The myth of the permanent underclass

[Cowperson]

An interesting study into income mobility in Canada

Over the span of a decade, 83% of Canada’s lowest income earners moved up the income ladder, according to a Fraser Institute report released Tuesday.

“Lower-income Canadians are not permanently stuck with a low income — that’s a myth,” Mr. Lammam said. “Where you are today is not where you’re going to be five, 10 or 20 years down the road.”

The 60-page report is based on Statistics Canada income data for more than one million Canadians, today aged 39 through 64, whose tax returns were linked with Social Insurance Numbers to track their earnings over the course of five, 10 and 19 years. And the findings, Mr. Lammam said, are remarkable: In the 19-year period between 1990 and 2009, one in five Canadians in the lowest of five income groups eventually moved up to the highest-income camp, and nine out of 10 people in the lowest-income group rose out of the bottom.

“The results are extremely encouraging, especially when we’re bombarded with myths of stagnating Canadian incomes or that the rich are getting richer and the poor are getting poorer,” he said, adding that more than a third of top earners in 1990 slipped to a lower income category by 2009. “This study blows those myths out of the water.”

http://news.nationalpost.com/2012/11...study-reveals/

Cowperson

[polak]

I could personally vouch for this in the case of my parents, but so could most immigrants.

Moved here, cleaned offices for 5 bucks an hour at nights while they learned english during the day and eventually got better jobs. Still in the middle class but they definitely moved up. They could have probably in the upper-middle class if they were a little bit more careful financially but yeah...

[SeeBass]

Originally Posted by Cowperson

An interesting study into income mobility in Canada

Over the span of a decade, 83% of Canada’s lowest income earners moved up the income ladder, according to a Fraser Institute report released Tuesday.

“Lower-income Canadians are not permanently stuck with a low income — that’s a myth,” Mr. Lammam said. “Where you are today is not where you’re going to be five, 10 or 20 years down the road.”

The 60-page report is based on Statistics Canada income data for more than one million Canadians, today aged 39 through 64, whose tax returns were linked with Social Insurance Numbers to track their earnings over the course of five, 10 and 19 years. And the findings, Mr. Lammam said, are remarkable: In the 19-year period between 1990 and 2009, one in five Canadians in the lowest of five income groups eventually moved up to the highest-income camp, and nine out of 10 people in the lowest-income group rose out of the bottom.

“The results are extremely encouraging, especially when we’re bombarded with myths of stagnating Canadian incomes or that the rich are getting richer and the poor are getting poorer,” he said, adding that more than a third of top earners in 1990 slipped to a lower income category by 2009. “This study blows those myths out of the water.”

http://news.nationalpost.com/2012/11...study-reveals/

Cowperson

So does this stat take into account that a student is poor then finishes school and moves their way up?
If that is so, it does fall into the definition of upward mobility but these students were probably going to be poor for only a short time as they reach their potential.
Perhaps students need to be taken out of the equation.

[gargamel]

Obviously students and recent graduates would be among the lowest earners, yet their incomes would increase greatly over the course of 5, 10 or 19 years to the point where they could be among the highest earners. I don't know if that's enough to account for all of the "mobility" found in this study, but I suspect that it explains a significant portion of it. The real question is what percentage of the children of the lowest income earners will also be among the lowest income earners.

[Rathji]

The metrics given in thy story seem really vague, almost like it is on purpose.

Anyone else get that vibe?

[joe_mullen]

Originally Posted by gargamel

Obviously students and recent graduates would be among the lowest earners, yet their incomes would increase greatly over the course of 5, 10 or 19 years to the point where they could be among the highest earners. I don't know if that's enough to account for all of the "mobility" found in this study, but I suspect that it explains a significant portion of it. The real question is what percentage of the children of the lowest income earners will also be among the lowest income earners.

agree with this. also, it would be much more relevant if this was compared to other countries as well. some sort of control would bring more perspective.

[joe_mullen]

Originally Posted by Rathji

The metrics given in thy story seem really vague, almost like it is on purpose.

Anyone else get that vibe?

seeing how the fraser institute is involved, it makes you wonder.

[PsYcNeT]

Originally Posted by joe_mullen

seeing how the fraser institute is involved, it makes you wonder.

Oh I don't think anyone needs to wonder about what the Fraser Institutes agenda is.

It's an odd thing though, championing upward mobility in a (mostly) capitalist society. It's really not possible for everyone to be upwardly mobile, even when you take globalization into account.

[kirant]

Originally Posted by Rathji

The metrics given in thy story seem really vague, almost like it is on purpose.

Anyone else get that vibe?

The study struck me as one where they didn't investigate the cause of the shift enough. There are many possible causes but none of them are heavily looked at. One example, as mentioned before, is students possibly being counted as part of the lowest quintile. It does seem like they looked at the numbers and declared something without asking the how or the why, a logical faux pas in my books.

[PsYcNeT]

Also not mentioned is the 43.2% historical rate of inflation between 1990 and 2009, and the 57.1% increase in the CLI.

Shoddy number crunching on their part.

[AMG_G]

A lot of my parent's friends that came to Canada with absolutely nothing, spoke no English, had no friends but still made a very good life for themselves. They did not mind doing menial low paying work and saved their earnings and not blow their money on useless crap. Their kids, born and raised here, on the otherhand are deadbeats. They had all the chances in the world to make a better lives for themselves yet they choose to do minimum. They should look at their parents and be ashamed of themselves.

[FlamesAddiction]

Originally Posted by polak

I could personally vouch for this in the case of my parents, but so could most immigrants.

Moved here, cleaned offices for 5 bucks an hour at nights while they learned english during the day and eventually got better jobs. Still in the middle class but they definitely moved up. They could have probably in the upper-middle class if they were a little bit more careful financially but yeah...

As I can. My family immigrated here and I was the first person in my family born in Canada.

During my childhood, we had a familiy of 4 on a family income of right around the "poverty" level (which I think then was defined at around $20k/year).

I would say that now I am firmly middle class (if my wife was employed, we'd be doing a lot better, but I digress). A bit of it is a facade though. With student loan payments, plus not owning any assets, I am just thankful that I don't have kids because a family wouldn't be affordable right now. It is kind of a choice - stay in the gene pool and be low/under class, or choose not to have kids, and get by.

I guess what I am getting at is that class mobility is not that difficult, but for people near the bottom, the margin of error is still small.

[crazy_eoj]

Not really surprising results. I think most Canadians would agree if you work hard, attain valuable skills and education, there is plenty of opportunity to increase your income in our country.

These results merely validate that.

[Gozer]

Universal health care, investments in education, and other socialist principles are great for social mobility.

[homestand]

Originally Posted by joe_mullen

seeing how the fraser institute is involved, it makes you wonder.

The usual Fraser Institute spin.

[opendoor]

I just read through the actual report, and as others suspect, this is an income cycle at work far more than social mobility. A rich kid whose parents are paying all of his expenses is going to have barely any income through school. If he then gets a good job and moves into the higher brackets, that's not upward mobility. This quote pretty much says it all:

In 1990, the average income earned through wages and salaries of Canadians in the bottom 20% was $6,000. However, the average income of those same individuals increased dramatically to $44,100 by 2009 (all income in 2009 dollars).

So basically a bunch of people in the study temporarily had low income while they were in school, or apprenticing, or just starting out, or having children, and then eventually made normal wages. That's their mobility.

Unsurprisingly, not once in the 48 page study is the average age of each income group or the age range of the people who experienced the greatest mobility revealed. In fact, age is probably the biggest factor and they completely ignored it, I suspect because it would largely nullify their argument.

That said, income mobility is generally fairly good in Canada and it'd have been nice to see a proper study which illustrated this. I would have been much more impressed if the Fraser Institute had actually tackled this issue correctly rather than putting together a crap study just so they could proclaim huge numbers of social mobility and income equality.

[blankall]

Originally Posted by opendoor

I just read through the actual report, and as others suspect, this is an income cycle at work far more than social mobility. A rich kid whose parents are paying all of his expenses is going to have barely any income through school. If he then gets a good job and moves into the higher brackets, that's not upward mobility. This quote pretty much says it all:

So basically a bunch of people in the study temporarily had low income while they were in school, or apprenticing, or just starting out, or having children, and then eventually made normal wages. That's their mobility.

Unsurprisingly, not once in the 48 page study is the average age of each income group or the age range of the people who experienced the greatest mobility revealed. In fact, age is probably the biggest factor and they completely ignored it, I suspect because it would largely nullify their argument.

That said, income mobility is generally fairly good in Canada and it'd have been nice to see a proper study which illustrated this. I would have been much more impressed if the Fraser Institute had actually tackled this issue correctly rather than putting together a crap study just so they could proclaim huge numbers of social mobility and income equality.

The study I'd be more more interested in seeing is income of people vs. their parents' income. This would be the most telling stat. Rich kids not working through their 20s and then earning a high income afterwards is not social mobility.

[peter12]

Originally Posted by Gozer

Universal health care, investments in education, and other socialist principles are great for social mobility.

Haha, my friend, these principles are purely capitalist.

[crazy_eoj]

Originally Posted by opendoor

I just read through the actual report, and as others suspect, this is an income cycle at work far more than social mobility. A rich kid whose parents are paying all of his expenses is going to have barely any income through school. If he then gets a good job and moves into the higher brackets, that's not upward mobility. This quote pretty much says it all:

So basically a bunch of people in the study temporarily had low income while they were in school, or apprenticing, or just starting out, or having children, and then eventually made normal wages. That's their mobility.

Unsurprisingly, not once in the 48 page study is the average age of each income group or the age range of the people who experienced the greatest mobility revealed. In fact, age is probably the biggest factor and they completely ignored it, I suspect because it would largely nullify their argument.

That said, income mobility is generally fairly good in Canada and it'd have been nice to see a proper study which illustrated this. I would have been much more impressed if the Fraser Institute had actually tackled this issue correctly rather than putting together a crap study just so they could proclaim huge numbers of social mobility and income equality.

Well, of course we know they had to take the data from Statistics Canada so whether they tied an age to an income level is not indicated. Do you know that they have this information in the data?

I mean, the bottom line here is that 9/10 people in the bottom income bracket (lowest 20%) had moved OUT of that bracket in that period. Are you alleging that 90% of the 'poor' are students?

Of considerable note is that the average income in that bottom 20% has moved up over 600% in the short period of the study. That in itself is fantastic news.

[Rathji]

Originally Posted by crazy_eoj

Well, of course we know they had to take the data from Statistics Canada so whether they tied an age to an income level is not indicated. Do you know that they have this information in the data?

I mean, the bottom line here is that 9/10 people in the bottom income bracket (lowest 20%) had moved OUT of that bracket in that period. Are you alleging that 90% of the 'poor' are students?

Of considerable note is that the average income in that bottom 20% has moved up over 600% in the short period of the study. That in itself is fantastic news.

My income has increased about 50000% during that same time period.

I must be rich.