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Why I'm not gloating about Canada's middle class

April 24, 2014

3-minute read

This week Canada’s nascent national debate about the problem of income inequality as it relates to the anxious middle class descended into ridiculous levels of un-Canadian gloating.

On Tuesday, Canadians awoke to news that the hypothetical middle-income Canadian outperformed its American counterpart in terms of after-tax income in 2010 (median, per capita, after-tax PPP-adjusted, inflation-adjusted income).

Right-wing politicians and pundits were quick to crow that their ideology was working and that Canada’s middle class is not, in fact, struggling.

Andrew Coyne claimed the idea of Canada’s “struggling middle class” is so two decades ago that it’s time to “retire” that talking point.

Business professor Ian Lee started a live debate with me on Power and Politics by gloating that there is no problem with Canada’s middle class and that organizations like mine that carefully document income inequality were wrong all along.

The finding that Canada did well in 2010, amid a global economic recession that rocked entire nations, isn’t that surprising. America’s middle class has been pummeled by a global economic recession their financial elite created.

It did not help that America’s middle class was over-leveraged with household debt and had no Canadian-style social safety net upon which to fall. The result was devastating for middle class America and that, to me, is nothing to gloat about.

In Canada, thanks to our strong bank regulations (which existed before the current federal government) and thanks to the fact that it took us longer to adopt $0 down, 40-year mortgages, we were relatively sheltered from the worst of the economic meltdown. Though Canadians did lose jobs in the recession and long-term unemployment remains a problem. Let’s not forget about them.

International comparisons and rankings are interesting, but they have their drawbacks. Often, they collapse so much data to be able to make the comparison that it scrubs out the details, like regional disparities in Canada.

For instance, if you’re earning a middle income in oil-blessed Alberta during this current boom, enjoy it. These are the salad days. And we all know that what goes boom eventually goes bust.

If you’re living in Canada’s manufacturing heartland – among the thousands who have lost good-paying jobs in Windsor and London, Ontario, for instance, your family is looking at food banks in a whole new light.

If you’re among Canada’s youth or immigrant population, facing stubbornly high levels of unemployment post-recession, the struggle is real.

Dismissing the angst of Canada’s middle and working class while we watch America struggle strikes me as a perfect way to avoid having an important conversation in this country about very real pressure on the majority of Canadians.

Today, the ticket into Canada’s middle class means it takes two or more workers in a household to stay afloat, partly because male median income has fallen over a 35-year period. Many piece together their standard of living by working part-time, contract jobs without benefits, sick pay or pensions.

We live in an era where, even when all workers help grow Canada’s economy, the majority is getting a smaller share of the income gains than when the gap between the rich and the rest of us was narrowing.

In this Hill Times story, CCPA Senior Economist Armine Yalnizyan pointed to the key drivers behind income inequality in Canada today: the richest 1% has doubled its share of income over the past generation while de-industrialization in Canada and the U.S. is fueling “continued outsourcing of manufacturing jobs, the erosion of unions’ bargaining power” and constant pressure on the middle “to give something up”.

When the CCPA released a report in 2012 by Dalhousie University Economist Lars Osberg, he noted in his examination of income inequality in North America that Mexico is the only part of the continent where the middle class has been gaining from growth.

“Although similar trends in Canada and the U.S. maintained growth in middle class incomes until the 1970s,” Osberg says, “they have since run out of steam. Globalization, technological advances, a drop in unionized work, and a deregulated labour market have contributed to stagnant real incomes for most in Canada and the U.S. since the 1980s.”

For young Canadians, the future can feel daunting: the B.A. is the new Grade 12 – and young Canadians are taking on student debt the size of a mortgage downpayment before they even land their first big job.

Meanwhile, household debt is so troubling we’ve had both Canada’s former federal finance minister and former Bank of Canada governor raise it as a major problem.

So, it’s a story of worry and instability for many Canadians.

We are becoming a more unequal society and the consequence of that trend is palpable. If Canadians don’t start talking about solutions, now when we’re well-positioned as a country to ensure a stable middle class and address persistent poverty, we may find ourselves looking back at this moment and realizing we missed a crucial opportunity to get real in uncertain times.

That’s a conversation well worth keeping front and centre in Canada today and for years to come. Denial is not an option.

Trish Hennessy is director of the Canadian Centre for Policy Alternatives’ Ontario office. Follower her on Twitter: @trishhennessy. Follow the CCPA-Ontario on Twitter: @CCPA_Ont

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