“North of the border, the winners win more, and the losers lose more” TD Bank on Statistics Canada latest report on the growing social economic divide here in Canada. In this case I believe the losers are the middle class.. not to be confused with the lower class. Read on..
Please read about that report here:
Stats Canada released their latest numbers on how the Canadian Middle Class has been faring over the last 30 years. In a nutshell the definition of middle class has evolved rapidly as the upper class keeps getting richer and the lower class has narrowed the divide between middle and lower through changes and evolutions in government funded social programs and welfare aid.
The middle class in any healthy society has typically encompassed the middle 60-65% of a normal bell curve (assuming you passed grade 10). Lower classes and upper classes then fill the remaining 20%.
Over the past 30 years the median income for the middle class percentile has grown at an inflation adjusted rate of 7%. This is far below the top fifth of earners seeing their incomes increase by 38% and the nation as a whole including low income earners with an 18% growth rate. See chart below from Stats Can
The increasing earnings of the top 20% means that the bell curve distorts significantly to the far right as high income earners earn higher without middle income earnings increasing at a proportionate rate.
30 or even 20 or 10 years ago being in the middle class meant easy access to many of the luxuries that are increasingly becoming more and more inaccessible to this class. Access to housing, cars, vacations and non-Walmart consumer goods as well as SAVING money was easily achievable. Income growth for this class has seen stagnant growth over the same time period while the cost of living has skyrocketed. Couple this phenomenon with less and less job creation for the middle class and increasing high class job growth has resulted in the astonishing and disastrous amounts of debt that the middle class has undertaken to make up for the difference between earnings and cost of living.
The middle class these days shows average earnings of between $65000 to $70000.. anything below this makes the cost of living harder and harder for Canadians to “keep up” with middle class standards of living without borrowing and accumulating debt to levels that are considered extremely high risk.
Compounding the problem are today’s modern generations obsession with keeping up with the Joneses.. where every Average Joe with a middle income job feels the need to have what the guy next door has, drive what they can’t afford and live where they shouldn’t be living.. all of this financed by jobs that offer insufficient job security, no backup savings and mountains of debt. Exactly what the Joneses are doing to finance their lives which keeps the cycle alive and healthy.
So not only are middle class earners not earning anymore, it is becoming more and more expensive to stay “middle class” and usually means more and more debt.
Who is responsible for this endless cycle of destruction amongst the middle class? There are numerous parties at play here.. but the biggest are Government policy makers who are influenced heavily by the rich, a nation that encourages unsustainable spending and consumption by its middle class with profits going to the rich and policy that promotes it only has one real loser in the end.. the middle class.