BC's top earners gained, lower income people lost, inequality study reports.

VANCOUVER -- "We spent much of the 1990s fretting about the confidence of upper-income earners," said Marc Lee, author of New Perspectives on Income Inequality in BC, "It turns out they were doing just fine. The real story should have been growing inequality and the decline of incomes at the bottom."

Top income earners received more and people at the bottom received less, according to the report published by the Canadian Centre for Policy Alternatives. The report is based on survey data, tax data and census data.

"Higher inequality was primarily driven by changes in market incomes," said Lee. "But the tax and transfer system also became less effective in mitigating the rise in market income inequality."

As a result of gains at the top and losses at the bottom, the ratio of market incomes of the top 5% to the bottom 5% grew dramatically over the 1992-2000 period. In 1992, the top 5% made 57 times the income of the bottom 5%. By 2000, this had grown to 94 times.

"This research should be a wake-up call for the provincial government," said Lee. "Early signs suggest that this inequality picture has worsened in recent years by policy changes such as income tax cuts favouring high-income earners, higher medical service plan premiums that place a higher burden on low-income earners, and reductions in welfare incomes and eligibility."

The report points out that government policy failed to stem the tide of rising inequality in both Canada and BC. The inequality gap has also been affected by government measures--with regard to labour markets, monetary policy, federal and provincial budget cutbacks, and cuts to El and welfare.

Funding for the study was provided by the Social Sciences and Humanities Research Council of Canada. 604-801-5121