Only Mexico's middle class grew in North America

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Only Mexico's middle class grew in North America

Only Mexico's middle class grew in North America

Wednesday, May 23, 2012
  • berg
Osberg warns that increasing inequality is not a sustainable trend.

MONTREAL: Only Mexico's middle class has grown over the past 30 years in North America, while income disparity has increased in Canada and the United States, according to a study here out Tuesday.

 

"Mexico's middle class has benefited from urbanisation, greater female employment, improved education and better social programmes," said economist Lars Osberg, the author of the report by the Canadian Centre for Policy Alternatives (CCPA).

 

In the study Osberg, a professor at Dalhousie University, tracks the rise and fall of income inequality in the three North America Free Trade Agreement (NAFTA) partners.

 

Similar trends in Canada and the United States helped maintain middle-class growth until the 1970s, Osberg said, but those trends have since run out of steam.

 

"Globalisation, technological advances, a drop in unionised work, and a deregulated labour market have contributed to stagnant real incomes for most in Canada and the US since the 1980s," he said.

 

Osberg said that income disparity has accelerated in both Canada and the United States.

 

"This combination of stagnant real incomes for most people and a rapid rise of the incomes of the richest one per cent in the United States and Canada has produced steadily increasing income inequality -- to a level that hasn't been seen since the 1920s," he said.

 

"Increasing inequality is not a sustainable trend," Osberg warned. "When those at the top keep amassing income, their growing savings have to go somewhere."

 

"When the rising savings of the rich are parked in the financial markets, but everyone else falls deeper into debt, a house of cards is created, producing the kind of economic instability that led to the 1929 financial sector crash and the market meltdown of 2008."

 

The path to stability "requires either an acceleration of the income growth rate of the bottom 99 per cent or a decline in income growth of the top one per cent," Osberg said.