Improving Canadians’ income mobility is the next big policy challenge

theglobeandmail.com
By JOHN IBBITSON
June 29, 2017

Intergenerational income mobility is so much more than your kids doing a little bit better than you did. The expectation that each generation will be more prosperous than the one that came before helps to erode class barriers, persuades the struggling immigrant that her sacrifices will ensure a better life for her children, sends the teenager from his small town to a distant college thrilled by the possibility of the world, allows Canadians, no matter where they live or where they come from, to believe that the future could be better than the past.

And so The Globe and Mail’s analysis of a study by Miles Corak of the University of Ottawa on the impact of geography on income mobility raises troubling questions about what steps, if any, governments should take to improve the prospects of people living in places where the child is less likely to do better than the parent.

Will Canada evolve into a mix of both urban hubs and prosperous and self-sufficient hinterland communities, or are we destined to become a country of a few big cities with nothing but empty or poor in between? And is there anything that can be done to shape that future? These are the choices facing policy makers today.

Prof. Corak’s analysis reveals that income mobility is greatest in Canada’s growing cities: places such as Greater Toronto or Saskatoon or B.C.’s Lower Mainland or Montreal or Halifax.

That growth will accelerate. Warren Mabee, head of geography and planning at Queen’s University, thinks federal and provincial governments might, through targeted investments, be able to create mini-hubs in places such as Prince George or Thunder Bay. But in the main, vertical mobility depends on horizontal mobility: The best chance for your son or daughter’s income to be higher than yours is for your family to move to the city.

This wasn’t always true. In the past, farming and forestry and mining offered stable, secure incomes for people and communities generation after generation. Governments provided the roads, railroads and ports and the rest of the infrastructure that sustained Canada’s natural-resource economy, and then relied on market forces to do the rest.

Even now, children in rural Alberta and Saskatchewan are more upwardly mobile than children in some other parts of Canada, thanks to the oil boom that for decades fuelled the region’s economy, a boom sustained by federal and provincial infrastructure investments.

But over all, rural Canada is struggling. The farms and forests and mines, and the mills and factories they generated, no longer provide the income security they once did. Competition and automation have weakened the economic base of rural Canada.

This is why so many who look at the question of preserving the rural economy focus on the importance of high-speed Internet as the new infrastructure priority.

“We really need to move that forward,” Prof. Mabee in an interview said. “One thing that would level the playing field, at least a little bit, and provide people with opportunities in small communities by allowing them to take part in the knowledge economy, is going to be broadband connectivity.”

The Trudeau government has committed $500-million over five years to expanding rural and remote access to broadband. Last December, the Canadian Radio-television and Telecommunications Commission (CRTC) announced a $750-million fund, to be financed by telecommunications companies, to expand broadband access in rural and remote areas. On Wednesday, the Federation of Canadian Municipalities delivered its brief to the CRTC on how the federation thinks the program should be rolled out.

If schools, businesses and homes in rural communities don’t have the same high-speed access as the nearest city, “you don’t have the same opportunities,” said Jenny Gerbasi, the federation’s president, who is also a Winnipeg city councillor and deputy mayor. “That’s what we’re trying to overcome.”

Universal, affordable access to the digital universe is vital to moving beyond a declining resource-based economy, she says. “Even if you are in a remote area or a northern area or a very small community, you have the ability to connect to the digital economy.”

Education is essential to income mobility. Children do better when they have access to high-quality daycare, to early childhood education, to excellent primary and secondary schools, to nearby colleges and universities. Federal, provincial and municipal governments struggle to provide such resources in rural areas.

There may be little or no education offered prior to kindergarten; school may involve a long daily bus ride; postsecondary education may be unavailable anywhere nearby. Improved Internet access in rural communities won’t solve that problem, but it will at least help by bringing knowledge resources into the home and school.

Herb Emery, an economist at University of New Brunswick, observes that the spread of universal public education after the Second World War ensured that each generation did better than the one that came before.

But now, with 85 per cent of Canadians completing high school and more than half receiving degrees or diplomas, the overall population may be as educated as it’s ever going to get.

A highly educated population engaged in a knowledge-based 21st-century economy will inevitably be attracted to urban hubs, he believes. The only policy priority that matters is ensuring people in rural areas are able to move or stay as their own preferences and market conditions permit.

“Federal programs such as transfer payments and equalization programs may do more harm than good in the long run by retarding labour mobility and the pace of much-needed economic transformation in the Atlantic region,” he said in an interview.

Children in some First Nations communities have particularly low odds of doing better than their parents. Justin Trudeau campaigned on the promise of a new relationship between the federal government and Indigenous Canadians. “We are very much focused on building new infrastructure, new schools, new opportunities,” he told reporters earlier this week. But progress is slow.

Connecting remote reserves to the digital universe could help overcome their isolation. Better schooling is also essential, although what looks from the outside like programs to improve Indigenous education can look to First Nations leaders like the latest attempt at assimilation.

But a truly revolutionary approach to ending poverty on reserves would require massive investments, funded by higher taxes than most Canadians appear willing to pay. More likely, young Indigenous Canadians will migrate from the reserve to cities, continuing the rural drain.

We can’t know whether the expansion of digital infrastructure will improve income mobility in rural parts of Canada, or slow the migration of the young to urban hubs. We can’t know whether, having reached Peak Education, intergenerational income mobility generally is destined to slow. All government can do is try to ensure that every Canadian is as well-educated and as connected as possible, regardless of where they live. After a century and a half of building Canada, this is the next big challenge.