Canadian and American economies compared
Encyclopedia
The economies of Canada
and the United States
are extremely similar because they are both developed countries and are each other's largest trading partners. However, key differences in population makeup, geography, government policies and productivity all result in different economies.
Canada
Canada has one of the highest levels of economic freedom in the world. Today Canada closely resembles the U.S. in its market-oriented economic system, and pattern of production.[10] As of August 2011, Canada's national unemployment rate stood at 7.2%,[11] as the economy continues its recovery from the effects of the 2007-2010 global financial crisis. In May 2010, provincial unemployment rates varied from a low of 5.0% in Saskatchewan to a high of 13.8% in Newfoundland and Labrador.[12] According to the Forbes Global 2000 list of the world's largest companies in 2008, Canada had 69 companies in the list, ranking 5th next to France.[13] As of 2008, Canada’s total government debt burden is the lowest in the G8.
International trade makes up a large part of the Canadian economy, particularly of its natural resources. In 2009, agricultural, energy, forestry and mining exports accounted for about 58% of Canada's total exports.[14] Machinery, equipment, automotive products and other manufactures accounted for a further 38% of exports in 2009.[14] In 2009, exports accounted for approximately 30% of Canada's GDP. The United States is by far its largest trading partner, accounting for about 73% of exports and 63% of imports as of 2009.[15] Canada's combined exports and imports ranked 8th among all nations in 2006.[16]
Canada has considerable natural resources spread across its varied regions. As an example, in British Columbia the forestry industry is of great importance, while the oil and gas industry is important in Alberta, Saskatchewan and Newfoundland and Labrador. Northern Ontario is home to a wide array of mines, while the fishing industry has long been central to the character of the Atlantic provinces, though it has recently been in steep decline. Canada has mineral resources of coal, copper, iron ore, and gold.
These primary industries are increasingly becoming less important to the overall economy. Only some 4% of Canadians are employed in these fields, and they account for 6.2% of GDP.[17] They are still paramount in many parts of the country. Many, if not most, towns in northern Canada, where agriculture is difficult, exist because of a nearby mine or source of timber. Canada is a world leader in the production of many natural resources such as gold, nickel, uranium, diamonds and lead. Several of Canada's largest companies are based in natural resource industries, such as EnCana, Cameco, Goldcorp, and Barrick Gold. The vast majority of these products are exported, mainly to the United States. There are also many secondary and service industries that are directly linked to primary ones. For instance one of Canada's largest manufacturing industries is the pulp and paper sector, which is directly linked to the logging industry.
The large reliance on natural resources has several effects on the Canadian economy and Canadian society. While manufacturing and service industries are easy to standardize, natural resources vary greatly by region. This ensures that differing economic structures developed in each region of Canada, contributing to Canada's strong regionalism. At the same time the vast majority of these resources are exported, integrating Canada closely into the international economy. Howlett and Ramesh argue that the inherent instability of such industries also contributes to greater government intervention in the economy, to reduce the social impact of market changes.[18]
Such industries also raise important questions of sustainability. Despite many decades as a leading producer, there is little risk of depletion. Large discoveries continue to be made, such as the massive nickel find at Voisey's Bay. Moreover the far north remains largely undeveloped as producers await higher prices or new technologies as many operations in this region are not yet cost effective. In recent decades Canadians have become less willing to accept the environmental destruction associated with exploiting natural resources. High wages and Aboriginal land claims have also curbed expansion. Instead many Canadian companies have focused their exploration and expansion activities overseas where prices are lower and governments more accommodating. Canadian companies are increasingly playing important roles in Latin America, Southeast Asia, and Africa.
The exploitation of renewable resources have raised concerns in recent years. After decades of escalating overexploitation the cod fishery all but collapsed in the 1990s, and the Pacific salmon industry also suffered greatly. The logging industry, after many years of activism, has in recent years moved to a more sustainable model.
U.S.A.
The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.7 trillion in 2010,[1] approximately a quarter of nominal global GDP.[15][16] Its GDP at purchasing power parity was also the largest in the world, approximately a fifth of global GDP at purchasing power parity.[15] The U.S. economy also maintains a very high level of output per capita. In 2010, it was estimated to have a per capita GDP (PPP) of $47,284, the 7th highest in the world. The U.S is the largest trading nation in the world. Its three largest trading partners as of 2010 are Canada, China and Mexico.
Historically, the economy of the United States has maintained a stable overall GDP growth rate, a low unemployment rate, and high levels of research and capital investment funded by both national and, because of decreasing saving rates, increasingly by foreign investors. It has been the world's largest national economy since the 1870s[17][18] and remains the world's largest manufacturer, representing 19% of the world's manufacturing output. In 2009, consumer spending, coupled with government health care spending constituted 70% of the American economy.[19] About 30% of the entire world's millionaire population reside in the United States (in 2009).[20] Furthermore, 34% of the world's billionaires are American (in 2011).[21][22] The US is also home to the world's largest stock exchange, the New York Stock Exchange. It also boasts the world's largest gold reserves and the world's largest gold depository, the New York Federal Reserve Bank. The United States is also home to 139 of the world's 500 largest companies, which is almost twice that of any other country.[23] A large contributor to the country's success has also been a very strong and stable currency. The US dollar holds about 60% of world reserves, as compared to its top competitor, the euro, which controls about 24%.
Since the 1960s, the United States economy absorbed savings from the rest of the world. The phenomenon is subject to discussion among economists. The US is by far the most heavily invested-into country in the world, with foreign investments made in the US measuring almost $2.4 trillion, which is more than twice that of any other country.[24] The US is also by far the largest investor in the world, with US investments in foreign countries totaling over $3.3 trillion, which is almost twice that of any other country.[25] Like other developed countries, the United States faces retiring baby boomers who have already begun withdrawing money from Social Security; however, the American population is young and growing when compared to Europe or Japan. The United States public debt is in excess of $14 trillion and continues to grow at a rate of about $5.48 billion each day by direct calculation between December 31, 2010 and July 31, 2011.[26][27] Total public and private debt was $50.2 trillion at the end of the first quarter of 2010, or 3.5 times GDP.[28] Domestic financial assets totaled $131 trillion and domestic financial liabilities totaled $106 trillion.[29] Due in part to the amount of both public and private investment, the economy of the United States is regarded as a type of mixed economy.
The American labor market has attracted immigrants from all over the world and in 2009 ranked 16th in terms of net migration rate. The United States is ranked fourth, down from first in 2008–2009 due to the economic crisis, in the Global Competitiveness Report.[30] The country is one of the world's largest and most influential financial markets, home to major stock and commodities exchanges like NASDAQ, NYSE, AMEX, CME, and PHLX.
Geography of U.S.A.
The land area of the contiguous United States is approximately 1,900 million acres (7,700,000 km2). Alaska, separated from the contiguous United States by Canada, is the largest state at 365 million acres (1,480,000 km2). Hawaii, occupying an archipelago in the central Pacific, southwest of North America, has just over 4 million acres (16,000 km2).[17] The United States is the world's third or fourth largest nation by total area (land and water), ranking behind Russia and Canada and just above or below China. The ranking varies depending on how two territories disputed by China and India are counted and how the total size of the United States is measured: calculations range from 3,676,486 square miles (9,522,055 km2)[18] to 3,717,813 square miles (9,629,091 km2)[19] to 3,794,101 square miles (9,826,676 km2).[1] Including only land area, the United States is third in size behind Russia and China, just ahead of Canada.[20]
Satellite image showing topography of the contiguous United States
The coastal plain of the Atlantic seaboard gives way further inland to deciduous forests and the rolling hills of the Piedmont. The Appalachian Mountains divide the eastern seaboard from the Great Lakes and the grasslands of the Midwest. The Mississippi–Missouri River, the world's fourth longest river system, runs mainly north–south through the heart of the country. The flat, fertile prairie of the Great Plains stretches to the west, interrupted by a highland region in the southeast. The Rocky Mountains, at the western edge of the Great Plains, extend north to south across the country, reaching altitudes higher than 14,000 feet (4,300 m) in Colorado. Farther west are the rocky Great Basin and deserts such as the Mojave. The Sierra Nevada and Cascade mountain ranges run close to the Pacific coast. At 20,320 feet (6,194 m), Alaska's Mount McKinley is the tallest peak in the country and in North America. Active volcanoes are common throughout Alaska's Alexander and Aleutian Islands, and Hawaii consists of volcanic islands. The supervolcano underlying Yellowstone National Park in the Rockies is the continent's largest volcanic feature.[21]
The bald eagle, national bird of the United States since 1782
The United States, with its large size and geographic variety, includes most climate types. To the east of the 100th meridian, the climate ranges from humid continental in the north to humid subtropical in the south. The southern tip of Florida is tropical, as is Hawaii. The Great Plains west of the 100th meridian are semi-arid. Much of the Western mountains are alpine. The climate is arid in the Great Basin, desert in the Southwest, Mediterranean in coastal California, and oceanic in coastal Oregon and Washington and southern Alaska. Most of Alaska is subarctic or polar. Extreme weather is not uncommon—the states bordering the Gulf of Mexico are prone to hurricanes, and most of the world's tornadoes occur within the country, mainly in the Midwest's Tornado Alley.[22]
The U.S. ecology is considered "megadiverse": about 17,000 species of vascular plants occur in the contiguous United States and Alaska, and over 1,800 species of flowering plants are found in Hawaii, few of which occur on the mainland.[23] The United States is home to more than 400 mammal, 750 bird, and 500 reptile and amphibian species.[24] About 91,000 insect species have been described.[25] The Endangered Species Act of 1973 protects threatened and endangered species and their habitats, which are monitored by the United States Fish and Wildlife Service. There are fifty-eight national parks and hundreds of other federally managed parks, forests, and wilderness areas.[26] Altogether, the government owns 28.8% of the country's land area.[27] Most of this is protected, though some is leased for oil and gas drilling, mining, logging, or cattle ranching; 2.4% is used for military purposes.[27]
Geography of Canada
Canada's abundance of natural resources is reflected in their continued importance in the economy of Canada. Major resource-based industries are fisheries, forestry, agriculture, petroleum products and mining.
The fisheries industry has historically been one of Canada's strongest. Unmatched cod stocks on the Grand Banks off Newfoundland launched this industry in the 16th century. Today these stocks are nearly depleted, and their conservation has become a preoccupation of the Atlantic Provinces. On the West Coast, tuna stocks are now restricted. The less depleted (but still greatly diminished) salmon population continues to drive a strong fisheries industry. Canada claims 12 nautical miles (22 km) of territorial sea, a contiguous zone of 24 nautical miles (44 km), an exclusive economic zone of 200 nautical miles (370 km) and a continental shelf of 200 nautical miles (370 km) or to the edge of the continental margin.
Forestry has long been a major industry in Canada. Forest products contribute one fifth of the nation's exports. The provinces with the largest forestry industries are British Columbia, Ontario and Quebec. Fifty-four percent of Canada's land area is covered in forest. The boreal forests account for four-fifths of Canada's forestland.
Albertan grain elevators
Five per cent of Canada's land area is arable, none of which is for permanent crops. Three per cent of Canada's land area is covered by permanent pastures. Canada has 7,200 square kilometres (2,800 mi2) of irrigated land (1993 estimate). Agricultural regions in Canada include the Canadian Prairies, the Lower Mainland and interior plateau of British Columbia, the St. Lawrence Basin and the Canadian Maritimes. Main crops in Canada include flax, oats, wheat, maize, barley, sugar beets and rye in the prairies; flax and maize in Western Ontario; Oats and potatoes in the Maritimes. Fruit and vegetables are grown primarily in the Annapolis Valley of Nova Scotia, Southwestern Ontario, the Golden Horseshoe region of Ontario, along the south coast of Georgian Bay and in the Okanagan Valley of British Columbia. Cattle and sheep are raised in the valleys of British Columbia. Cattle, sheep and hogs are raised on the prairies, cattle and hogs in Western Ontario, sheep and hogs in Quebec, and sheep in the Maritimes. There are significant dairy regions in central Nova Scotia, southern New Brunswick, the St. Lawrence Valley, northeastern Ontario, southwestern Ontario, the Red River valley of Manitoba and the valleys of eastern British Columbia, on Vancouver Island and the Lower mainland.
Fossil fuels are a more recently developed resource in Canada, with oil and gas being extracted from deposits in the Western Canadian Sedimentary Basin since the mid 1900's. While Canada's crude oil deposits are fewer, technological developments in recent decades have opened up oil production in Alberta's Tar Sands to the point where Canada now has some of the largest reserves of oil in the world. In other forms, Canadian industry has long exploited large coal and natural gas reserves.
Canada's mineral resources are diverse and extensive. Across the Canadian Shield and in the north there are large iron, nickel, zinc, copper, gold, lead, molybdenum, and uranium reserves. Large diamond concentrations have been recently developed in the Arctic, making Canada one of the world's largest producers. Throughout the Shield there are many mining towns extracting these minerals. The largest, and best known, is Sudbury, Ontario. Sudbury is an exception to the normal process of forming minerals in the Shield since there is significant evidence that the Sudbury Basin is an ancient meteorite impact crater. The nearby, but less known Temagami Magnetic Anomaly has striking similarities to the Sudbury Basin. Its magnetic anomalies are very similar to the Sudbury Basin, and so it could be a second metal-rich impact crater.[8] The Shield is also covered by vast boreal forests that support an important logging industry.
Canada's many rivers have afforded extensive development of hydroelectric power. Extensively developed in British Columbia, Ontario, Quebec and Labrador, the many dams have long provided a clean, dependable source of energy.
In Canada total tax and non-tax revenue
for every level of government equals about 38.4% of GDP, compared to the U.S. rate of 28.2%.
A significant portion of this tax differential is due to spending differences between the two countries. While the US is running deficits of about 4% of GDP, Canada has consistently posted a budget surplus of around 1% of GDP. Considered in a revenue-neutral context, the differential is much smaller - Canada's total governmental spending was about 36% of GDP vs. 31% in the US. In addition, caution must be used when comparing taxes across countries, due to the different services each offers. Whereas the Canadian healthcare system is 70% government-funded, the US system is just under 50% government-funded (mostly via Medicare
and Medicaid
); adding the additional healthcare-spending burden to the above figures to obtain comparable numbers (+3% for Canada, +7% for the US) gives adjusted expenditures of 38–39% of GDP for each of the two nations.
The taxes are applied the same as well. Canada's income tax system is more heavily biased against the highest income earners, thus while Canada's income tax rate is higher on average, the bottom fifty percent of the population is roughly taxed the same on income as in the United States. However, Canada has a national goods and services tax
of 5% on most purchases, while the U.S. federal government does not, increasing the tax burden on Canadian low-income earners due to the proportional
nature of a sales tax. Canadian GST does not tax food and other essentials and a GST rebate for low-income earners mitigates regressiveness.
In addition to the 5% GST levied on most purchases, some Canadians also pay a provincial sales tax at a rate that varies by province and can be as high as 10%. In Ontario, for example, where the provincial sales tax (PST) is 8%, consumers must pay a total of 13% sales tax on top of the purchase price. (It should be noted that Ontario has eliminated both the PST and GST, replacing them with harmonized sales tax, or HST, of 13%, which changes the sales tax on some items.) There are some purchases which are PST exempt, such as children's clothing. In the U.S., most states impose a sales tax, and cities and counties are often permitted to levy taxes as well, which can exceed 10% on purchases but realistically average at about 6-8%. Five U.S. states do not have any sales tax imposed. The Canadian province of Alberta and all three territories have no provincial or territorial sales tax on top of the GST.
Spending in the United States fluctuated narrowly around 34-38 percent of GDP over the same period. However, starting in 2008 US spending has turned sharply upwards to reach an estimated 42.7% of GDP in 2009 from 39% in 2008. Spending is expected to reach 45% of GDP in 2011, and stabilize at that level.
, a largely government-funded health care
system, and having all major universities receive partial government funding. The United States, however, does have most of its major universities subsidized by state
government. The US also has two national public broadcasters which receive partial government funding, PBS
(television) and NPR (radio).
The greatest difference in social programs is in health care. Contrary to popular belief, the U.S. Government spends as much on health care, 7% of GDP, as the Canadian government does, and total healthcare spending is much higher - 14.6% of GDP in the US vs. 10% in Canada. Canadians, however, receive comparable care to those Americans who receive treatment, and result measures, such as life expectancy
and infant mortality
are better in Canada. The Canadian health care system is said by some also to be attractive to employers, as in Canada health care is mostly paid through employee income taxes, while in the United States most companies choose to extend health benefits to full-time employees. Many employers in Canada do offer employees some additional medical coverage, for non-necessary treatments, and for pharmaceuticals which are not universally-covered by the government-paid health insurance system. The most common complaint regarding the Canadian system are the long lines and waiting periods that have appeared for minor and non-life threatening procedures over the last 15 years, since the introduction of widespread cuts to public funding. Separately, a number of medical tests and screenings are not covered (or due to increasing costs, are no longer covered) by the Canadian health system, forcing patients to pay for these services out of their own pockets. For these reasons, some relatively wealthy Canadians undergo treatment at private healthcare facilities at their own expense, either in Canada, in India, or in other nations to avoid waiting for medical treatment, joining "medical tourists
" from many nations, including the US. Despite these sporadic problems, Canada's healthcare performance is generally on par with, or better than, the US. Furthermore, healthcare coverage is universal for Canadians.
quite closely, any large difference in interest rate
s could quickly lead to large problems for the Canadian economy. The U.S. Federal Reserve and the Bank of Canada
both staunchly believe in fighting inflation
while neither aggressively pursue policies of full employment
. One difference that has emerged recently is that while Canada is still hewing closely to the balanced budget
s policies of the 1990s the United States has moved into a heavy deficit, a policy both countries followed in the 1970s and 1980s.
A good example of this is the automobile industry, which can be clearly demarcated into two periods: before and after the free trade creating Auto Pact of 1969. Before this, Canada had its own production lines creating each of the models that would be sold in Canada. These branch plant factories would only make small production runs of each vehicle, requiring frequent, and expensive retoolings. The factories would also generally be smaller. Fewer varieties were available to Canadian consumers and prices were generally higher. However, these cars were almost all still made by American companies. After the Auto Pact, the industry was transformed as a unified North American market was created. The Canadian factories were rebuilt to be much larger, but to make only one model that would be sold in both countries creating large economies of scale
. The prices of cars fell in Canada as wages and total employment in the automobile sector increased.
After the Second World War tariffs between the two countries gradually fell, with full free trade
being established by the 1988 Canada-United States Free Trade Agreement
. Some industries are still protected, however. These are mostly perceived as sensitive areas such as cultural industries including publishing, television, and newspapers, all of which have stringent foreign ownership rules. Other areas such as the transport industry are also protected with Canadian control of the airlines and trains being viewed as in the national interest.
This tends to create far more monopolies in Canada. For instance the air travel industry in Canada until recently was dominated by a single airline, Air Canada
. Canada has long had to make a trade-off between monopolization and efficiency which the United States has not. The United States can support a number of airlines that are big enough to operate efficiently, and still have a competitive market (although in recent years the competitiveness of the major US airlines declined sharply). Canadians are forced to choose between small inefficient airlines that would be competitive, or monopolistic airlines that will generate their own inefficiency.
. The United States traditionally has had a plethora of banks, some with very few branches. The U.S. system continues to support the creation of numerous small banks through both government-sponsored institutions like the Federal Home Loan Banks
and similar non-government entities like Bankers' bank
, that does not exist in markets like Canada. This has led to a more competitive but less stable system, with many thousands of banks having collapsed during U.S. history. Canada has always had far fewer banks per capita, but the banks have been larger and quickly expanded nationwide. Canadian banks have many branches and distributed assets and Canada has only had one major bank, the Home Bank
, collapse in its history. The Glass–Steagall Act and other laws and regulations prevented U.S. banks from becoming too large. Changes allowed U.S. banks to grow and the Glass–Steagall Act was repealed in 1999. This concentration of banks in Canada relative to the U.S. has continued to this day. In 2002 in Canada the six largest banks controlled 90 percent of Canadian domestic banking assets, while the five largest U.S. banks controlled only 9.7 percent of their domestic assets.
There are several subsidies in the U.S. system that do not exist in Canada. In terms of direct impact to consumers, mortgage interest is a tax deductible in the U.S. (a market distortion
designed to encourage home ownership), but is not in Canada. The U.S. also indirectly subsidizes mortgages through a plethora of government sponsored enterprises. The U.S. entities do much more than provide mortgage insurance
, and use their own huge balance sheets to purchase mortgages. The Canada Mortgage and Housing Corporation
historically was mainly limited to providing mortgage insurance, although now facilitates funding of mortgages also through the Canada Mortgage Bond program, which has also grown to be quite large.
Canada's banks have traditionally been fierce competitors internationally, though today America's largest banks have a more significant presence overseas. In part the history of this situation is rooted in Canada's smaller market. For Canadian banks international exchange was always a central concern. For American banks domestic banking was paramount. In the 1920s in the American economic centre of New York
Canadian banks dominated the international banking sector due to greater expertise and focus. Thus Canadian banks came to have far wider spread networks. Much of the banking system in the West Indies is controlled by the Canadian banks. Canadian banks also have far more of a presence in the United States than American firms do in Canada. In part this is because American firms cannot buy Canadian banks, but Canadian banks have, at times, been able to buy American ones. Since the large Canadian banks already operated nationwide chains of a thousand or more branches, they find it relatively easy to integrate smaller chains of American banks into their systems.
In recent years this advantage has disappeared as American banks have also grown substantially in size and today have many branches, and the large American banks are now operating over 2000 branches each. In fact, the ten largest banks in North America today are all U.S.-based. Overseas, American banks have a larger presence than Canadian banks. Only Royal Bank of Canada
's RBC Capital Markets
division has a global scale that even approaches that of the U.S. investment banks.
Until recently, Canadian banks had historically been far less strictly regulated than their American counterparts. Canadian banks had, until the Gramm-Leach-Bliley Act
in 1999, been freer to participate in the financial planning and insurance industries than their American counterparts. In the 1980s and 1990s, the large Canadian banks acquired almost all significant trust and brokerage companies in Canada. They also started their own mutual fund and insurance businesses. As a result, Canadian banks broadened out to become supermarkets of financial services, a trend that has started later in the U.S. market. The average U.S. bank is a domestic banking operation. The large Canadian banks are financial conglomerates, with large domestic Canadian banking operations.
Bank regulation in the United States is highly fragmented compared to Canada which has only OSFI as the bank regulator (although credit unions are provincially regulated). In the U.S., a bank's primary regulator could be the Federal Reserve Board, the Office of the Comptroller of the Currency
, the Office of Thrift Supervision
, or any one of 50 state regulatory bodies, depending on the charter of the bank. And within the Federal Reserve Board, there are 12 districts with 12 different regulatory staffing groups. The U.S. is also one of the most highly regulated banking environments in the world; however, many of the regulations are not safety and soundness related, but are instead focused on privacy, disclosure, fraud prevention, anti-money laundering, anti-terrorism, anti-usury
lending, and promoting lending to lower-income segments. Even individual cities enact their own financial regulation laws (for example, for usury
lending). Canadian banks had not faced laws against usury
, or interest guarantees on deposits. Return on equity
for Canadian banks were generally comparable to U.S. banks (with return on assets lower, but with Canadian banks using more leverage to compensate).
Credit unions in Canada are tax-paying entities, while they have been tax-exempt in the U.S. However, as restrictions on the size of credit unions in the U.S. have eased, the American Bankers Association
has been lobbying to have credit unions taxed to level the playing field.
had fallen low enough that it more than made up for price differences. Today prices are somewhat lower in Canada for at least one item: the Big Mac Index
shows that in January 2006 a Big Mac
cost $3.15 in the States and only $3.01 in Canada http://www.economist.com/markets/bigmac/displayStory.cfm?story_id=5389856 (both figures in USD). In October, 2007 a strong Canadian dollar rose to parity with a weak American dollar, benefiting Canadian travelers and consumers. However, this was not favorable to Canadian manufacturers and exporters who do most of their business south of the border. As the economic conditions decayed in 2008, a flight to safety in the American dollar and lower prices for Canadian commodities reversed some of the growth in the Canadian dollar relative to the American dollar.
Fuel
prices have always been higher in Canada, even though Canada is a net exporter of energy. This is because Canada, unlike many oil producers, does not heavily subsidize fuel. Prices are based on the world market price.
(particularly electronics
and computer
), finance
, and service sectors. Industries where Canada is more productive than the U.S. are the construction
and natural resources
sectors with Canadian workers achieving 129% relative productivity. .
The productivity gap had been even larger in the 1950s but the difference has been narrowing, aided by the elimination of the smaller market problem through free trade. The gap was still closing somewhat in the 1980s but at a much slower pace than in the 1960s. From 1961 to 1973 labour productivity rose annually by 3.3 percent in Canada and 1.7 percent in the United States. From 1973 to 1995 productivity growth was 1.1% in Canada and 0.8% in the United States.
The productivity gap began to widen again in the 1990s, particularly in the manufacturing sector. By 2000, this was called Canada's "Excellence Gap" by the Chief Economist of Canadian Manufacturers & Exporters. The United States has the second-highest productivity of the G8
countries, while Canada's is 5th based on the 1997 estimate.
Five main reasons for the productivity gap: the lower capital intensity of economic activity in Canada; an innovation gap in Canada relative to the United States; Canada’s relatively underdeveloped high-tech sector; less developed human capital in Canada in terms of proportionately fewer university graduates and scientists and engineers in research and development; and more limited economies of scale and scope in Canada.
model of regulating trade unions and collective bargaining, though legislation regulating organized labour principally falls under provincial jurisdiction in Canada. This North American model differs significantly from patterns of organized labour found in other developed countries.
economist, found that a 0.9% difference was caused by the differing measurement systems. Statistics Canada has also acknowledged this, and it now publishes a second unemployment rate using the same methodology as the Americans. Using the American methodology, the June 2008 Canadian unemployment rate was 5.3%, which was 0.2% lower than the American rate.
Prior to the identification of the difference in methodologies, some politicians claimed that higher income taxes, restrictive labour laws, unions, universal healthcare, and greater unemployment benefits in Canada were causing a higher actual unemployment rate. However, when unemployment insurance and welfare were sharply cut in many parts of Canada during the 1990s there was little gain in employment relative to the Americans. Others attempted to explain the reported difference in terms of the large number of seasonal workers in trades such as fishing
and logging
who are unemployed for a portion of the year.
(50th percentile) worker has essentially the same purchasing power in each nation. In terms of purchasing power parity
, the most recent statistics from the IMF
has Canada (US $35,494) lower than that in the United States (US $43,444).
In the late 1990s, the GDP gap widened. In this period, GDP increased by 5% annually in the United States, and 2% in Canada. Earlier, it had been narrowing between 1961 and 1995. However, it was closing at a much faster rate in the 1960s than the early 1990s. From 1961 to 1973, real GDP grew at an average annual rate of 5.5% in Canada and 4.0% in the United States. From 1973 to 1995 it was 2.6% in Canada and 2.3% in the USA. http://www.imf.org/external/pubs/ft/fandd/1997/12/pdf/salgado.pdf Canada was not hit as hard by the economic downturn in 2001, however, so cumulative growth in real GDP has been almost exactly the same amount in each country over the last 15 years.
Human Development Index
ranks the United States (fourth) higher than Canada (eighth). Other independent groups, such as the Economist
have ranked each of Canada's four largest cities as better places to live than any American city. In their 2005 ranking, Toronto, Montreal, Vancouver and Ottawa ranked within the top 10 livable cities while the highest ranked American cities, Cleveland and Pittsburgh, were tied at 26th place.
Canada ranks higher than the U.S. in statistics such as life expectancy
(80.22 years in Canada versus 77.85 in the U.S.) and infant mortality
(4.75 Canadian deaths per 1000 versus 6.50 in the States). Both countries rank highly with 99% literacy
rates. The United States has more major consumer goods per capita than Canada. For instance, while Canada had only 297 computers per 1000 people in 1996, the United States had 403.
Average income is slightly higher in the United States. However, the gap in median incomes is minor. In terms of racial disparity, United States African-Americans and Hispanic
s have a lower standard of living than the rest of the population; in Canada, Aboriginal peoples
and Black Canadian
s are disproportionately likely to live in poverty, although these groups represent 25% of the US population and only 6% of Canada's. In both countries, recent immigrants tend to have lower earnings than more established residents. Canada's French-Canadians also used to be a poorer group, but since the Quiet Revolution
in the 1960s this has been partially remedied.
The United States measures poverty, while Canada does not have an official measure (see Poverty in Canada#Measures of poverty in Canada), although Statistics Canada
measures something called the Low-Income Cutoffs, the statistical agency repeatedly states that this is not a poverty measure (it is an income dispersion measure like the Gini coefficient
). In the United States the poverty line is set at triple the "minimum adequate food budget." When a common measure is used, such as that of the Luxembourg Income Study
, the United States has higher rates. The LIS reports that Canada has a poverty rate of 15.4% and the United States 18.7%. http://www.cfc-efc.ca/docs/ccsd/00000324.htm In both countries lower incomes are found in those most affected by poverty include single-parent families and single elderly people. In addition, because of social policies such as universal healthcare, the poverty stricken in Canada maintain a higher quality of life.
It may be said the cost of absorbing lower skilled, poorer workers in the US skews comparison studies downward for the United States (see also Economic impact of illegal immigrants in the United States
). In recent years, what otherwise would have been a reduction in the low-income cutoff, was more than offset by the impact of immigration. According to a 2003 study by Statistics Canada "The rise in the low-income rates in the three major Canadian cities, and in Ontario and B.C. during the 1990s in particular, was largely concentrated among the immigrant population. Basically, low-income rates have been falling over the past two decades among the Canadian born, and rising among immigrants." A more recent January 2007 study by Statistics Canada explains that the low-income rates of new immigrants has deteriorated by yet another significant amount from 2000 to 2004 (see also Economic impact of immigration to Canada
).
rates in both countries are very high compared to worldwide (or even developed countries), the United States has a slightly higher level of home ownership at 68.9% http://www.census.gov/hhes/www/housing/hvs/annual05/ann05t12.html versus 67% for Canada http://realtytimes.com/rtcpages/20050310_canmarket.htm. This number has converged in recent years.
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
are extremely similar because they are both developed countries and are each other's largest trading partners. However, key differences in population makeup, geography, government policies and productivity all result in different economies.
Canada
Canada has one of the highest levels of economic freedom in the world. Today Canada closely resembles the U.S. in its market-oriented economic system, and pattern of production.[10] As of August 2011, Canada's national unemployment rate stood at 7.2%,[11] as the economy continues its recovery from the effects of the 2007-2010 global financial crisis. In May 2010, provincial unemployment rates varied from a low of 5.0% in Saskatchewan to a high of 13.8% in Newfoundland and Labrador.[12] According to the Forbes Global 2000 list of the world's largest companies in 2008, Canada had 69 companies in the list, ranking 5th next to France.[13] As of 2008, Canada’s total government debt burden is the lowest in the G8.
International trade makes up a large part of the Canadian economy, particularly of its natural resources. In 2009, agricultural, energy, forestry and mining exports accounted for about 58% of Canada's total exports.[14] Machinery, equipment, automotive products and other manufactures accounted for a further 38% of exports in 2009.[14] In 2009, exports accounted for approximately 30% of Canada's GDP. The United States is by far its largest trading partner, accounting for about 73% of exports and 63% of imports as of 2009.[15] Canada's combined exports and imports ranked 8th among all nations in 2006.[16]
Canada has considerable natural resources spread across its varied regions. As an example, in British Columbia the forestry industry is of great importance, while the oil and gas industry is important in Alberta, Saskatchewan and Newfoundland and Labrador. Northern Ontario is home to a wide array of mines, while the fishing industry has long been central to the character of the Atlantic provinces, though it has recently been in steep decline. Canada has mineral resources of coal, copper, iron ore, and gold.
These primary industries are increasingly becoming less important to the overall economy. Only some 4% of Canadians are employed in these fields, and they account for 6.2% of GDP.[17] They are still paramount in many parts of the country. Many, if not most, towns in northern Canada, where agriculture is difficult, exist because of a nearby mine or source of timber. Canada is a world leader in the production of many natural resources such as gold, nickel, uranium, diamonds and lead. Several of Canada's largest companies are based in natural resource industries, such as EnCana, Cameco, Goldcorp, and Barrick Gold. The vast majority of these products are exported, mainly to the United States. There are also many secondary and service industries that are directly linked to primary ones. For instance one of Canada's largest manufacturing industries is the pulp and paper sector, which is directly linked to the logging industry.
The large reliance on natural resources has several effects on the Canadian economy and Canadian society. While manufacturing and service industries are easy to standardize, natural resources vary greatly by region. This ensures that differing economic structures developed in each region of Canada, contributing to Canada's strong regionalism. At the same time the vast majority of these resources are exported, integrating Canada closely into the international economy. Howlett and Ramesh argue that the inherent instability of such industries also contributes to greater government intervention in the economy, to reduce the social impact of market changes.[18]
Such industries also raise important questions of sustainability. Despite many decades as a leading producer, there is little risk of depletion. Large discoveries continue to be made, such as the massive nickel find at Voisey's Bay. Moreover the far north remains largely undeveloped as producers await higher prices or new technologies as many operations in this region are not yet cost effective. In recent decades Canadians have become less willing to accept the environmental destruction associated with exploiting natural resources. High wages and Aboriginal land claims have also curbed expansion. Instead many Canadian companies have focused their exploration and expansion activities overseas where prices are lower and governments more accommodating. Canadian companies are increasingly playing important roles in Latin America, Southeast Asia, and Africa.
The exploitation of renewable resources have raised concerns in recent years. After decades of escalating overexploitation the cod fishery all but collapsed in the 1990s, and the Pacific salmon industry also suffered greatly. The logging industry, after many years of activism, has in recent years moved to a more sustainable model.
U.S.A.
The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.7 trillion in 2010,[1] approximately a quarter of nominal global GDP.[15][16] Its GDP at purchasing power parity was also the largest in the world, approximately a fifth of global GDP at purchasing power parity.[15] The U.S. economy also maintains a very high level of output per capita. In 2010, it was estimated to have a per capita GDP (PPP) of $47,284, the 7th highest in the world. The U.S is the largest trading nation in the world. Its three largest trading partners as of 2010 are Canada, China and Mexico.
Historically, the economy of the United States has maintained a stable overall GDP growth rate, a low unemployment rate, and high levels of research and capital investment funded by both national and, because of decreasing saving rates, increasingly by foreign investors. It has been the world's largest national economy since the 1870s[17][18] and remains the world's largest manufacturer, representing 19% of the world's manufacturing output. In 2009, consumer spending, coupled with government health care spending constituted 70% of the American economy.[19] About 30% of the entire world's millionaire population reside in the United States (in 2009).[20] Furthermore, 34% of the world's billionaires are American (in 2011).[21][22] The US is also home to the world's largest stock exchange, the New York Stock Exchange. It also boasts the world's largest gold reserves and the world's largest gold depository, the New York Federal Reserve Bank. The United States is also home to 139 of the world's 500 largest companies, which is almost twice that of any other country.[23] A large contributor to the country's success has also been a very strong and stable currency. The US dollar holds about 60% of world reserves, as compared to its top competitor, the euro, which controls about 24%.
Since the 1960s, the United States economy absorbed savings from the rest of the world. The phenomenon is subject to discussion among economists. The US is by far the most heavily invested-into country in the world, with foreign investments made in the US measuring almost $2.4 trillion, which is more than twice that of any other country.[24] The US is also by far the largest investor in the world, with US investments in foreign countries totaling over $3.3 trillion, which is almost twice that of any other country.[25] Like other developed countries, the United States faces retiring baby boomers who have already begun withdrawing money from Social Security; however, the American population is young and growing when compared to Europe or Japan. The United States public debt is in excess of $14 trillion and continues to grow at a rate of about $5.48 billion each day by direct calculation between December 31, 2010 and July 31, 2011.[26][27] Total public and private debt was $50.2 trillion at the end of the first quarter of 2010, or 3.5 times GDP.[28] Domestic financial assets totaled $131 trillion and domestic financial liabilities totaled $106 trillion.[29] Due in part to the amount of both public and private investment, the economy of the United States is regarded as a type of mixed economy.
The American labor market has attracted immigrants from all over the world and in 2009 ranked 16th in terms of net migration rate. The United States is ranked fourth, down from first in 2008–2009 due to the economic crisis, in the Global Competitiveness Report.[30] The country is one of the world's largest and most influential financial markets, home to major stock and commodities exchanges like NASDAQ, NYSE, AMEX, CME, and PHLX.
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Geography
The land area of the contiguous United States is approximately 1,900 million acres (7,700,000 km2). Alaska, separated from the contiguous United States by Canada, is the largest state at 365 million acres (1,480,000 km2). Hawaii, occupying an archipelago in the central Pacific, southwest of North America, has just over 4 million acres (16,000 km2).[17] The United States is the world's third or fourth largest nation by total area (land and water), ranking behind Russia and Canada and just above or below China. The ranking varies depending on how two territories disputed by China and India are counted and how the total size of the United States is measured: calculations range from 3,676,486 square miles (9,522,055 km2)[18] to 3,717,813 square miles (9,629,091 km2)[19] to 3,794,101 square miles (9,826,676 km2).[1] Including only land area, the United States is third in size behind Russia and China, just ahead of Canada.[20]
Satellite image showing topography of the contiguous United States
The coastal plain of the Atlantic seaboard gives way further inland to deciduous forests and the rolling hills of the Piedmont. The Appalachian Mountains divide the eastern seaboard from the Great Lakes and the grasslands of the Midwest. The Mississippi–Missouri River, the world's fourth longest river system, runs mainly north–south through the heart of the country. The flat, fertile prairie of the Great Plains stretches to the west, interrupted by a highland region in the southeast. The Rocky Mountains, at the western edge of the Great Plains, extend north to south across the country, reaching altitudes higher than 14,000 feet (4,300 m) in Colorado. Farther west are the rocky Great Basin and deserts such as the Mojave. The Sierra Nevada and Cascade mountain ranges run close to the Pacific coast. At 20,320 feet (6,194 m), Alaska's Mount McKinley is the tallest peak in the country and in North America. Active volcanoes are common throughout Alaska's Alexander and Aleutian Islands, and Hawaii consists of volcanic islands. The supervolcano underlying Yellowstone National Park in the Rockies is the continent's largest volcanic feature.[21]
The bald eagle, national bird of the United States since 1782
The United States, with its large size and geographic variety, includes most climate types. To the east of the 100th meridian, the climate ranges from humid continental in the north to humid subtropical in the south. The southern tip of Florida is tropical, as is Hawaii. The Great Plains west of the 100th meridian are semi-arid. Much of the Western mountains are alpine. The climate is arid in the Great Basin, desert in the Southwest, Mediterranean in coastal California, and oceanic in coastal Oregon and Washington and southern Alaska. Most of Alaska is subarctic or polar. Extreme weather is not uncommon—the states bordering the Gulf of Mexico are prone to hurricanes, and most of the world's tornadoes occur within the country, mainly in the Midwest's Tornado Alley.[22]
The U.S. ecology is considered "megadiverse": about 17,000 species of vascular plants occur in the contiguous United States and Alaska, and over 1,800 species of flowering plants are found in Hawaii, few of which occur on the mainland.[23] The United States is home to more than 400 mammal, 750 bird, and 500 reptile and amphibian species.[24] About 91,000 insect species have been described.[25] The Endangered Species Act of 1973 protects threatened and endangered species and their habitats, which are monitored by the United States Fish and Wildlife Service. There are fifty-eight national parks and hundreds of other federally managed parks, forests, and wilderness areas.[26] Altogether, the government owns 28.8% of the country's land area.[27] Most of this is protected, though some is leased for oil and gas drilling, mining, logging, or cattle ranching; 2.4% is used for military purposes.[27]
Geography of Canada
Canada's abundance of natural resources is reflected in their continued importance in the economy of Canada. Major resource-based industries are fisheries, forestry, agriculture, petroleum products and mining.
The fisheries industry has historically been one of Canada's strongest. Unmatched cod stocks on the Grand Banks off Newfoundland launched this industry in the 16th century. Today these stocks are nearly depleted, and their conservation has become a preoccupation of the Atlantic Provinces. On the West Coast, tuna stocks are now restricted. The less depleted (but still greatly diminished) salmon population continues to drive a strong fisheries industry. Canada claims 12 nautical miles (22 km) of territorial sea, a contiguous zone of 24 nautical miles (44 km), an exclusive economic zone of 200 nautical miles (370 km) and a continental shelf of 200 nautical miles (370 km) or to the edge of the continental margin.
Forestry has long been a major industry in Canada. Forest products contribute one fifth of the nation's exports. The provinces with the largest forestry industries are British Columbia, Ontario and Quebec. Fifty-four percent of Canada's land area is covered in forest. The boreal forests account for four-fifths of Canada's forestland.
Albertan grain elevators
Five per cent of Canada's land area is arable, none of which is for permanent crops. Three per cent of Canada's land area is covered by permanent pastures. Canada has 7,200 square kilometres (2,800 mi2) of irrigated land (1993 estimate). Agricultural regions in Canada include the Canadian Prairies, the Lower Mainland and interior plateau of British Columbia, the St. Lawrence Basin and the Canadian Maritimes. Main crops in Canada include flax, oats, wheat, maize, barley, sugar beets and rye in the prairies; flax and maize in Western Ontario; Oats and potatoes in the Maritimes. Fruit and vegetables are grown primarily in the Annapolis Valley of Nova Scotia, Southwestern Ontario, the Golden Horseshoe region of Ontario, along the south coast of Georgian Bay and in the Okanagan Valley of British Columbia. Cattle and sheep are raised in the valleys of British Columbia. Cattle, sheep and hogs are raised on the prairies, cattle and hogs in Western Ontario, sheep and hogs in Quebec, and sheep in the Maritimes. There are significant dairy regions in central Nova Scotia, southern New Brunswick, the St. Lawrence Valley, northeastern Ontario, southwestern Ontario, the Red River valley of Manitoba and the valleys of eastern British Columbia, on Vancouver Island and the Lower mainland.
Fossil fuels are a more recently developed resource in Canada, with oil and gas being extracted from deposits in the Western Canadian Sedimentary Basin since the mid 1900's. While Canada's crude oil deposits are fewer, technological developments in recent decades have opened up oil production in Alberta's Tar Sands to the point where Canada now has some of the largest reserves of oil in the world. In other forms, Canadian industry has long exploited large coal and natural gas reserves.
Canada's mineral resources are diverse and extensive. Across the Canadian Shield and in the north there are large iron, nickel, zinc, copper, gold, lead, molybdenum, and uranium reserves. Large diamond concentrations have been recently developed in the Arctic, making Canada one of the world's largest producers. Throughout the Shield there are many mining towns extracting these minerals. The largest, and best known, is Sudbury, Ontario. Sudbury is an exception to the normal process of forming minerals in the Shield since there is significant evidence that the Sudbury Basin is an ancient meteorite impact crater. The nearby, but less known Temagami Magnetic Anomaly has striking similarities to the Sudbury Basin. Its magnetic anomalies are very similar to the Sudbury Basin, and so it could be a second metal-rich impact crater.[8] The Shield is also covered by vast boreal forests that support an important logging industry.
Canada's many rivers have afforded extensive development of hydroelectric power. Extensively developed in British Columbia, Ontario, Quebec and Labrador, the many dams have long provided a clean, dependable source of energy.
Taxation
Non-tax revenue
Non-tax revenue or non-tax receipts are government revenue not generated from taxes. Examples include:* Aid from another level of government - for example, in the United States, federal grants may be considered non-tax revenue to the receiving states, and equalization payments* Aid from abroad *...
for every level of government equals about 38.4% of GDP, compared to the U.S. rate of 28.2%.
A significant portion of this tax differential is due to spending differences between the two countries. While the US is running deficits of about 4% of GDP, Canada has consistently posted a budget surplus of around 1% of GDP. Considered in a revenue-neutral context, the differential is much smaller - Canada's total governmental spending was about 36% of GDP vs. 31% in the US. In addition, caution must be used when comparing taxes across countries, due to the different services each offers. Whereas the Canadian healthcare system is 70% government-funded, the US system is just under 50% government-funded (mostly via Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
and Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
); adding the additional healthcare-spending burden to the above figures to obtain comparable numbers (+3% for Canada, +7% for the US) gives adjusted expenditures of 38–39% of GDP for each of the two nations.
The taxes are applied the same as well. Canada's income tax system is more heavily biased against the highest income earners, thus while Canada's income tax rate is higher on average, the bottom fifty percent of the population is roughly taxed the same on income as in the United States. However, Canada has a national goods and services tax
Goods and Services Tax (Canada)
The Goods and Services Tax is a multi-level value added tax introduced in Canada on January 1, 1991, by then Prime Minister Brian Mulroney and his finance minister Michael Wilson. The GST replaced a hidden 13.5% Manufacturers' Sales Tax ; Mulroney claimed the GST was implemented because the MST...
of 5% on most purchases, while the U.S. federal government does not, increasing the tax burden on Canadian low-income earners due to the proportional
Proportional tax
A proportional tax is a tax imposed so that the tax rate is fixed. The amount of the tax is in proportion to the amount subject to taxation. "Proportional" describes a distribution effect on income or expenditure, referring to the way the rate remains consistent , where the marginal tax rate is...
nature of a sales tax. Canadian GST does not tax food and other essentials and a GST rebate for low-income earners mitigates regressiveness.
In addition to the 5% GST levied on most purchases, some Canadians also pay a provincial sales tax at a rate that varies by province and can be as high as 10%. In Ontario, for example, where the provincial sales tax (PST) is 8%, consumers must pay a total of 13% sales tax on top of the purchase price. (It should be noted that Ontario has eliminated both the PST and GST, replacing them with harmonized sales tax, or HST, of 13%, which changes the sales tax on some items.) There are some purchases which are PST exempt, such as children's clothing. In the U.S., most states impose a sales tax, and cities and counties are often permitted to levy taxes as well, which can exceed 10% on purchases but realistically average at about 6-8%. Five U.S. states do not have any sales tax imposed. The Canadian province of Alberta and all three territories have no provincial or territorial sales tax on top of the GST.
Government Spending
Government spending at all levels (federal, state/provincial and local) has traditionally been higher in Canada than the United States. In Canada, government spending as a percentage of GDP peaked at 53% in 1992. Since 1992 spending has steadily declined in Canada to just below 40 percent in 2008.Spending in the United States fluctuated narrowly around 34-38 percent of GDP over the same period. However, starting in 2008 US spending has turned sharply upwards to reach an estimated 42.7% of GDP in 2009 from 39% in 2008. Spending is expected to reach 45% of GDP in 2011, and stabilize at that level.
Social programs
For its higher taxes Canada has a larger system of social programs than the United States. This includes having a national broadcaster in the CBCCanadian Broadcasting Corporation
The Canadian Broadcasting Corporation, commonly known as CBC and officially as CBC/Radio-Canada, is a Canadian crown corporation that serves as the national public radio and television broadcaster...
, a largely government-funded health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
system, and having all major universities receive partial government funding. The United States, however, does have most of its major universities subsidized by state
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
government. The US also has two national public broadcasters which receive partial government funding, PBS
Public Broadcasting Service
The Public Broadcasting Service is an American non-profit public broadcasting television network with 354 member TV stations in the United States which hold collective ownership. Its headquarters is in Arlington, Virginia....
(television) and NPR (radio).
The greatest difference in social programs is in health care. Contrary to popular belief, the U.S. Government spends as much on health care, 7% of GDP, as the Canadian government does, and total healthcare spending is much higher - 14.6% of GDP in the US vs. 10% in Canada. Canadians, however, receive comparable care to those Americans who receive treatment, and result measures, such as life expectancy
Life expectancy
Life expectancy is the expected number of years of life remaining at a given age. It is denoted by ex, which means the average number of subsequent years of life for someone now aged x, according to a particular mortality experience...
and infant mortality
Infant mortality
Infant mortality is defined as the number of infant deaths per 1000 live births. Traditionally, the most common cause worldwide was dehydration from diarrhea. However, the spreading information about Oral Re-hydration Solution to mothers around the world has decreased the rate of children dying...
are better in Canada. The Canadian health care system is said by some also to be attractive to employers, as in Canada health care is mostly paid through employee income taxes, while in the United States most companies choose to extend health benefits to full-time employees. Many employers in Canada do offer employees some additional medical coverage, for non-necessary treatments, and for pharmaceuticals which are not universally-covered by the government-paid health insurance system. The most common complaint regarding the Canadian system are the long lines and waiting periods that have appeared for minor and non-life threatening procedures over the last 15 years, since the introduction of widespread cuts to public funding. Separately, a number of medical tests and screenings are not covered (or due to increasing costs, are no longer covered) by the Canadian health system, forcing patients to pay for these services out of their own pockets. For these reasons, some relatively wealthy Canadians undergo treatment at private healthcare facilities at their own expense, either in Canada, in India, or in other nations to avoid waiting for medical treatment, joining "medical tourists
Medical tourism
Medical tourism is a term initially coined by travel agencies and the mass media to describe the rapidly-growing practice of travelling across international borders to obtain health care...
" from many nations, including the US. Despite these sporadic problems, Canada's healthcare performance is generally on par with, or better than, the US. Furthermore, healthcare coverage is universal for Canadians.
Anti-trust
The United States has since the Sherman Anti-Trust Act been strongly opposed to monopolies. In Canada this has been far less of an issue, and Canada has never had rigorously enforced rules against monopolization, and in certain situations the government has even encouraged monopolies. However, the Canadian government is more willing to interfere in the operations of large, integrated firms where they appear to be acting against the public interest, offsetting in part one reason that American law prevents large-scale monopolization.Fiscal and monetary policy
Canada is generally forced to follow American monetary policyMonetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
quite closely, any large difference in interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s could quickly lead to large problems for the Canadian economy. The U.S. Federal Reserve and the Bank of Canada
Bank of Canada
The Bank of Canada is Canada's central bank and "lender of last resort". The Bank was created by an Act of Parliament on July 3, 1934 as a privately owned corporation. In 1938, the Bank became a Crown corporation belonging to the Government of Canada...
both staunchly believe in fighting inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
while neither aggressively pursue policies of full employment
Full employment
In macroeconomics, full employment is a condition of the national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so....
. One difference that has emerged recently is that while Canada is still hewing closely to the balanced budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
s policies of the 1990s the United States has moved into a heavy deficit, a policy both countries followed in the 1970s and 1980s.
Market size
One of the most important differences historically between Canada and the United States was the size of the two markets. When both nations had high tariffs the two countries did not have a unified market. Canada's smaller market led to higher prices and greater inefficiency.A good example of this is the automobile industry, which can be clearly demarcated into two periods: before and after the free trade creating Auto Pact of 1969. Before this, Canada had its own production lines creating each of the models that would be sold in Canada. These branch plant factories would only make small production runs of each vehicle, requiring frequent, and expensive retoolings. The factories would also generally be smaller. Fewer varieties were available to Canadian consumers and prices were generally higher. However, these cars were almost all still made by American companies. After the Auto Pact, the industry was transformed as a unified North American market was created. The Canadian factories were rebuilt to be much larger, but to make only one model that would be sold in both countries creating large economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
. The prices of cars fell in Canada as wages and total employment in the automobile sector increased.
After the Second World War tariffs between the two countries gradually fell, with full free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
being established by the 1988 Canada-United States Free Trade Agreement
Canada-United States Free Trade Agreement
The Free Trade Agreement was a trade agreement signed by Canada and the United States on October 4, 1988. The agreement, finalized by October 1987, removed several trade restrictions in stages over a ten year period, and resulted in a great increase in cross-border trade...
. Some industries are still protected, however. These are mostly perceived as sensitive areas such as cultural industries including publishing, television, and newspapers, all of which have stringent foreign ownership rules. Other areas such as the transport industry are also protected with Canadian control of the airlines and trains being viewed as in the national interest.
This tends to create far more monopolies in Canada. For instance the air travel industry in Canada until recently was dominated by a single airline, Air Canada
Air Canada
Air Canada is the flag carrier and largest airline of Canada. The airline, founded in 1936, provides scheduled and charter air transport for passengers and cargo to 178 destinations worldwide. It is the world's tenth largest passenger airline by number of destinations, and the airline is a...
. Canada has long had to make a trade-off between monopolization and efficiency which the United States has not. The United States can support a number of airlines that are big enough to operate efficiently, and still have a competitive market (although in recent years the competitiveness of the major US airlines declined sharply). Canadians are forced to choose between small inefficient airlines that would be competitive, or monopolistic airlines that will generate their own inefficiency.
Banking
Canada and the United States have long had very different banking systems. The United States' was copied from England's, while Canada's was taken from ScotlandScotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
. The United States traditionally has had a plethora of banks, some with very few branches. The U.S. system continues to support the creation of numerous small banks through both government-sponsored institutions like the Federal Home Loan Banks
Federal Home Loan Banks
The Federal Home Loan Banks are 12 U.S. government-sponsored banks that provide stable, on-demand, low-cost funding to American financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending...
and similar non-government entities like Bankers' bank
Bankers' bank
A bankers' bank is a financial institution that provides financial services to community banks in the United States of America. Bankers' banks are owned by investor banks and may provide services only to community banks....
, that does not exist in markets like Canada. This has led to a more competitive but less stable system, with many thousands of banks having collapsed during U.S. history. Canada has always had far fewer banks per capita, but the banks have been larger and quickly expanded nationwide. Canadian banks have many branches and distributed assets and Canada has only had one major bank, the Home Bank
Home Bank
The Home Bank of Canada was a Canadian bank that was incorporated July 10, 1903 in Toronto. It failed August 18, 1923 and was the subject of a Canadian Royal Commission initiated by Prime Minister Mackenzie King in 1924....
, collapse in its history. The Glass–Steagall Act and other laws and regulations prevented U.S. banks from becoming too large. Changes allowed U.S. banks to grow and the Glass–Steagall Act was repealed in 1999. This concentration of banks in Canada relative to the U.S. has continued to this day. In 2002 in Canada the six largest banks controlled 90 percent of Canadian domestic banking assets, while the five largest U.S. banks controlled only 9.7 percent of their domestic assets.
There are several subsidies in the U.S. system that do not exist in Canada. In terms of direct impact to consumers, mortgage interest is a tax deductible in the U.S. (a market distortion
Market distortion
In neoclassical economics, a market distortion is any event in which a market reaches a market clearing price for an item that is substantially different from the price that a market would achieve while operating under conditions of perfect competition and state enforcement of legal contracts and...
designed to encourage home ownership), but is not in Canada. The U.S. also indirectly subsidizes mortgages through a plethora of government sponsored enterprises. The U.S. entities do much more than provide mortgage insurance
Mortgage insurance
Mortgage insurance is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending upon the insurer...
, and use their own huge balance sheets to purchase mortgages. The Canada Mortgage and Housing Corporation
Canada Mortgage and Housing Corporation
Canada Mortgage and Housing Corporation is a Crown corporation, owned by the Government of Canada, founded after World War II to provide housing for returning soldiers...
historically was mainly limited to providing mortgage insurance, although now facilitates funding of mortgages also through the Canada Mortgage Bond program, which has also grown to be quite large.
Canada's banks have traditionally been fierce competitors internationally, though today America's largest banks have a more significant presence overseas. In part the history of this situation is rooted in Canada's smaller market. For Canadian banks international exchange was always a central concern. For American banks domestic banking was paramount. In the 1920s in the American economic centre of New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
Canadian banks dominated the international banking sector due to greater expertise and focus. Thus Canadian banks came to have far wider spread networks. Much of the banking system in the West Indies is controlled by the Canadian banks. Canadian banks also have far more of a presence in the United States than American firms do in Canada. In part this is because American firms cannot buy Canadian banks, but Canadian banks have, at times, been able to buy American ones. Since the large Canadian banks already operated nationwide chains of a thousand or more branches, they find it relatively easy to integrate smaller chains of American banks into their systems.
In recent years this advantage has disappeared as American banks have also grown substantially in size and today have many branches, and the large American banks are now operating over 2000 branches each. In fact, the ten largest banks in North America today are all U.S.-based. Overseas, American banks have a larger presence than Canadian banks. Only Royal Bank of Canada
Royal Bank of Canada
The Royal Bank of Canada or RBC Financial Group is the largest financial institution in Canada, as measured by deposits, revenues, and market capitalization. The bank serves seventeen million clients and has 80,100 employees worldwide. The company corporate headquarters are located in Toronto,...
's RBC Capital Markets
RBC Capital Markets
RBC Capital Markets is a Canadian investment bank with assets of $711 billion. It is part of the Royal Bank of Canada and has one of the highest credit ratings in the world by Moody's and Standard & Poor's.,According to Bloomberg, RBCCM is consistently ranked among the top 20 global investment...
division has a global scale that even approaches that of the U.S. investment banks.
Until recently, Canadian banks had historically been far less strictly regulated than their American counterparts. Canadian banks had, until the Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
The Gramm–Leach–Bliley Act , also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress...
in 1999, been freer to participate in the financial planning and insurance industries than their American counterparts. In the 1980s and 1990s, the large Canadian banks acquired almost all significant trust and brokerage companies in Canada. They also started their own mutual fund and insurance businesses. As a result, Canadian banks broadened out to become supermarkets of financial services, a trend that has started later in the U.S. market. The average U.S. bank is a domestic banking operation. The large Canadian banks are financial conglomerates, with large domestic Canadian banking operations.
Bank regulation in the United States is highly fragmented compared to Canada which has only OSFI as the bank regulator (although credit unions are provincially regulated). In the U.S., a bank's primary regulator could be the Federal Reserve Board, the Office of the Comptroller of the Currency
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...
, the Office of Thrift Supervision
Office of Thrift Supervision
The Office of Thrift Supervision was a United States federal agency under the Department of the Treasury that charters, supervises, and regulates all federally- and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency...
, or any one of 50 state regulatory bodies, depending on the charter of the bank. And within the Federal Reserve Board, there are 12 districts with 12 different regulatory staffing groups. The U.S. is also one of the most highly regulated banking environments in the world; however, many of the regulations are not safety and soundness related, but are instead focused on privacy, disclosure, fraud prevention, anti-money laundering, anti-terrorism, anti-usury
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
lending, and promoting lending to lower-income segments. Even individual cities enact their own financial regulation laws (for example, for usury
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
lending). Canadian banks had not faced laws against usury
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
, or interest guarantees on deposits. Return on equity
Return on equity
Return on equity measures the rate of return on the ownership interest of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity . ROE shows how well a company uses investment funds to generate earnings growth...
for Canadian banks were generally comparable to U.S. banks (with return on assets lower, but with Canadian banks using more leverage to compensate).
Credit unions in Canada are tax-paying entities, while they have been tax-exempt in the U.S. However, as restrictions on the size of credit unions in the U.S. have eased, the American Bankers Association
American Bankers Association
The American Bankers Association is an industry trade group and professional association representing the United States' banking industry...
has been lobbying to have credit unions taxed to level the playing field.
Prices
In Canada prices have long tended to be higher. This is partly because of structural issues in Canada such as low population density and harsher weather, and partly due to Canada's tax system, which depends more heavily on sales taxes relative to income taxes than the US. This has contributed to phenomena such as cross-border shopping. Since the early 1990s this has not been the case, as the Canadian dollarCanadian dollar
The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...
had fallen low enough that it more than made up for price differences. Today prices are somewhat lower in Canada for at least one item: the Big Mac Index
Big Mac index
The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries...
shows that in January 2006 a Big Mac
Big Mac
The Big Mac is a hamburger sold by McDonald's, an international fast food restaurant chain. It is one of the company's signature products...
cost $3.15 in the States and only $3.01 in Canada http://www.economist.com/markets/bigmac/displayStory.cfm?story_id=5389856 (both figures in USD). In October, 2007 a strong Canadian dollar rose to parity with a weak American dollar, benefiting Canadian travelers and consumers. However, this was not favorable to Canadian manufacturers and exporters who do most of their business south of the border. As the economic conditions decayed in 2008, a flight to safety in the American dollar and lower prices for Canadian commodities reversed some of the growth in the Canadian dollar relative to the American dollar.
Fuel
Fuel
Fuel is any material that stores energy that can later be extracted to perform mechanical work in a controlled manner. Most fuels used by humans undergo combustion, a redox reaction in which a combustible substance releases energy after it ignites and reacts with the oxygen in the air...
prices have always been higher in Canada, even though Canada is a net exporter of energy. This is because Canada, unlike many oil producers, does not heavily subsidize fuel. Prices are based on the world market price.
Productivity
Canadian workers are estimated to be 82% as productive per hour as their American counterparts. Because American workers also tend to work longer hours, the productivity gap per worker becomes even greater. The industries with the largest productivity advantages for the U.S. are the manufacturingManufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
(particularly electronics
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
and computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
), finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, and service sectors. Industries where Canada is more productive than the U.S. are the construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
and natural resources
Natural Resources
Natural Resources is a soul album released by Motown girl group Martha Reeves and the Vandellas in 1970 on the Gordy label. The album is significant for the Vietnam War ballad "I Should Be Proud" and the slow jam, "Love Guess Who"...
sectors with Canadian workers achieving 129% relative productivity. .
The productivity gap had been even larger in the 1950s but the difference has been narrowing, aided by the elimination of the smaller market problem through free trade. The gap was still closing somewhat in the 1980s but at a much slower pace than in the 1960s. From 1961 to 1973 labour productivity rose annually by 3.3 percent in Canada and 1.7 percent in the United States. From 1973 to 1995 productivity growth was 1.1% in Canada and 0.8% in the United States.
The productivity gap began to widen again in the 1990s, particularly in the manufacturing sector. By 2000, this was called Canada's "Excellence Gap" by the Chief Economist of Canadian Manufacturers & Exporters. The United States has the second-highest productivity of the G8
G8
The Group of Eight is a forum, created by France in 1975, for the governments of seven major economies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. In 1997, the group added Russia, thus becoming the G8...
countries, while Canada's is 5th based on the 1997 estimate.
Five main reasons for the productivity gap: the lower capital intensity of economic activity in Canada; an innovation gap in Canada relative to the United States; Canada’s relatively underdeveloped high-tech sector; less developed human capital in Canada in terms of proportionately fewer university graduates and scientists and engineers in research and development; and more limited economies of scale and scope in Canada.
Organized Labour
Both Canada and the U.S. follow the Wagoner ActNational Labor Relations Act
The National Labor Relations Act or Wagner Act , is a 1935 United States federal law that limits the means with which employers may react to workers in the private sector who create labor unions , engage in collective bargaining, and take part in strikes and other forms of concerted activity in...
model of regulating trade unions and collective bargaining, though legislation regulating organized labour principally falls under provincial jurisdiction in Canada. This North American model differs significantly from patterns of organized labour found in other developed countries.
Unemployment
For several decades Canada typically had reported its unemployment rate as somewhat higher than the US rate. For example, in June 2008 the reported unemployment in the US was 5.5 percent and 6.1% in Canada. However, a closer examination reveals that the two countries measure the unemployment rate differently. Craig Riddell, a University of British ColumbiaUniversity of British Columbia
The University of British Columbia is a public research university. UBC’s two main campuses are situated in Vancouver and in Kelowna in the Okanagan Valley...
economist, found that a 0.9% difference was caused by the differing measurement systems. Statistics Canada has also acknowledged this, and it now publishes a second unemployment rate using the same methodology as the Americans. Using the American methodology, the June 2008 Canadian unemployment rate was 5.3%, which was 0.2% lower than the American rate.
Prior to the identification of the difference in methodologies, some politicians claimed that higher income taxes, restrictive labour laws, unions, universal healthcare, and greater unemployment benefits in Canada were causing a higher actual unemployment rate. However, when unemployment insurance and welfare were sharply cut in many parts of Canada during the 1990s there was little gain in employment relative to the Americans. Others attempted to explain the reported difference in terms of the large number of seasonal workers in trades such as fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
and logging
Logging
Logging is the cutting, skidding, on-site processing, and loading of trees or logs onto trucks.In forestry, the term logging is sometimes used in a narrow sense concerning the logistics of moving wood from the stump to somewhere outside the forest, usually a sawmill or a lumber yard...
who are unemployed for a portion of the year.
Balance of trade
While the United States has in recent years had a large trade deficit, Canada had for several decades maintained a trade surplus, which turned to a deficit since 2006. The Canadian surplus had been almost entirely due to trade with the United States. Canada has trade deficits with Europe and Asia, just as the Americans do. In 2005, Canada exported about $109 billion worth of goods more than they imported from the U.S. With the rest of the world, Canada had a trade deficit of $47 billion creating an overall surplus of some $62 billion.Income
Although wealth is more highly concentrated in the U.S., the medianMedian
In probability theory and statistics, a median is described as the numerical value separating the higher half of a sample, a population, or a probability distribution, from the lower half. The median of a finite list of numbers can be found by arranging all the observations from lowest value to...
(50th percentile) worker has essentially the same purchasing power in each nation. In terms of purchasing power parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
, the most recent statistics from the IMF
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
has Canada (US $35,494) lower than that in the United States (US $43,444).
In the late 1990s, the GDP gap widened. In this period, GDP increased by 5% annually in the United States, and 2% in Canada. Earlier, it had been narrowing between 1961 and 1995. However, it was closing at a much faster rate in the 1960s than the early 1990s. From 1961 to 1973, real GDP grew at an average annual rate of 5.5% in Canada and 4.0% in the United States. From 1973 to 1995 it was 2.6% in Canada and 2.3% in the USA. http://www.imf.org/external/pubs/ft/fandd/1997/12/pdf/salgado.pdf Canada was not hit as hard by the economic downturn in 2001, however, so cumulative growth in real GDP has been almost exactly the same amount in each country over the last 15 years.
Standard of living
The United NationsUnited Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
Human Development Index
Human Development Index
The Human Development Index is a composite statistic used to rank countries by level of "human development" and separate "very high human development", "high human development", "medium human development", and "low human development" countries...
ranks the United States (fourth) higher than Canada (eighth). Other independent groups, such as the Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
have ranked each of Canada's four largest cities as better places to live than any American city. In their 2005 ranking, Toronto, Montreal, Vancouver and Ottawa ranked within the top 10 livable cities while the highest ranked American cities, Cleveland and Pittsburgh, were tied at 26th place.
Canada ranks higher than the U.S. in statistics such as life expectancy
Life expectancy
Life expectancy is the expected number of years of life remaining at a given age. It is denoted by ex, which means the average number of subsequent years of life for someone now aged x, according to a particular mortality experience...
(80.22 years in Canada versus 77.85 in the U.S.) and infant mortality
Infant mortality
Infant mortality is defined as the number of infant deaths per 1000 live births. Traditionally, the most common cause worldwide was dehydration from diarrhea. However, the spreading information about Oral Re-hydration Solution to mothers around the world has decreased the rate of children dying...
(4.75 Canadian deaths per 1000 versus 6.50 in the States). Both countries rank highly with 99% literacy
Literacy
Literacy has traditionally been described as the ability to read for knowledge, write coherently and think critically about printed material.Literacy represents the lifelong, intellectual process of gaining meaning from print...
rates. The United States has more major consumer goods per capita than Canada. For instance, while Canada had only 297 computers per 1000 people in 1996, the United States had 403.
Average income is slightly higher in the United States. However, the gap in median incomes is minor. In terms of racial disparity, United States African-Americans and Hispanic
Hispanic
Hispanic is a term that originally denoted a relationship to Hispania, which is to say the Iberian Peninsula: Andorra, Gibraltar, Portugal and Spain. During the Modern Era, Hispanic sometimes takes on a more limited meaning, particularly in the United States, where the term means a person of ...
s have a lower standard of living than the rest of the population; in Canada, Aboriginal peoples
Aboriginal peoples in Canada
Aboriginal peoples in Canada comprise the First Nations, Inuit and Métis. The descriptors "Indian" and "Eskimo" have fallen into disuse in Canada and are commonly considered pejorative....
and Black Canadian
Black Canadian
'Black Canadians is a designation used for people of Black African descent, who are citizens or permanent residents of Canada. The term specifically refers to Canadians with Sub-Saharan African ancestry. The majority of Black Canadians are of Caribbean origin...
s are disproportionately likely to live in poverty, although these groups represent 25% of the US population and only 6% of Canada's. In both countries, recent immigrants tend to have lower earnings than more established residents. Canada's French-Canadians also used to be a poorer group, but since the Quiet Revolution
Quiet Revolution
The Quiet Revolution was the 1960s period of intense change in Quebec, Canada, characterized by the rapid and effective secularization of society, the creation of a welfare state and a re-alignment of politics into federalist and separatist factions...
in the 1960s this has been partially remedied.
The United States measures poverty, while Canada does not have an official measure (see Poverty in Canada#Measures of poverty in Canada), although Statistics Canada
Statistics Canada
Statistics Canada is the Canadian federal government agency commissioned with producing statistics to help better understand Canada, its population, resources, economy, society, and culture. Its headquarters is in Ottawa....
measures something called the Low-Income Cutoffs, the statistical agency repeatedly states that this is not a poverty measure (it is an income dispersion measure like the Gini coefficient
Gini coefficient
The Gini coefficient is a measure of statistical dispersion developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper "Variability and Mutability" ....
). In the United States the poverty line is set at triple the "minimum adequate food budget." When a common measure is used, such as that of the Luxembourg Income Study
Luxembourg Income Study
The Luxembourg Income Study, asbl is a non-profit project which produces a cross-national database of micro-economic income data for social science research. The project started in 1983 and is headquartered in Luxembourg. In 2006 the database included data from 30 countries on four continents,...
, the United States has higher rates. The LIS reports that Canada has a poverty rate of 15.4% and the United States 18.7%. http://www.cfc-efc.ca/docs/ccsd/00000324.htm In both countries lower incomes are found in those most affected by poverty include single-parent families and single elderly people. In addition, because of social policies such as universal healthcare, the poverty stricken in Canada maintain a higher quality of life.
It may be said the cost of absorbing lower skilled, poorer workers in the US skews comparison studies downward for the United States (see also Economic impact of illegal immigrants in the United States
Economic impact of illegal immigrants in the United States
The economic impact of illegal immigration to the United States is a matter of study and debate relating to the nation's economy and politics. Undocumented immigrants contribute both benefits and costs to the U.S. economy...
). In recent years, what otherwise would have been a reduction in the low-income cutoff, was more than offset by the impact of immigration. According to a 2003 study by Statistics Canada "The rise in the low-income rates in the three major Canadian cities, and in Ontario and B.C. during the 1990s in particular, was largely concentrated among the immigrant population. Basically, low-income rates have been falling over the past two decades among the Canadian born, and rising among immigrants." A more recent January 2007 study by Statistics Canada explains that the low-income rates of new immigrants has deteriorated by yet another significant amount from 2000 to 2004 (see also Economic impact of immigration to Canada
Economic impact of immigration to Canada
The economic impact of immigration is an important topic in Canada. While the immigration rate has declined sharply from its peak early in the 20th century, Canada still holds the title of accepting more immigrants per capita than any other country....
).
Income
Median household income levels in the U.S. and Canada are roughly the same.Home ownership
While home ownershipOwner-occupier
An owner-occupier is a person who lives in and owns the same home. It is a type of housing tenure. The home of the owner-occupier may be, for example, a house, apartment, condominium, or a housing cooperative...
rates in both countries are very high compared to worldwide (or even developed countries), the United States has a slightly higher level of home ownership at 68.9% http://www.census.gov/hhes/www/housing/hvs/annual05/ann05t12.html versus 67% for Canada http://realtytimes.com/rtcpages/20050310_canmarket.htm. This number has converged in recent years.