Monday, January 16, 2017

Monday Morning Links

Miscellaneous material to start your week.

- Tom Parkin points out that neither austerity nor isolationism offers any real solution to improve Canada's fiscal and economic standing. And Rob Carrick highlights what should be the most worrisome form of debt - being the increased consumer debt taken on to allow people to keep spending in the absence of wage increases:
“If wage growth slows, so does your purchasing power and so does the economy,” said Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives. This is our strange economic reality today – people are taking on debt to make up for stagnant or declining purchasing power, but it’s not enough to jolt the economy. Growth is still on the weak side, December’s strong job creation numbers notwithstanding.

Ms. Yalnizyan was one of the economists who contributed to a must-read collection of 75 economic charts that Maclean’s compiled as a guide on what to watch in 2017. Her input was a chart showing the growth rate for the average hourly inflation-adjusted earnings of salaried and hourly employees. The chart is headlined, “Canada just can’t shake off the slowth,” a term that means slow growth.

Unfortunately, the data in the chart may understate the problem of income stagnation. Ms. Yalnizyan said the average data are pulled higher by workers with incomes at the highest levels, and by the skew in our working population toward older workers at the peak of their career earning power.
We should probably spend a little less to keep our borrowing more in line with our incomes. But growth in household debt in the third quarter of last year was actually quite modest at 1.3 per cent. The debt-to-income ratio moved higher – to 166.9 per cent from 166.4 per cent in the second quarter – because disposable incomes rose a puny 1 per cent.

Higher incomes would help contain debt growth, but it’s hard to be optimistic about pay hikes in today’s slow-growth world. A report from CIBC World Markets late last year found that the quality of employment is falling, as judged by the proportion of part-time versus full-time jobs, self-employment versus paid employment and the compensation of full-time jobs....
There are two ways for the cycle of debt rising faster than incomes to end. Either an economic shock terrorizes people into borrowing less, or we get to a point where incomes rise faster than debt levels. The federal Liberals talk a lot about helping the middle class. We’ll know they’ve accomplished something if wage increases once again give us an advantage over inflation.
- Meanwhile, Simon Enoch writes about the futility of any attempt to cut one's way to growth - with particular reference to the Saskatchewan Party's ill-advised attacks on Saskatchewan workers.

- Maiji Unkuri examines how Finland's basic income trial should ensure that people are able to seek out desirable work. And Sara Mojtehedzadeh reports that Ontario is just now starting to make some effort to document workplace diseases and ensure that workers receive the support they need in response.

- Charles Marohn discusses the impact of different types of public investment in housing, and concludes that poor neighbourhoods offer a far greater return than affluent ones.

- Finally, the CP reports on Oxfam's latest look at wealth inequality in Canada - featuring the revelation that just two people now have more wealth at their disposal than 11,000,000 of their fellow Canadians.

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