Canadian Economy - The Capitalists’ Share Grows While the Workers Share Falls

An economic study, published on June 28th by the Canadian Centre for Policy Alternatives (CCPA), has statistically confirmed what most workers intuitively sense in their daily lives: that despite economic growth, they are not getting a fair shake from their bosses. Last year, 65% of Canadians told Environics Research they felt that a greater share of economic growth is going into the already well-lined pockets of the rich. Indeed, the CCPA reports that average real wages (wages that have been adjusted to take inflation into account) have been stagnant for a good 30 years in this country; a stagnation that the authors find to be “dramatically at odds with previous historical experience”, at least for the period going from 1961 until the late 1970s. This situation has developed in a context of economic growth and increased productivity. Canada’s economy grew by 72% between 1975 and 2005 in real per capita terms and its labor productivity, measured in GDP/hour grew by 51% over the same period.

What this means for workers in very practical terms is that if their real wages had risen in proportion to their increased productivity between 1991 and 2005, their average income would have been 200 dollars higher each week (in 2005 dollars). That adds up to 10,000 dollars a year per full-time worker that is going into someone else’s pocket... guess whose? The CCPA report answers the question clearly.

Looking at just the period between 1991-2005, the changing distribution of income is striking. In 1991, the corporate profit share was at a low point of just over 22%; by 2005 it was close to 34%. This represents a large increase in corporate profits.

It causes the workers’ share of revenue from the economic pie in 2005 to have fallen to its lowest level in over 40 years! This completely disproves the capitalist economists claim that “a rising tide lifts all boats”. It is simply not true that workers’ fortunes grow proportionately equally with their bosses in situations of “economic high tide”. There is no fair shake under capitalism. In fact, not only has the wages share of the economy fallen compared to the profit share, and the average real wage been frozen for many decades, but a high proportion of workers have actually experienced real wage decreases.

For workers at the bottom end of the revenue spectrum, those working at minimum wage, this decrease has been dramatic. Their average hourly pay has gone down from $9.14 to $7.32 between 1976 and 2006 in terms of 2006 dollars.

These numbers demonstrate that the ruling class is on the attack. It is driving up the exploitation rate, and is driven to do everything it can to redress the general tendency of the profit rates to fall. Wages freezes and rollbacks are not its only weapons, though they are quite potent ones. The capitalists are also attacking our social wage (in the form of social programs) and our working conditions (1) as well as pushing ever more aggressive imperialist policies in their efforts to stave off the general world crisis of its cycle of accumulation.

This proves that workers, even in a country as developed as Canada, would be immensely better off by getting rid of the profit system once and for all.


(1) See Canada: Workplace Fatalities on the Rise, Internationalist Notes Vol. 1, No 2, Spring 2007.