Canada’s middle class is a huge topic these days. There’s been a lot of talk recently about the growing gap between Canada’s affluent and middle class. Before we can begin to understand what’s happening to Canada’s middle class, we must first be able to define it.
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“One of the troubles with the term middle class is it’s so elastic and there’s not a clear-cut definition,” said Charles Beach, an economist and Queen’s University professor emeritus. Beach says surveys have shown most Canadians consider themselves part of the middle class without quite defining what it is. “There is no consensus definition of ‘middle class,’ nor is there an official government definition,” said the memo, obtained by The Canadian Press under the Access to Information Act.
The New York Times defines the middle class as families earning between $35,000 and $100,000 a year. This would seem to hold true in Canada as well. According to Employment and Social Development Canada:
- The middle 60% of families earned an average of $53,500 after tax in 2011
According to Statistics Canada:
- The total median 2012 income for families, defined in this case as all couples with or without kids, was $81,980
The problem is that it’s now difficult to make middle class. Paul Kershaw, policy professor at the University of British Columbia reports:
- The typical 25 – 34-year-old is now making wages that are 11% lower than they were for the same aged person in 1976, even though their education levels are higher
- The typical older worker is making wages that are 3% – 7% higher than a similar person did 30 years ago
- House prices have nearly doubled in that time, meaning more wealth for the older person and more debt for the younger person
“It takes longer now to do anything that looks like a middle-class lifestyle,” says John Myles, professor emeritus of sociology at University of Toronto, as young people stay in school longer than in generations past, get more credentials, start careers later, get married later and buy homes later. And the gap between the affluent and the middle class is growing.
Canadian Centre for Policy Alternatives report finds most affluent families in their 20’s have net worth over $500,000, more than most middle-class families save over decades. Real estate is typically the reason the affluent are able to meet such a high net worth at such a young age. Their parents buy a property for them, help purchase the property and/or give the down payment. In addition the affluent are starting off life with no student debt as their families were able to fund their educations. Conversely, those striving to make middle class are often buried under a mountain of student debt. This in and of itself is problematic enough, but it also delays being able to purchase a house. And with the cost of housing rising exponentially (the average price of a detached house in Toronto is now over $1 million), the gap between the affluent and the middle class will continue to grow.
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