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Canada’s Major Cities Turning Into Islands Of Wealth, Poverty As Middle Class Disappears: Researchers

Everything from house prices to racial discrimination is playing a part.

Canada's largest, most economically dynamic cities are becoming islands of cultural isolation, as economic inequality grows and the cities' neighbourhoods become increasingly polarized, researchers warn.

The result, they say, could be a fractured, distrustful society where common ground between different groups can be hard to find.

According to data compiled by researchers led by University of Toronto professor David Hulchanski, all four of Canada's largest metro areas — Toronto, Montreal, Vancouver and Calgary — are seeing their middle-income neighbourhoods disappear, replaced by increasingly segregated high-income and low-income neighbourhoods.

Tenants in the Toronto neighbourhood of Parkdale protest rent hikes and evictions amid the city's rapidly rising housing costs on March 16, 2017.
Carlos Osorio via Getty Images
Tenants in the Toronto neighbourhood of Parkdale protest rent hikes and evictions amid the city's rapidly rising housing costs on March 16, 2017.

Though the trend has been going on for decades, Hulchanski and the researchers he leads at the Neighbourhood Change Research Partnership recently updated the numbers to take into account the latest census data. What they found was evidence of a continuing, profound change in Canadian cities.

In 1980, 60 per cent of census tracts in Toronto were middle-income areas; by 2015, only 28 per cent were middle income, the researchers found.

At the same time, rich and poor neighbourhoods exploded: wealthy areas rose from 12 per cent to 21 per cent of all tracts, while low-income areas exploded from 28 per cent to 51 per cent. Yes, even in these boom times, a majority of Toronto's neighbourhoods are low-income.

A similar trend, though less pronounced, has taken place in Montreal, Vancouver and Calgary as well.

Watch as wealthy (blue) and low-income (red) neighbourhoods spread across Toronto over 35 years:

Toronto "is no longer a city of neighbourhoods — it's a collection of islands segregated by income," Hulchanski co-wrote with the United Way's Michelynn Laflèche in a recent blog.

"Access to opportunity plus hard work no longer equals success. In a region marked by islands of wealth and poverty, where you live increasingly determines your access to opportunity — and a better life."

And it's not just the core city: The same trends are playing out in the suburbs as well. One dramatic example: Toronto's suburban Peel Region saw low-income areas mushroom from two per cent of the region's census tracts in 1980, to 52 per cent in 2015.

This chart shows inequality rising in all four of the largest metro areas in Canada since 1970, with Toronto experiencing the greatest increase in inequality.
This chart shows inequality rising in all four of the largest metro areas in Canada since 1970, with Toronto experiencing the greatest increase in inequality.

That trend is leading to a new kind of polarization in cities, said Laflèche, vice-president of strategy research and policy at the United Way of Toronto and York Region.

"What you see is the separation of people," she told HuffPost Canada. "Thirty years ago, people lived cheek by jowl next to each other, upper income and middle income and lower income." That generated "a common sense of belonging, a common sense of who we are," something that we are losing in today's cities, Laflèche said. As a society, we risk becoming less trusting and less understanding of one another.

Watch: 82% of the wealth created in 2017 went to the top one per cent

While it's happening to some extent across Canadian cities, Toronto has it worst, Hulchanski's research shows. Up until around 1990, Toronto's inequality patterns were very similar to other major Canadian cities, but after that, the city's polarization accelerated beyond that seen in the other cities.

"The bigger, more dynamic, more changing metro areas will demonstrate a trend more severely, whatever the trends are," Hulchanski told HuffPost Canada.

"If an economy is creating more precarious employment, a place that's growing rapidly will have more of that, so you will have more households at the lower end. Likewise if the economy is creating a lot of well-paying jobs, in medicine and tech and so on, those tend to also be located in the bigger cities. More at the top and more at the bottom at the expense of the middle."

So who, or what, is to blame? Hulchanski points to four broad causes for the disappearance of middle-class neighbourhoods:

  • A changing labour market. Like many developed countries, Canada has seen a decline in well-paying unionized manufacturing jobs, replaced by lower-paying service sector jobs. "You have a job market that isn't paying middle-class wages anymore," Hulchanski said.
  • An unaffordable housing market. In recent decades, cities have moved away from building or requiring social housing and affordable housing, leaving the issue entirely to market forces. "The cost of housing is not going down in real terms, whereas the incomes of many people have stagnated or gone down," Hulchanski said.
  • Taxes and transfers. In the 1990s, Canada experienced major cuts to social spending, and in the years since, there have been successive waves of tax cuts. The social spending reductions hit the poor in particular, while the tax cuts helped higher earners disproportionately. Those policies "helped redistribute income to the upper end," according to Hulchanski.
  • Discrimination: The increasing number of visible minorities among Canada's immigrants in recent decades has made discrimination more of an issue in the well-being of Canadian households. "Racialized immigrants in particular are reporting experiencing much higher levels of discrimination, in being hired, in being able to maintain their jobs, and discrimination in their being able to advance in their jobs," said United Way's Laflèche.

There is, of course, plenty of blame to go around; many argue the Liberal government of Jean Chrétien in the 1990s deserves some, for its aggressive cuts to social spending, and the Conservative government of Stephen Harper deserves some as well, for its cuts to corporate taxes.

But ultimately, "we did this to ourselves," said Hulchanski. "We did it to us, in the way we govern ourselves, starting in the 1990s."

So what can be done about it?

The first step, Laflèche says, is mitigation.

"We need to improve outcomes for those not succeeding, for example creating career ladders instead of dead-end jobs," she says.

She's calling for programs to "stimulate and promote local economic development that serves the people already there in low-income neighbourhoods."

The country needs a new approach to housing as well, she says, as that is also exacerbating inequality. "Those who entered the market 20 years ago now have an asset that new buyers today will never have," she noted.

To bring down the pressure on housing costs, "we need to partner with the private sector to build affordable housing," Laflèche said.

'We can't change this overnight'

Precarious employment is an issue that needs to be addressed as well, she said. Canada built a social safety net, such as employment insurance, that enabled people to survive in difficult times. Today, we may need new programs to address new issues.

"How do we make it so that the benefits of economic growth are shared by a greater number of people?" Laflèche asks.

"We can't change this overnight, this happened over a period of 30 years .... And it's going to have to be a multi-pronged approach to fixing it."

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