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High costs of health care, drugs, housing and everyday consumer items in the US tips scales for average Canadians despite big-ticket bargains and tax breaks
By: Ish Theilheimer and the Straight Goods team
Who's better off, average Americans or average Canadians? It's no contest.
Our two-week survey has confirmed that despite popular myths, average Canadian families are far better off economically than their American counterparts.
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Seniors don't buy a lot of appliances, but they need prescription drugs quite often. Cheap consumer "toys" in the US don't make up for higher health care and housing expenses |
Americans do enjoy bargains on prominent items like electronics, appliances, gasoline, and other "toys." Our survey found a typical price spread, after allowing for exchange, of 20% on household appliances and a gap of up to 50% on some consumer electronics.
But ordinary families don't buy these items every day, and fuel prices are only one component of car costs, most of which are pretty similar in the US and Canada.
Canadian workers win bronze in gross wages
On average, Canadians earn more, take home more, have more public benefits, and pay about the same as or less for almost everything. In February, the Organization for Economic Cooperation and Development (OECD) placed average Canadians slightly ahead of Americans in gross and take-home pay. [www.oecd.org/news_and_events/publish/pb00- 02a.htm]
The OECD report compared wages and disposable income for single individuals "at the income level of the average production worker" in 24 Western countries. Canadian workers rank third in gross wages. US workers rank seventh.
Average Canadian workers earns $30,200 in "dollars with equal purchasing power," compared with $29,076 for average Americans. Average Americans take home two percent more of their gross wage than Canadians - 26% vs 28% . But higher wages give Canadians a slight edge, $24,764 to $24,424.
Canadian bonuses: health care, drugs, social programs - for now
Canadians have more of their living and social expenses paid for publicly. Health care is the most famous item on the list. Although medicare in Canada is suffering from cuts, the cost advantage of Canadians over Americans is still enormous.
Most American workers pay for private health insurance through payroll deductions. Yet many also pay hefty fees when they need medical help. So Americans often pay twice for health care, while Canadians may not pay at all - for now.
Canadians enjoy a whole range of other publicly-funded benefits Americans either don't get at all or as generously. These include public pensions and old age supplements, subsidized tuition at public colleges and universities, home care services, and so on.
Unfortunately for Canadians, these are the very benefits being cut federally and provincially. Economist Mike McCracken of Infometrica in Ottawa says Americans are closing the gap on Canadians due to government cuts. "Whatever it was 20 years ago, we're getting less."
Drug costs are much higher in the US. In Canada, drug prices are held down by our greater use of generic drugs and government formularies regulating drug prices for medicare and other public plans.
Our survey found some prescription drugs almost three times more expensive in the States, after exchange. A 100-capsule bottle of Nitrofur, for instance, costs twice as much in US funds ($71.84) from a Michigan discount chain as it costs in the small town of Killaloe, ON in Canadian funds ($35.97) at a small pharmacy.
A shopping list of common prescription drugs for a senior with respiratory problems came in 80% higher in Michigan at $318.21US ($461.40 CDN) vs $256.68 CDN ($177.11 US) in Ontario. The senior who needs these drugs may not buy cell phones or fridges very often, but will probably purchase these important drugs frequently. And only the poorest seniors qualify for public drug plans for Medicaid in the States, unlike Canada with its more generous seniors' drug plans.
Housing appears considerably cheaper in Canada than in the US. A 2-bedroom apartment in a middle-class high-rise in Montreal can rent for about a $600 a month, compared with $1,000 in Toronto, $1,200 in Vancouver, $1,450 in Seattle, $1,500 in Chicago or $2,000 in New York - all in CDN dollars. The 3-bedroom middle-class home with two baths might go for $150K ($150,000) in Montreal, $220K in Toronto, $300K in Seattle, $375K in Vancouver , $4-600K in Chicago, or a whopping $900,00 in New York, all in CDN dollars.
Wearing out the plastic off the interstate
The inspiration for this series was motor trips into the US from Canada. Most Canadians who travel know the feeling:
You get off the interstate highway and buy cheap gas and pop, and cigarettes, if that's your vice. Then you go to the Big Boy or Denny's and spend ten bucks (US) on a breakfast special. Or, if it's late in the evening, you plunk down more than US $100 on a franchise motel in the middle of a cornfield.
And yet, you could have bought the same breakfast special on the 401 or Trans-Canada Highway back home for eight bucks (CDN) or ruined your marriage in a franchise motel in Kamloops or Guelph for less than CDN $100.
Our survey has confirmed that this pattern holds across a range of consumer items purchased regularly by average families, like groceries, meals, entertainment, housing, and health care. Americans may have some cheap toys. But average Canadian families have little to envy their American cousins in terms of wages, taxes, or cost of living.
* The Straight Goods team that has worked so hard on this series includes interns Mia Rabson (London), Mark Reynolds (Montreal), and Fara Tabatabai (Vancouver), editor Susan Sperling (Toronto), last week's guest editor Kathy Eisner (Killaloe), researcher Len Ferns (Pembroke), and volunteers Steve Eisner (Seattle), Ben Eisner- Butzen (Olympia, WA), Larry Sperling (Vero Beach, FL), Myron Theilheimer (New York), TJ, Andy Mayhew (Northport, MI), and Janet Lackey (Traverse City, MI). Thanks to all for your efforts contributing to an accurate and informative snapshot of living costs.
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