Ownership of stocks, bonds, real estate and professional incomes set the 1% apart from the rest of us.
Wages and salaries account for most of the income of Newfoundlanders and Labradorians. This is as true for the wealthiest among us, the 1% of OccupyNL, as it is for the rest of us. For those earning more than $150,000 a year in 2009 (0.88 of 1% of the provincial population and 1.1% of those filing an income tax return) wages and salaries made up 62% of their total income, while for the 99% wages and salaries were 64% of income.
There is a lesson here for both the provincial finance department and the Board of Trade.
There is, of course, a major quantitative difference here. The scale is seven to one: the salaries of the top 1% average $208,172 versus an average $31,840 in employment income, mostly wages, that the rest of us earned.
But when we turn to non-waged sources of income the differences become qualitative in nature. It is no longer simply a question of bigger numbers, the why and wherefore of the income streams change.
More than half of the non-waged income of the 1% comes from owning stocks (dividends, 33%), bonds (interest, 4%) real estate (net rents, 1%) or the sale of these productive assets (capital gains, 16%). These four income streams of ownership account for less than 6% of the non-waged income of the 99%, hence the dramatically different distributions on the two pie charts.
After ownership, professional income is the next largest source of income for the wealthy. Although only one in five of the people declaring a professional income in 2009 made it into the top 1%, these lawyers, doctors, dentists and engineers accounted for 71% of net professional income.
Perhaps surprisingly, net business income placed a distant fifth as a source of non-waged income. Only one in eighteen of the wealthy declared any net business income. Perhaps the word ‘net’ (i.e. after all expenses have been met) hides more than it reveals here, but 87 cents on the dollar of net business income accrued to members of the 99%.
There is a lesson here for both the provincial finance department and the Board of Trade. Most businesses in our province remain small and granting large income tax breaks to the wealthy does not address their needs. The success of their businesses depends on maintaining a healthy consumer base.
One in four Newfoundlanders and Labradorians depend on our inadequate public pension schemes. While federal transfer payments in the form of Employment Insurance (105,580 people), Old Age Security (71,510 people), the Universal Child Care Benefits (24,500 families), and diverse social programs accounted for 12% of provincial income in 2009
The Flaherty/Harper policies place all of these programs under increasing stress. For example, the temporary measures to improve EI, introduced in 2009 at the insistence of the NDP, have now run their course. As a result, the proportion of unemployed Canadians eligible for EI has dropped from 54% to 37%.
This throws more people onto our woefully inadequate provincial social assistance programs. Here in Newfoundland, in 2009, welfare payments averaged a measly $7,600, less than half the low-income cut-off [LICO is Canada’s poverty line].
The differing income streams of the 1% means they have different interests than the rest of us. These fundamental differences affect how each group understands the role of government. In the ongoing debates, as we collectively develop the new public policies we so need for these challenging times, it is vital that our federal, provincial and municipal governments learn to respect the interests of the overwhelming majority.