The state of the Canadian middle class has been hotly debated in recent years. Some claim it’s shrinking or even disappearing; others say it’s growing wealthier. And now, according to an internal report from the Conservative government, the middle class are watching the Canadian dream becoming a “myth more than a reality.”
A Secret Reality?
The document — based on three years of internal research — was prepared in October 2013 by experts within the Employment and Social Development Canada department for department deputy minister Ian Shugart. News of the report circulated late last week after the Canadian Press obtained the report under the Access to Information Act.
According to the report, the wages of middle-class workers virtually stood still between 1993 and 2007 (earnings rose by an average of 1.7 per cent a year during this period), middle-class income families are now increasingly vulnerable to financial shocks, and many are spending much more than they are earning — “mortgaging their future to sustain their current consumption.” And what about the idea of the Canadian dream becoming mere myth? The authors state that “over the medium term, middle-income Canadians are unlikely to move to higher income brackets.”
Debt Becoming More Of A Threat
A quick look at the debt-to-income ratio in Canada also paints a less-than-rosy picture. Earlier this month, we talked about the household debt-to-income ratio hitting a new high in the third quarter of 2013, reaching 163.7 per cent, and consumer debt totaling $1.422 trillion in the fourth quarter of 2013.
But perhaps this Statistics Canada Survey of Financial Security provides at least one reason to not panic just yet. The study, published on February 25, reports that the median net worth (“the amount family units would have if they sold all of their assets and paid off all of their debts”) of Canadian family units was $243,800 in 2012, up a whopping 44.5 per cent from 2005 and almost 80 per cent more than the 1999 median of $137,000.