OECD Report: Canada’s Poorest 10% Could Take Four Generations Just to Earn a Middle Income

Prime Minister Justin Trudeau and his Finance Minister Bill Morneau love to talk about “the middle class, and those working hard to join the middle class.”

But a new study published by the Organization for Economic Co-operation and Development (OECD) suggests many low-income Canadians will never become middle-income earners, no matter how hard they work.

According to the OECD, new data on intergenerational social mobility – which the OECD defines as “the relationship between the socioeconomic status of parents and the status their children will attain as adults” – suggests there is very little evidence to support right-wing economic myths about pulling yourself up by your own bootstraps and other rags to riches tales.

In fact, the OECD concludes the poorest 10% of Canadians may take up to “four generations for decedents of families in the bottom of the income distribution to reach the median income.”

That picture isn’t quite as sunny as the one offered by Trudeau or right-wing think tanks like the Fraser Institute, which declared “social mobility is alive and well in Canada,” and adding that “young people in Canada are not shackled to the economic class into which they are born.”

The OECD’s data, however, not only suggests that young people from poor families have a hard time moving up the income ladder but that those born into higher earning families are more than likely to stay there.

While Canada’s score on intergenerational social mobility reflects a similar pattern seen in other Western economies, the OECD suggests low-spending on labour market programs and the high cost of housing in cities like Vancouver and Toronto are lowering social mobility particularly among the poorest.

Another factor contributing to the problem is inequality.

The OECD also finds, maybe unsurprisingly, that countries with greater levels of equality also have higher levels of social mobility, making it easier for those near the bottom to rise up the income ladder from one generation to the next.

OECD

Another OECD study earlier this year found that Canada’s public spending on social programs – the greatest and most important guarantors of equality – ranks in the bottom among countries in the industrialized world.