Canada’s Middle Class Falling Behind Everyone Else, Report To Flaherty Finds #cokestrike

What happens when worker rights and representation are eroded:

Canada’s Middle Class Falling Behind Everyone Else, Report To Flaherty Finds.

If you’re wealthy in Canada, things have been good for you in recent decades. And if you’re poor, you’ve likely seen some wage gains and increased support from the government in the form of tax decreases.

But if you’re in the middle, you’ve likely been getting nowhere — or, at best, getting somewhere thanks to ever-larger debt loads.

A presentation made to Finance Minister Jim Flaherty last October, and obtained by Postmedia this week through access to information laws, shows the extent of the problem.

According to the Finance Ministry report, Canada’s middle earners saw income grow a measly seven per cent between 1976 and 2010, when adjusted for inflation. That’s just 0.2 per cent per year.

Meanwhile, the top one-fifth of earners saw their incomes grow 38 per cent during that period, adjusted for inflation. For the country as a whole, the overall rate was 18 per cent.

The numbers look better when adjusted for shrinking family size. Middle class households today have fewer working adults than they did in 1976; when the numbers are adjusted for this, income growth jumps to 30 per cent for the period — still below the top fifth of earners.

But the report also found that the median wage in Canada (the wage right in the middle of all wages) fell six per cent during the same period, suggesting a larger proportion of Canada’s workers are in low-wage jobs.

“Middle-class families have not received significant hourly wage increases. This is true in absolute [terms] and relative to other income groups,” the Post quoted the presentation as saying.

The numbers more or less square up with other research. In a report released earlier this year, TD Bank found that low- and middle-wage jobs are shrinking as a portion of the economy, as job growth concentrates more and more in the high-wage category.

This “hollowing out” of middle class jobs is different from the phenomenon seen in the U.S., where job growth has been stronger at both the top end of the labour market and at the bottom end, while middle-wage jobs suffer. But in Canada, both middle- and low-wage jobs are shrinking (relatively), while only high-end jobs are growing as a share of the economy.

“North of the border, the winners win more, and the losers lose more,” TD Bank declared.

A Statistics Canada analysis of income trends among Canadian families, released last month, found that 2011 was the fourth consecutive year that family household income saw no growth.

Over the four years from 2007 to 2011, median income for families grew a tepid 1.9 per cent, to $68,000 from $66,700, StatsCan reported. That’s a growth rate of less than 0.5 per cent per year.

However, what hasn’t shrunk in recent years is middle-class spending. Retail sales growth, though weaker in recent years than it has been historically, still outstrips earnings growth. House prices have also been increasing above wage growth.

All of this has translated into record-high debt levels among Canadians, with household debt jumping from around 70 or 80 per cent of household income in the mid-1970s to more than 160 per cent in the past few years.

Many economists say Canada’s over-indebted consumers are now going to become a drag on the economy, as taking on more debt becomes unfeasible for a growing number of households.

Canadian consumers were the lynchpin of the economic recovery, contributing more than half of total GDP growth in 2010 and 2011,” a Bank of Montreal report said earlier this year. “Unfortunately, a good chunk of that consumption was fueled by debt, making it unsustainable.”

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