Toronto’s rich are getting richer and its poor are getting poorer— such are the findings of a study on the city’s economic divide done by U of T’s Centre for Urban and Community Studies. Since 1971, rich neighbourhoods have seen average incomes rise, while 36 per cent of Toronto’s poorer neighbourhoods have seen them fall by 34 per cent.
The culprits? “Changes in the economy, in the nature of employment (more part-time and temporary jobs), and in government taxes and income transfers,” says the report. This criticism sounds like the typical indictment of capitalist economics for leaving employment up to the market and cutting social programs, while lowering taxes for the rich.
Before we go and lead the proletariat into revolution, remember that there is little evidence that this polarization is caused by structural inequality or a lack of upward mobility among the general populace. It is far more likely a reflection of Toronto’s role as a top destination for new immigrants.
The first problem with the report’s argument is that the study focuses on the average income trends of Toronto neighbourhoods, not of individuals. When it comes to poverty, we should care about the plight of people, not of arbitrary geographic areas. That said, the fact that average income in a certain area went down doesn’t say anything about personal welfare. Upon closer inspection, there’s actually nothing in the study to back the claim that poor individuals have gotten poorer.
For example, picture a neighbourhood that initially contains a mix of high and low income residents. Now, let’s say that the richer residents move away and an influx of residents with lower incomes arrive. Statistically, average income drops. But this doesn’t mean that individuals in the neighbourhood are getting any poorer. In fact, who’s to say they didn’t get richer? It’s entirely possible that those who stayed in the neighbourhood saw their incomes rise, while newcomers improved their situation relative to their place of origin.
Since Toronto is the primary destination for new immigrants, there is good reason to think that this is what’s happening. It’s no coincidence that the neighbourhoods classified as poor also have the highest concentration of immigrants. Of the population in these areas, 62 per cent is foreign-born and 42 per cent arrived in Canada only after 1981. In 1971, native-born Canadians were the predominant group.
Recent immigrants face high language barriers, and are often disconnected from the social networks necessary to find high-paying employment. This makes their labour market incomes lower than the average Canadian. Newcomers are also typically concentrated in the same neighbourhoods, due to the presence of shared languages and familiar cultural products like food and entertainment. It would be nothing short of a miracle if average incomes in these localities stayed constant over the period studied in the report.
The good news is that, according to a 2003 Statistics Canada study, “initial [immigrant] settlement is in disadvantaged immigrant enclaves from which longer-term, more successful migrants subsequently exit as they purchase homes in more affluent neighbourhoods.” But as these established immigrants move away and are replaced by more recent arrivals, neighbourhood average incomes, of course, drop—reinforcing the illusion of the poor getting poorer.
Beneath this bleak tale of neighbourhood inequality is a serious success story. Over the past few decades, hundreds of thousands of people from less fortunate places around the world came to Toronto in search of a better future. Migration significantly improved their opportunity and standard of living. As they settled in, their incomes rose and many moved out of ethnic ghettoes, only to be replaced by a new group of people looking to do the same thing.
There is an inevitable trade-off here. We can’t accommodate a massive influx of new immigrants and expect our demographics to remain constant. Torontonians have shown that they believe in the right of people to come here in search of a better life, but this makes our city’s neighbourhoods less economically similar, as waves of newcomers slowly adjust to life in Canada. In the end, we need to stop focusing so much on income equality and ask a fundamental question: are the living standards of individuals rising over their lifespan? If the answer is yes, we should be proud.
