New study shows UCP “trickle-down” policies haven’t worked
CALGARY – As the provincial election looms, corporate tax cuts and other examples of “trickle-down economics” have been in the news on an almost daily basis. But new economic evidence shows that these policies have not worked in Alberta.
Prominent Canadian economist Dr. Jim Stanford has prepared a research report reviewing the “trickle-down” economic policies embraced and implemented under the UCP since 2019. The statistical evidence strongly indicates that these policies have hurt the Alberta economy more than they helped it.
In Dr. Stanford’s words, “The business-centric policies implemented in Alberta over the last four years have failed to stimulate more investment, growth, jobs, or prosperity.”
“These policies have certainly redistributed income upward to the corporate sector, which has enjoyed unprecedented profitability. But that wealth has distinctly failed to trickle down.”
The study, entitled “The Failures of Trickle-Down Economics in Alberta,” shows that in the last four years Alberta has had:
• The slowest wage growth in the country, and wages that have fallen far behind inflation
• Below-average job creation
• A significant drop in business investment
• Among the slowest rates of economic growth in Canada
“Trickle-down economics” is the suite of policies generally favoured by conservative parties that includes lower taxes on corporate profits; privatization and cuts to public services; the reduction of regulatory protections for consumers and the environment; and attacks on worker rights, including weaker minimum wages and restrictions on the right to join unions and bargain collectively.
Proponents of “trickle-down economics” claim these policies will attract business investment, create jobs, enhance economic growth and boost wages.
But as Stanford shows in his report, following the implementation of a full range of “trickle-down” policies in Alberta starting in 2019, none of the promised benefits have materialized. In fact, business investment has slowed down, not accelerated, real wages have declined, and economic growth and job creation have lagged behind other provinces.
The only economic indicator in which Alberta has led all provinces has been the growth of corporate profits: they increased by 145% between 2018 and 2022, and the growth of profits relative to GDP in Alberta has led all provinces.
“The empirical evidence suggests that policies promoting a more balanced vision of economic development – including pro-active efforts to stimulate higher wages, increased private investment, improved public services and investment, and better, more stable jobs – would be more successful at achieving a prosperous and fairer provincial economy.”
Media interviews with Dr. Stanford can be arranged through the AFL.
Director Government Relations and Political Action, AFL