Income inequality highest in Rossland: report

“My suspicion is that (income inequality) is being driven by the high number of professionals.” John Buttle, Selkirk economics instructor

Rossland is a community made up of professionals, seasonal tourists and service sector jobs, resulting in income inequality – one of the highest in the Columba Basin.

According to the 2014 State of the Basin Report, released by the Columbia Basin Rural Development Institute (CBRDI), Rossland, along with Fernie and Sparwood, have the highest disparity between before tax incomes among residents.

Jonathan Buttle, economics instructor at Selkirk College and researcher at CBRDI, says in Rossland, it is social demographics that have an impact on how income is distributed.

“My suspicion is that (income inequality) is being driven by the high number of professionals,” he said.

“Looking at the demographics in Rossland, there is a high level of well-educated people compared to the provincial average and having that education provides high income potential.”

Income equality is measured by individual, not by household.

Buttle says that the children and spouses of the professional high income earners feel less pressure to earn high wages.

“There is also a lot of service activity going on up in Rossland with Red Mountain and everything,” he said, adding that there is less income potential in the tourism industry, a large chunk of Rossland’s workforce.

“You’ve got a lot of itinerant workers coming through the resorts and hotels and those will provide lower incomes, like in a roving ski bum situation. They aren’t looking for the high income positions, but rather, jobs with more time to go and play.”

Income inequality is measured by something called the Gini coefficient – a numbered ratio determining how far apart incomes are in a community. In Rossland, the Gini coefficient is .475, a relatively high disparity. Montrose, a community at the bottom of the CBRDI list, has a Gini coefficient closer to .37, showing incomes are more equally distributed. A Gini coefficient of 1 would mean that one person in a community earns all the income, while the rest earn nothing – an extreme example.

In Montrose, chief administrative officer Kevin Chartres, says the low Gini coefficient for the village could have to do with the high number of residents on a fixed income.

“Montrose definitely has a lot of retirees,” he said in an email to the Trail Times. “Thirty-nine per cent of our Home Owner Grant applications are for over 65s. The numbers for the Montrose Recreation Commission’s annual retirees and seniors dinner increase every year.”

In the long term, a high income inequality could eventually lead to less money being invested back into the community, known as economic leakage, and even social unrest.

“Economically, you tend to have higher savings rates with people with higher incomes,” said Buttle. “Some of that income earned in the community is syphoned off. A high level of leakage and you might wind up with social schisms and essentially a disintegration of community, if it were to go far enough.”

Buttle says the situation in Rossland isn’t severe enough at this point to expect a social impact of that nature.

“I don’t want to overplay it, but we are talking about a community where the income distribution is fairly healthy despite the disparity of incomes,” he said.

To view the 2014 Snapshot of the Basin report, visit www.cbrdi.ca.

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