Wellesley Visiting Scholar John Myles has published a very interesting paper on the changing impact of income inequality. John is a professor in the Department of Sociology at the University of Toronto and holds a senior position with Statistics Canada. He argues that a crucial challenge is to develop social policy that reflects the conditions, prospects and needs of people over their whole lives from young adulthood through old age.
Current retirees, unlike their predecessors, are relatively affluent because many had good working lives: job security and rising real wages through the boom years of a growing industrial economy. He analyzes the life course prospects of the cohort of 30 somethings who will be 65 in 2040, and who face very different prospects than their parents:
- they are entering the traditional markers of adulthood later ” staying in school and in the family home longer;
- young people’s relative earnings have been getting worse for two decades;
- they are postponing and limiting the number of children they have (more than many would like).
Social policy will need to reflect the very different economy and challenges this cohort will face:
- significant income differentials between singles and dual-earner households;
- and between those with higher education and those without;
- earnings inequality among families is getting worse.
Prof Myles argues that the objective of redesigning our social architecture is to ensure that today’s children and the young adults now entering the labour market also have good lives ” as children, as young adults, during middle age and in their retirement years. He recommends:
- more progressive taxation to finance income transfers and services;
- better income guarantees for those who cannot work;
- addressing the long-standing low-wage character of the Canadian economy:
- making early childhood education and other human capital investments;
- gradually increasing the minimum wage;
- more immediately, developing a system of refundable tax credits or negative income tax for low earners;
- considering later retirement to both reduce public expenditure and increase output.
This report is part of the Canadian Council on Social Development’s New Social Architecture. The Canadian Policy Research Network has also been developing a similar series: its Social Architecture papers provide comprehensive analyses of the fundamental challenges facing progressive social policy and a responsive welfare state in Canada, interesting examples and lessons from other countries, and promising directions to build social policy for the future.
*Bob Gardner, Director – Public Policy