A Tale of Three Cities

In my web-surfing this week, I came upon the study “The Three Cities Within Toronto: Income Polarization Among Toronto’s Neighbourhoods, 1970-2005” by J. David Hulchanski, University of Toronto. I’ve written before about Toronto’s potential to become an enclave of the well-to-do, and our lack of tangible manufacturing potentially eliminating the middle class, and it was good to be reminded even if I had based my thoughts on something besides irregular reading patterns and mere logic, I may be onto something.

Toronto Archive

This study, a multi-year project that builds on ground laid in the same-named study 1970-2000 published in 2007, was released in 2010 and got its fair share of headlines, so maybe you remember it. The study says that if the trend continues — and we’re talking about a 35-year trend — Toronto will soon become two cities: one affluent, and one poor, with little in between. It uses 2006 census data to update the original report, and says that the long-term patterns then identified aren’t showing signs of change. It’s now 2013, halfway between the original study’s year-2000 data and the predicted outcomes for 2025, which I figure makes it a good time for another look.

If the trend continues, said the report, by 2025 City #1 (as it calls affluent neighbourhoods) will comprise about 30% of all Toronto’s neighbourhoods; City #3 (neighbourhoods with declining incomes) will cover 60% of the city; and City #2, the former middle class, will make up only the remaining 10%. (City #1 incomes are identified as 20% or more above the average individual income for the CMA as a whole; City #2 as within 20% above or below the average; and City #3 as 20% or more below average. )

It’s not just a 416 trend, either. Hulchanski said, “Although there are more middle-income neighbourhoods in the 905 region to begin with, the number is steadily decreasing and has done so since 1970, while the numbers of low-income neighbourhoods are steadily rising. Twenty percent of the 905-region neighbourhoods are now low income, compared to none in the 1970s.” That it’s consistent with trends in the 416 means that it isn’t a case of middle-income households simply moving to the far suburbs.

One of the biggest trends to note is that poverty had moved from the centre to the edges of the city; the former generally meant that at least low-income households had good access to transit and services. Many downtown neighbourhoods have now gentrified, and the low-income neighbourhoods concentrated more in the northeast and northwest have relatively poor access.

The report notes that the trend is not inevitable or irreversible, that public policy that makes housing more affordable and expands transit and services where the need is greatest, and renewal of aging high-rise neighbourhoods throughout City #3, can turn things around.

Here are a few interesting tidbits:

• In 1970, 66% of neighbourhoods in Toronto fell into the middle-income bracket; in 2005, it was 29%

• In 1970, 19% of neighbourhoods were considered low-income; in 2005, 53%

• In 1970, individuals 15 and older earned an average income of $88,400 in City #1, and $26,900 in City #3

• Renters were found throughout the city, but in City #3 accounted for nearly half of all households, and spent a much greater percentage of their income on housing than owners did

• Residents in City #3 have to travel further to work, and yet have the poorest access to the TTC— only 19 of the 68 subway stops were within or near City #3 neighbourhoods

• Income increased by 99% in City #1 over the study’s 35 years, while City #3 income declined by 37%, reflecting lower levels of education

• While white collar employment in Toronto increased to 40% from 17% for all occupations, blue collar employment decreased to 17% from 28%

• Half of Toronto’s rental housing was in energy inefficient, overcrowded high-rise buildings built from 1950 to the early 1980s — almost 300,000 apartments — that are in clusters of five or more with few community services

You get the gist. There was little change to note between the 2001 and the 2006 census.

Projections for 2025 were not encouraging: City #1 will account for one-fifth of the city, City #2 for one-10th, and City #3 for nearly two-thirds of the census tracts in Toronto. Let that number sink in for a moment — 60% of the city classified as low-income.

It’s easy to think that it’s only bad news if you’re among the City #3 dwellers. People with money like their money (as do I, let’s be honest), and the choices it buys, like where to live and what services to demand. If you ain’t broke, why fix it?

Because it affects everyone. Poverty breeds violence and diminishes motivation, and creates a further burden on our limited social services.

Some of the more obvious contributors to a different future won’t be popular with those who are benefitting from the current system, like limiting foreign real estate investment or tying it to mandatory investment in infrastructure or employment, or mandating low-income housing in every new market-value development. How about if we force the 99th percentile to pay their fair percentage of taxes, instead of offering shelters that see some of them barely pay taxes at all? Can we look to civic leaders to help create neighbourhoods that aren’t just mixed-use (at least we seem to have finally gotten that through our heads), but mixed income? And how long before we embrace, say, a group home or psychiatric facility in our own backyard?

What’s changed since this report? What are we doing to mitigate the outcome of income disparity?

A Globe and Mail column by Andrew Jackson this week notes that reduced taxation of capital gains and corporate profit have boosted after-tax incomes of those 1 percenters, many of whom have considerable stock options and investment income, but it’s growing inequality in wages and salaries he says (and also according to the OECD in a 2011 study) is most to blame, and that tax-and-transfer policies can only do so much. Last year, University of McMaster data about income redistribution showed that the top 1% of earners in Canada in 2009 made more than 12% of all income; after taxes and transfers, their share was still a more than healthy 9.9%.

Jackson mentions a recent Journal of Economic Perspectives paper that says we pay top executives much more than needed to stimulate and fairly reward performance, with some CEO compensation packages providing huge personal gains for luck, not just for exceptional effort or corporate performance relative to competitors in the same industry in the same market. Heaven knows, it’s hard to justify some of the remuneration of our public officials, such as the PR people at the OLG pulling down $150K a year.

Predistribution, says Jackson, a professor of social justice at York, is at least as important as redistribution, but what public policy has the guts to change that?

There’s a battle brewing in Toronto Centre over this very issue right now, the veritable hotbed of income inequality itself. NDP candidate Linda McQuaig said this week, ” There is nothing natural or inevitable about the dramatic increase in inequality and the tremendous increase in precarious employment ... Those are the specific results of a specific set of rightwing economic policies.” She also criticized Rob Ford’s push to phase out a “jobs-for-life” provision that make it tough for the city to lay off workers — in my experience, telling people their employment doesn’t depend on continued acceptable performance is a recipe for disaster, so I can’t go along with her there, and I don’t think creating a welfare state is the answer, either, but it’s good to see the issue in the spotlight.

Are there answers that encourage entrepreneurship while still keeping the overall health of the city in mind? Policies that encourage investment but not unfettered greed?

For now, we muddle on. To paraphrase Ebenezer Scrooge, are these things that must be, or things that MIGHT be? The answer, of course, is in all of us.