Inequality seems to be the watchword of the moment in Fall 2012. It is on the minds of many, it seems, sometimes forming on surprising lips. Lloyd Blankfein, the CEO of Goldman Sachs, had this to say in a mid-September talk in Toronto to financiers, bankers, executives and lawyers: “In the U.S. over the last generation, we have been much better at generating wealth and much less good at distributing it." President Obama mentioned inequality in his acceptance speech at the Democratic National Convention, as did others who spoke there, notably Elizabeth Warren, then a Harvard Law Professor, now a U.S. Senator for Massachusetts, and co-author of the 2000 book The Fragile Middle Class. And the recent report of the World Economic Forum, The Global Competitiveness Report 2012-2013 focuses on the fundamental importance of social and environmental sustainability (including efforts to diminish social inequalities) to any country’s global competitiveness.
In sustained examinations of the various impacts of income inequalities, a range of new books has appeared. Nobel Laureate, Joseph Stiglitz’s book, The Price of Inequality: How Today’s Divided Society Endangers Our Future (2012), has received considerable attention, including a book review essay in The New York Review of Books (September 27, 2012). Stiglitz, in summary, sees the huge and growing gap between the richest 1% and the rest as the defining characteristic of a sick economy. Other recent books on inequality include: Wilkinson’s Impact of Inequality: How to Make Sick Societies Healthier (2006), Milanovic’s The Haves and Have-Nots (2010), Galbraith’s Inequality and Instability: A Study of the World Economy Just Before the Great Crisis (2012). Although taking different focal points, all agree that inequalities in income and power often are disastrous for citizens and for societies.
Why we should care about inequality has been well documented by the Broadbent Institute’s Equality Project report, and by the Canadian Centre for Policy Alternatives report, Why Inequality Matters (2007). In this paper, we hope to add another dimension or two to the ways inequality matters in Canada by reference to new research.
A basic maxim is that life courses of individuals are shaped by the intersection of their own biographies with historical moments. To understand this, in earlier work, major cohorts of the 20th century were analysed (McDaniel, 2001; 2004) to see what socio-economic historical contexts were in place at crucial ages of transition for each cohort, such as when they moved into adulthood and presumably a job and/or family. We found that the ‘precious generation’ was not the baby boom cohort (born 1946-1966) but the cohort preceding them. The pre-boomer cohort faced a booming job market, low house prices, wages sufficient to support a family, low divorce rates, as well as a developing secure welfare state with strong risk insurance, and significantly, low income inequalities.
The early boomer cohort, by contrast, had to compete intensely for jobs, prices of everything were increasing while wages were not to the same degree, the welfare state was shrinking, and income inequalities were growing. The post-boomer cohort has seen wages stagnating, youth unemployment increasing, the costs of education soaring, the welfare state significantly shrunken, and income inequalities skyrocketing. The question we then asked was what the specific role of income inequalities was in affecting (or not) overall life course well-being – financial, physical and mental.
The study we designed to answer this intriguing question followed individuals in mid-life through significant portions of their lives as they aged into their later years in the U.S. (14 years) and Canada (16 years) for as many cycles of national data as are available. We then connected the mid-life respondents with their older and younger relatives in both quantitative and qualitative analyses. What we found was amazing and surprising. The effect of income inequalities on well-being at every stage of life courses, and particularly at crucial life transition stages (such as the transition to adulthood) was large and prolonged. This effect remains even when controlling for other variables such as gender and socio-economic status. The effect of income inequalities on well-being over life courses was stronger in the U.S. than in Canada, but it was the largest factor contributing to well-being in both countries. With larger income inequalities at any given life course stage or transition, well-being was compromised.
Further, the effects of income inequalities on one generation affect other generations. Greater income inequalities among younger generations, for example, which we found most typically, create well-being challenges for those in mid-life and those who are in later life. Generations tend to "huddle together" in difficult times when income inequalities widen. This contradicts the usual notion that generations compete with each other for scarce resources.
The negative effects of income inequalities on well-being over time of individuals and families in both Canada and the U.S. is strong and clear in this research. In the qualitative phase of the project, the many ways generations connect to help each other emerges again and again. Family generations work to insulate each other against the negative effects of income inequalities and their accompaniments.
What Jean-Jacques Rousseau prophesized in 1754 is even more true in 2012. Inequality matters deeply.
The first man who, having fenced in a piece of land, said "This is mine," and found people naïve enough to believe him, that man was the true founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.
— Jean-Jacques Rousseau, Discourse on Inequality, 1754
Susan McDaniel, FRSC is Canada Research Chair (Tier 1) in Global Population and Life Course as well as Prentice Research Chair and Professor of Sociology at the University of Lethbridge.