Alleviating the financial pinch facing Canadian families, especially the middle class, has been a rallying cry for Liberal Leader Justin Trudeau in recent months and continues to be a common theme for NDP Leader Tom Mulcair.
Expect more attention from all parties on the challenges facing the middle class heading into an expected 2015 election, as federal leaders look to score political gains based on the strengths and weaknesses of the Canadian economy and attract support from what polls suggest is an increasingly divided electorate.
Trudeau highlighted his focus on the middle class during his Liberal leadership launch in early October 2012.
Approximately two weeks later, Finance Canada officials prepared a presentation for Flaherty titled “The Economic and Financial Situation of the Canadian Middle Class,” according to documents obtained by Postmedia News under access to information legislation.
The report delivered to Flaherty showed the income of Canadian middle-class families did not grow as fast as other income groups over the last 35 years, with male workers in middle-class families having seen “little wage increases” since the mid-1990s.
“The middle class has stalled in this country and that is leading to a level of anxiety,” Trudeau said in an interview. “There is a level of anxiety that business is doing well but Canadians aren’t.”
Real after-tax income of middle-class families (considered the middle quintile or middle one-fifth of families) in Canada grew by only seven per cent between 1976 and 2010 — or 0.2 per cent per year — according to the report, with the average family income (after taxes and transfers) totalling $49,700 in 2010 for the middle-income families.
When changes in the composition of families are taken into account — including fewer adults per household as family sizes decrease — the real after-tax income of middle-class families increased 30 per cent from 1976 to 2010, which is on par with other income groups. However, that’s still lower than the 38 per cent growth in the after-tax, per-adult income of the top one-fifth of earners.
Since 1976, the average after-tax income of all Canadian families grew 18 per cent in real terms (adjusting for inflation) to $61,000 in 2010 (most recent data available), say the documents.
“Among the working-age population, the rise in income for middle-class families has been fuelled by higher female employment rates, and, to a lesser extent, by higher wages and tax reductions,” says the presentation delivered to Flaherty.
“Middle-class families have not received significant hourly wage increases. This is true in absolute and relative to other income groups,” say the documents.
Flaherty was unavailable for comment.
Kathleen Perchaluk, the minister’s press secretary, said the Department of Finance consistently tracks information about the Canadian economy, including ongoing analysis of economic growth and income distribution.
The Conservative government’s tax relief measures have seen low- and middle-income Canadians receive proportionately greater relief, she said, with about one-third of the personal income tax relief provided by the government in 2013 going to Canadians with incomes in the first tax bracket (under $43,561). Canada also has the best job growth record in the G7, she said. The country has created about one million net new jobs since the depths of the recession in July 2009.
“The best way to help middle-class Canadians is by building a strong economy that fuels job creation,” Perchaluk said in an email.
Yet, the report says the median annual wage has actually declined by six per cent in real terms (adjusted for inflation) since 1976 and has only increased by eight per cent overall since 1996.
The lower wage growth for middle-class workers can be attributed partly to technological changes that have increased the demand for skilled workers, it says.
Trudeau said his sense from voters across Canada is the Canadian economy has performed generally well over the last few decades, but they don’t feel their families and communities are performing as well.
“That is absolutely what we have to begin to target,” Trudeau added.
In fact, the growth in real average (after-tax, after-transfer) family income from 1976 to 2010 was the smallest in the middle-income group, at seven per cent, while the top quintile (top 20 per cent) saw their family income grow by 27 per cent during that time.
For the average male worker, the median annual wage has declined 19 per cent in real terms from 1976 to 1996 (from $42,000 to $34,000), before rebounding by only two per cent from 1996 to 2010. However, the median annual wage for women has steadily increased by 28 per cent from 1976 to 2010 as more women entered the workforce.
“Improving Canada’s productivity performance will be key to foster the creation of high-quality high-paying jobs in the future,” say the briefing notes.
The main federal parties have all been tailoring their policies and messaging to middle-class families in an effort to win their electoral support.
For example, the Conservative government has, along with implementing a series of modest tax breaks, promised to introduce income-splitting for couples with children under age 18, and to double the annual savings limit in tax-free savings accounts — but only once the budget is balanced.
Trudeau has made improving the fortunes of the middle class a major focus of his leadership and the game plan of the Liberal party.
The NDP and Mulcair have for years been trumpeting the struggles of average families, often talking about the “kitchen table” issues affecting Canadians.
Bill Robson, president of the C.D. Howe Institute, a public policy think-tank, said one of the greatest challenges for the middle class is saving more for retirement at the same time wages aren’t growing nearly as fast and household debt piles up.
The financial strain facing some middle-income families is far different from the freedom 55 dream that many have been sold, he said.
“There’s just such resistance to the idea that we have to save more,” he said, noting many Canadians will have to work longer and sock away more to retire comfortably.
“For a lot of people, the psychology of it is difficult because it’s a lowering of expectations.”
He believes the concerns of the middle class will continue to receive significant attention from all political parties because it relates to real issues families are facing at home.
“It certainly resonates with the concerns that a lot of people have,” Robson said.
Original Article
Source: canada.com
Author: Jason Fekete
No comments:
Post a Comment