Tag Archives: middle earners

A middle-class pick me up?

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The one political rubric that defies partisan ownership these days is the plight of the so-called middle class.

Everyone from U.S. President Barack Obama to populist rabble-rouser Donald Trump to former Canadian Tory Prime Minister Stephen Harper to current Liberal office-holder in Ottawa Justin Trudeau makes hay with this benighted segment of the North American labour market.

The problem is the middle class just isn’t what it used to be, so figuring out ways to solve its many problems is a little like looking for needles in several thousand bales of straw.

What, for example, does it mean to be middle class in New Brunswick? Do the same standards and measures apply in Toronto, Vancouver, Montreal, or, for that matter, Fort McMurray?

Are you middle class if you earn $60,000 a year pushing paper in at government job in Freddy Beach? Are you a card-carrying member of the bourgeoisie if you pull down $85,000 doing the same thing at Queen’s Park in downtown Hog Town?

In the old days, what signified your status as a middle-class worker was, as often as not, your job security. That depended on the quality of your employment contract and/or the stability and effectiveness of your union’s bargaining unit. Not anymore.

A nicely penned piece by John Allemang in the Globe and Mail a couple of years ago made the salient point: “So it has come to this: Even union leaders are losing faith in the power of their unions. ‘There used to be a time when we had great respect from the public,’ says Ken Georgetti, president of the Canadian Labour Congress. ‘But we’ve lost that. There’s this notion that unions are just out for themselves and not for society. You get that label hung on you, and you have to work to get rid of it.’”

Yeah, good luck with that.

In fact, New Brunswick may be one of the most middle-class provinces in Canada if only because the labour market here has not endured the tumultuous economic reformations of other jurisdictions in the country – at least, not to the same extent.

That should make the recent federal budget good news to the provincial populace. After all, as Globe columnist Rob Carrick wrote last week, “Stagnant wages, rising household debt, income inequality and declining economic prospects for young Canadians are all woven into a budget narrative of a struggling middle class that needs help. The question is, how much support does the budget deliver?”

The other question is, does it really matter?

The budget document, itself, appears a tad unclear.

On the one hand, it states, “With more money in their pockets, middle class families will be able to save more, enhancing their own financial security. They will also have a greater opportunity to invest – in their own future and that of their children. Finally, they will have more money to spend, which will boost economic activity in the short term, and also put Canada on a firmer growth path over the long term.”

On the other hand, in the section expressly concerned with the middle class, it notes, “It is widely recognized that increasing support for low-income families also has a positive and long-term effect. Poverty is not just a problem for individual Canadians all of Canada is affected. Poverty is particularly challenging in the case of children, and its effect can be long term. When children are lifted out of poverty, they are better able to develop to their fullest potential.”

Perhaps, then, we have found our new middle class, after all: poor people.

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Are things really looking up for middle-income earners?

 

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We Canadians are richer than we thought, which is a relief, because the pickle barrels increasing numbers of us are wearing to the spring fashion shows this year have begun to chafe. 

According to the New York Times on Tuesday, “The American middle class, long the most affluent in the world, has lost that distinction. While the wealthiest Americans are outpacing many of their global peers, a (Times) analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.”

Drum roll, please. . .”After-tax middle-class incomes in Canada – substantially behind in 2000 – now appear to be higher than in the United States.”

The review relies on the methodology of the Luxembourg Income Study Database, which includes household and person information on market and government income, demography, employment, and expenditures, as well as intelligence from other datasets in Europe, North America, Latin America, Africa, Asia, and Australasia.

In other words, the source is unimpeachable, which means, apparently, that the findings are unassailable.

“Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it,” the Times piece observes. “Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several – including Britain, the Netherlands and Sweden – is much smaller than it was a decade ago.”

What’s more, “The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.”

Naturally, the news of the sudden, inexplicable resuscitation of this nation’s middle class, so soon after demographic coroners pronounced it dead on arrival, have crowded the front pages and lead the broadcasts for days.

The Globe and Mail queried coyly, “Can it be true that the Canadian middle class has never had it so good? And if so, what will it mean for the Liberals and the NDP, who have focused their strategies on promoting the notion of middle-class decline under the Conservatives?”

Certainly, the Tories are letting no opportunity to crow pass them by. “This study would appear to confirm that our government’s approach to creating jobs and economic growth, while keeping taxes low, is working,” Jason MacDonald told the Globe. “We’ll continue with our low tax plan, unlike the tax-and-spend Liberals and NDP, whose approach will only cost Canadian families.”

Nice try, Mr. MacDonald, but no cigar. The study neither confirms nor denies the efficacy of the government’s “approach to creating jobs and economic growth” because that’s not what it explicitly measures. But if it did, the findings would suggest that Liberal policies in the early part of the Century were far more successful as “job-generators” than were post-recession Conservative ones. 

As for the rest of us breathlessly revising our versions of the economic universe, we might pause and consider what’s written in the space between the lines of this study.

Middle incomes in Canada have, indeed, surpassed those in the United States. But that speaks more about the desperate condition of the American economy – in which millions of jobs vanished almost overnight in the aftermath of the financial meltdown and the fiscal collapse of 2008 – than it does about stellar conditions in ours.

The study ranks percentage increases in middle incomes, placing Canada high on the list at 19.7 per cent (along with Britain), and ahead of Ireland, Netherlands, Spain, and Germany (16.2, 13.9, 4.1, and 1.4 per percent, respectively). 

In absolute terms, however, middle-class salaries and benefits in this country have not risen appreciably since the Great Recession. In fact, those in the larger percentiles of the income range (i.e., lower) have seen their levels of real wealth actually contract, despite historically low interest rates and near-zero inflation.

All of which is to say that now is probably not the time to trade in that pickle barrel for an Armani sport coat, just yet. 

 

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