off than any other backwoods community in the middle of nowhere.
posted by Reggie Digest at 10:31 AM on September 4, 2007

The 2006 UN Human Development Report has Canada ranked slightly ahead of the US for overall quality of life (#6 v #8). In terms of income inequality and poverty, Canada is a little bit further ahead of the US.

As to the why? If that was known definitively, I suspect that election issues would be a little more clear cut. Personally, I suspect that cost of access to healthcare and education for the poorest probably plays a significant role. But then, I'm a pinko lefty, so I would say that.
posted by Jakey at 10:37 AM on September 4, 2007

Two points:
- Vastly rich Canadians often leave and live elsewhere because of the climate or because places like New York, London or Paris have more going on.
- The really poor native reserves are not in the south, but in remote places like Labrador.
posted by zadcat at 10:42 AM on September 4, 2007

Overall tax rates for Canada and the Us aren't really all that different for the majority of people, especially if you consider the cost to Americans for basic, emergancy health care a kind of tax. However Canada spends that money on education, health and other public works and America spends that money one bombing the heck out of other countries.

One other difference is education isn't as tightly tied to your neighbourhood as it is in the states. School Districts are huge and the funding within is fairly uniform. And in BC and AB at least your children are welcome to go to any school that has space for them. Don't like your neighbourhood elementary school? No problem, take your kids to the next one over or the one next to your work, or next to your day care. I've got the impression this isn't the case in the US where local school funding is dependant on local land values. yes I realise this is a little simplistic, wealthy people spend more on there kids than poor people can and rich neighbourhoods might have better equipment from donations and fundraising. However I haven't seen the case where one school has kids sharing textbooks and another school 20 blocks away is building a 30K person stadium.
posted by Mitheral at 10:58 AM on September 4, 2007

Canadians are wealthier. Median household income in Canada is C$58,100 (at current exchange rates, US$54,614). Median household income in the US is US$48,201.
posted by bonecrusher at 11:47 AM on September 4, 2007

List of countries by income inequality (various measures). Yes, it seems Canada really does fare better than the US in this respect. But then, so does most of the world.
posted by sfenders at 12:32 PM on September 4, 2007

IANAC, but my boyfriend is from rural Saskatchewan. based on what little time I've spent there it appears that your observation would hold true for rural SK (I didn't go near any of the reservations, though). I'm not sure how things are elsewhere, though - SK is the most socialist province. having driven through rural Alberta and parts of rural Quebec, they look more or less the same. I suspect that it's not so much that income levels are uniform so much as it's true that the rural lifestyle just doesn't provide as many opportunities for extravagance as living in a city would. probably most people who can afford to move to larger cities.
posted by dropkick queen at 1:55 PM on September 4, 2007

I perceive the same thing when I go down to the states. There is much more of a neighborhood by neighborhood feel there.

Personally, I think health care is a big factor. I've met people in the U.S. whose entire family (across more than one generation) is hurting from the financial cost of medical care because they didn't have insurance. Also, there's no reason to avoid the doctor because there's no cost.

Some other factors could include (other than what's mentioned above):
- Higher minimum wage
- Cities that actively plan to integrate social housing into regular neighborhoods. This is what Toronto is now dealing with in regards to Jane/Finch and the Dundas area. In Ottawa, it seems like most housing developments have a wide range of incomes and this is obviously planned.
- I think the school district tax issue is huge. My understanding is that in the U.S., your taxes go to the school in your neighborhood. In Canada, it's all pooled and distributed on a per student basis.
- Canada's immigrant population is probably skewed towards much more educated immigrants since we don't have a porous border.
posted by dripdripdrop at 2:02 PM on September 4, 2007

Minimum wage in Canada is also higher. Wikipedia has the breakdown of minimum wage by province and state.

From a personal perspective, as an RN in Arizona, I'm making $10 an hour less than I was making in Canada. My benefits in Canada were better as my employer did not have to pay for health care. This includes dental and pension benefits. I had a defined pension plan which seems to be disappearing in the United States. In the past couple of years in the United States I've had an appendectomy which cost me a several hundred dollars out of pocket, a broken toe ($95.00 emergency room fee) and a root canal ($900.00 on my dental plan). It actually seems harder to get ahead here in the United States. Yes, taxes are less but I don't feel I'm getting a lot for my money.

Finally, it seems that the laws are slanted against the working man here. Case in point - the latest bankruptcy law.
posted by TorontoSandy at 2:19 PM on September 4, 2007

Well the Canadian middle class - along with Norway's, is one of the few benefactors of by-design wealth re-distribution policies being successful.

Most other western societies are losing ground in this area. Maybe our tax dollars are doing some good after all?!?!

See the reprint of the G&M article on this : http://www.neowin.net/forum/index.php?automodule=blog&blogid=41&showentry=1223

Pretty interesting, and could explain a lot about the evenness of Canadian neighbourhoods versus the unneveness of other countries' neighbourhoods.
posted by iTristan at 3:09 PM on September 4, 2007

There was a recent article in the Globe and Mail about this phenomenon, entitled "The secrets of Canada's world-leading middle-class success". The article is now behind a paywall. Here is a blog entry with an excerpt. Canada has a larger middle class than many other nations. Why? The article asserts: "All the handouts, tax benefits, subsidies and rebates that transfer money into middle-class pockets (not including pensions). Without government help, Canada's middle class would be endangered."
posted by crazycanuck at 3:47 PM on September 4, 2007

A lot of it is myriad knock-on effects, especially those relating to social mobility, so the answer to your question is seven bazillion little things that all add up. You get a feel for them if you live the different countries for many years, and see how they systems affect and influence the people you know, over the years.

For example, in the USA, not having a secure safety net and healthcare sometimes traps people in jobs, where in another country, they would be able to safely quit and find a better job without the risk of missing rent/mortgage payments if it took longer than expected to find another job.

That's a small example of social mobility being impaired, and where social mobility is impaired, poverty (and riches) are more likely to become entrenched and self-reinforcing.
posted by -harlequin- at 4:48 PM on September 4, 2007

I always find it amusing when journalists discussing rising violence problems in Toronto insist on euphemistically calling Jane-Finch or other areas like it the "inner city".

Me too. Actually, I went to York University for 2 years, after having been around the US for the preceding year, and I strolled around Jane/Finch without ever worrying about it. Afterward I spent another couple of years in the US... and let me tell you, I would rather live on Jane St than ever walk through southern Los Angeles again.

As to this particular question, my very long answer is in another AskMe thread, here. The Coles Notes one-sentence version is that the system works here in ways that the US system utterly fails, in my unprofessional opinion. There are many, many factors involved.
posted by blacklite at 6:36 PM on September 4, 2007