Huffington Post Rips Calgary... Hard

[HotHotHeat]

Calgary was built on possibility and an ingrained belief that success is available to all those who seek it. But from 1980 to 2005, the gap between rich and poor neighbourhoods deepened dramatically. While the region roared into a period of unprecedented prosperity, Census data show that the income differential between have and have-not communities (measured with the Gini coefficient, using after-tax values) grew by 81 per cent -- far more than any other urban centre. The increase was enough to vault Calgary over Toronto, giving “The Heart of the New West” the dubious distinction of leading the country in neighbourhood income inequality.

According to University of Toronto sociologist John Myles, who crunched the data in a 2011 working paper titled “Why Have Poorer Neighbourhoods Stagnated Economically, While The Richer Have Flourished?”, the shift was caused primarily because “the rich were getting richer.” Over 25 years, the mean after-tax income in Calgary’s poorest neighbourhoods inched up by a mere five per cent; in the richest neighbourhoods, meanwhile, that figure ballooned by nearly 75 per cent.

None of this comes as a surprise to Noel Keough, an urban design professor at the University of Calgary, who has tracked the issue of income inequality in the city since the ’90s. As for the root of the disparity, he, too, points toward the collection of gleaming corporate headquarters clustered downtown.

“The oil and gas sector earns significantly higher [incomes] than any other sector, and it’s a minimum of people that work in oil and gas,” he says. “The concentration of a single industry with large, multinational players concentrates the wealth that’s generated in our city and in our province.”

Wanted to add in the actual front page as it's being shown right now. (This is beside the point, but they didn't use a very recent picture of downtown...)

Obviously Huff Post is left leaning, sometimes annoyingly so, but they raise a lot of valid concerns about the direction Calgary has taken.

Full article: http://www.huffingtonpost.ca/2011/12...tml?ref=canada

[Knut]

I do not really see how the issue here is any different than that in other cities... a widening income gap has happened everywhere. Sounds like a lot of the disparity is from all the multinational O and G companies moving their headquarters here. Which means it is explainable.

[Cowperson]

Originally Posted by HotHotHeat

Wanted to add in the actual front page as it's being shown right now. (This is beside the point, but they didn't use a very recent picture of downtown...)

Obviously Huff Post is left leaning, sometimes annoyingly so, but they raise a lot of valid concerns about the direction Calgary has taken.

Full article: http://www.huffingtonpost.ca/2011/12...tml?ref=canada

Having a highly profitable, employment generating industry headquartered in Calgary isn't a bad thing.

Don't let anyone tell you it is.

Cowperson

[CaptainCrunch]

Calgary’s poorest neighbourhoods inched up by a mere five per cent;

Isn't that above the Canadian inflation rate?

Yup, inflation rate is 2.9%

[something]

Having an income and employment generating sector is a good thing, absolutely.

How that money is dispersed among those employed (edit: both internal and external to the industry, whereas the industry is as dominant as oil and gas in Calgary for example), is a critical factor to that sector's success and long term gains also.

Beyond the obvious concerns with income inequality, wherever you have an industry propelling such circumstances, you will find an unsustainable business model in the long run.

[Street Pharmacist]

Basically, everyone got slightly richer.... and very wealthy people moved in. Easy fix. Kick people of a certain income and above out

[Rathji]

Poor people are not getting rich as fast as rich people.

I am glad someone noticed and told someone, these occupy protests really have not done a good enough job of letting people know.

[something]

Originally Posted by CaptainCrunch

Isn't that above the Canadian inflation rate?

Yup, inflation rate is 2.9%

I am not sure what you're suggesting here?

Are you suggesting that because the real income gain have been ~ 2.1% there isn't a concern?

And that the real gains for the wealthiest have been ~ 72.1% isn't relevant?

edit: this is all presuming that the stated figures are in nominal terms.

[something]

Originally Posted by fotze

I don't understand the 'multinational' term with the oil companies angle. Sure there are 'multnational' companies but there are also reams of non-multinational companies that tend to pay even better. I don't undertand why multinational makes any difference to the issues of the artical. Is it because multinational sounds more evil?

Its probably right though, other than that part.

I think you're pretty much right. Multinationals have a reputation for promoting income disparity based on their business models. It isn't all that relevant within the local context of Calgary's economy - it does make it sound that much more sinister though.

[CaptainCrunch]

I think there has to be deeper analysis into why there's the income jump for the wealthier is all I'm saying.

But I am clearly saying that there is still an increase in the lower income families that are above the inflation rate which to me states that they are keeping ahead of the curve.

Its the argument of income redistribution and why incomes increase.

If we're talking about the skilled labor force why, or the employment generating workforce then there has to be a reason for punishing them for being successful.

[kirant]

There's a major question of where this extra income is coming from and what the occupations of the lower income earners are and would require further investigation. If the lower end workers are fairly unskilled jobs with easily expendable staff, then I'm not sure we should be expecting them to keep pace with some of the expansion in Calgary.

Looking at it from the other side, it could be an investigation of whether or not the higher income earners are getting their money by working skilled, specialized jobs.

[MarchHare]

Originally Posted by CaptainCrunch

Isn't that above the Canadian inflation rate?

Yup, inflation rate is 2.9%

I'm pretty sure inflation in Calgary over a 25-year period (the time frame cited in the article) is greater than 2.9%.

In either case, I don't necessarily think it's a bad thing that people are achieving financial success in Calgary at rates larger than elsewhere in the country. Neither my wife or I work in the O&G industry, and we're both making very comfortable upper-middle class livings in this city. We certainly have a higher quality of life here than we would in Vancouver or Toronto where there's no possible way we could afford to buy a home in a central downtown location like we did in Calgary.

One thing these stats do accomplish, though, is provide yet another data point against the trickle down Reaganomics theory that "a rising tide lifts all boats".

[Knut]

I know that in my job I make more here than i would almost everywhere else in the country due to the extra disposable income around.

[NuclearPizzaMan]

Can the poorest areas in Calgary be compared to the poorest areas in cities like Toronto or Vancouver?

Doesn't Calgary have one of the best anti-homelessness campaigns in North America, and aren't we on track for eliminating homelessness in the next couple of years?


Income disparity is a problem, and the way the boom-bust cycle seems to spike rent and home prices is a big problem, but Calgary has a lot going for it, even if you don't work in the O&G sector.

[rd_aaron]

Originally Posted by CaptainCrunch

Isn't that above the Canadian inflation rate?

Yup, inflation rate is 2.9%

Over 25 years, the mean after-tax income in Calgary’s poorest neighbourhoods inched up by a mere five per cent; in the richest neighbourhoods, meanwhile, that figure ballooned by nearly 75 per cent.

5% over 25 years isn't beating inflation. Inflation is 2.9% per year. It's not like the richest neighborhoods are averaging a 75% income increase per year... it's over 25 years.

Maybe I'm reading that quote wrong, but it sounds like the average income has only gone up on average 0.2% per year (5%/25 years) over the past 25 years in the poorest neighborhoods and 3% per year (75%/25 years) in the richest neighborhoods. This means the richest neighborhoods are getting income increases right around inflation, while the poorest neighborhoods are losing 2.7% buying power every year.

EDIT: The number's don't work out quite like I mentioned as I didn't include that the interest would be compounded (ie 0.2%/year compounded ends up being a little more than 5% after 25 years) but they're close enough for discussion.

[Notorious Honey Badger]

pretty sobering numbers. but what is the solution? kick out rich people who work in oil and gas?

this is what capitalism is... the rich get richer, and the poor get by... whats the big story?

[kirant]

Originally Posted by MarchHare

I'm pretty sure inflation in Calgary over a 25-year period (the time frame cited in the article) is greater than 2.9%.

I suspect though that they may have used the 5% growth number as a real income value (pre-adjusted to inflation). Media loves to play with numbers when they get and a real income growth will undoubtably be much smaller than a nominal income growth, despite how similar they sound when presented.

[Cowperson]

Originally Posted by rd_aaron

5% over 25 years isn't beating inflation. Inflation is 2.9% per year. It's not like the richest neighborhoods are averaging a 75% income increase per year... it's over 25 years.

Maybe I'm reading that quote wrong, but it sounds like the average income has only gone up on average 0.2% per year (5%/25 years) over the past 25 years in the poorest neighborhoods and 3% per year (75%/25 years) in the richest neighborhoods. This means the richest neighborhoods are getting income increases right around inflation, while the poorest neighborhoods are losing 2.7% buying power every year.

That's why they're poor.

Generally, they're uncompetitive in the local economy.

Income is re-distributed from higher to lower through the consumption of goods and services and, potentially, taxation. The world always needs ditchdiggers and waitresses.

Ironically, the oil & gas business has always had a soft spot for turning high school dropouts into millionaires . . . . . so it shouldn't be getting a bad rap.

Cowperson

[Azure]

I know quite a few high school graduates and high school dropouts that are making 6 figures working on the rigs. Sure its hard work, but that is the price you sometimes have to pay.

The HuffPost isn't painting the complete picture. Not even close. The gap between the rich and the poor has been getting larger all over the world. Is the O&G sector to blame? Is Silicon Valley to blame? Is Wall Street to blame?

A strong Alberta economy provides a lot of jobs and money in a lot of other fields for a lot of other people. How many ditchdiggers and waitresses are employed strictly to service O&G companies? Hell, how many non-related jobs to the energy industry are created by the energy industry?

The most important thing in any society is opportunity. Opportunity to succeed, opportunity that if you work hard you can also make 6 figures. And there is a lot of that in Alberta.

EDIT: That is not to say that we shouldn't help the poor. Or help those that need help. We should, but blaming the O&G industry for doing well and creating jobs, wealth and income for thousands of Albertans is rather lame. What exactly should they do? Shut everything down because there is a increasing gap between the rich and the poor?

[Fozzie_DeBear]

There are economic feedback loops that make the rich better able to get richer...a wider range of investment options, disposable income etc.

Basically it takes money to make money...

Not sure what a municipality can do about this...save a progressive housing tax (i.e. a mansion tax).