MIDDLE CLASS
DECLINE AND REVIVAL
Prepared for Senator Joseph A. Day
WINTER 2014
PREPARED BY
ROBIN D. RUSSELL
ASSISTED BY
BETSY LEIMBIGLER
PROLOGUE
Canadian middle-class soccer moms and hockey dads have little, if any interest in statisticallybased public policy proposals. The current federal administration cherry-picks public policy
issues for promotion in order to energize electoral support while pursuing an indifferent
regard for objective realities.
The current angst within some sectors of the Canadian population about the future speaks to
current middle-class feelings based on a broad combination of insecurity, disappointment,
unrealistic expectations, and pointless faith in miracles. Often these feelings are
accompanied by a sense of victimization. All of this prevails in the grand context of galloping
technological change and globalization, often heightened by irritations of cultural diversity.
Since the 1700s, technological improvements have been producing employment insecurity.
The current transition to the digital age is probably no more unsettling and rancorous for
individuals and families than during any previous period of change.
This document is about feelings as much as it is about facts. Statistics that are quoted merely
support or challenge such feelings. For practical purposes, public policy proposals based on
facts may be easily ignored – particularly if such proposals are designed to win electoral
support – since the electorate is generally uninformed. Consequently, inspired public policy
must respond to the electorate’s feelings, expectations, and anxieties, rather than policymakers expecting wide-spread response to statistically-based solutions.
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TABLE OF CONTENTS
Introduction
1. MIDDLE CLASS: GLOBAL OVERVIEW
2. MIDDLE CLASS: WHO IS IT? WHAT IS IT?
3. MIDDLE CLASS AND THE HUMANITARIAN SOCIETY
4. MIDDLE CLASS CHARITABLE GIVING
5. MIDDLE CLASS HOUSEHOLD INCOME
6. MIDDLE CLASS INCOME STAGNATION
7. MIDDLE CLASS INCOME INEQUALITY RISES UNEQUALLY
8. MIDDLE CLASS INVESTMENT INCOME, INFLATION, AND SECURITY
9. MIDDLE CLASS SAVINGS AND DEBT
10. MIDDLE CLASS AND THE TAX BURDEN
11. MIDDLE CLASS UPWARD MOBILITY
12. MIDDLE CLASS AND THE FINANCIAL SERVICES INDUSTRY
13. MIDDLE CLASS PERKS: FEELINGS OF SUCCESS AND ACCOMPLISHMENT
14. MIDDLE CLASS DIVORCE
15. MIDDLE CLASS FAMILY STRUCTURE AND LIVING APART TOGETHER
16. MIDDLE CLASS GENDER INEQUALITY
17. MIDDLE CLASS WOMEN IN THE BOARD ROOM
18. MIDDLE CLASS EDUCATION CHOICES
19. MIDDLE CLASS AND THE FUTURE OF WORK
20. MIDDLE CLASS AND MENTAL HEALTH AND PAY CHECK TO PAY CHECK
21. MIDDLE CLASS: GOVERNMENT CHERRYPICKING AND ELECTORAL CHOICES
22. MIDDLE CLASS VOLUNTEERISM AND POLITICAL PARTICIPATION
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23. MIDDLE CLASS IN THE SUBURB VS MIDDLE CLASS LIVING DOWN TOWN
24. MIDDLE CLASS HOUSEHOLD: TO OWN OR TO RENT?
25. MIDDLE CLASS ACCOMMODATION, DEBT AND WEALTH
26. MIDDLE CLASS SENIORS: THE NEW LONGEVITY
27. MIDDLE CLASS MANDATORY RETIREMENT
28. MIDDLE CLASS PENSIONS AND WEALTH
29. MIDDLE CLASS AFFAIR WITH THE AUTOMOBILE ON THE WAY TO WORK
30. MIDDLE CLASS: THE COST OF KIDS FROM DAY CARE TO UNIVERSITY
31. MIDDLE CLASS VACATIONS
32. MIDDLE CLASS AND SMALL BUSINESS
33. MIDDLE CLASS QUALITY HOUSING
34. MIDDLE CLASS HOUSING AND INFRASTRUCTURE RELATIONSHIPS
35. MIDDLE CLASS AND THE ENVIRONMENT
36. MIDDLE CLASS CAPITALISM AND GLOBALIZATION
37. MIDDLE CLASS LEVEL PLAYINGFIELD
38. MIDDLE CLASS HAPPINESS
39. MIDDLE CLASS WHITE-COLLAR CRIME
40. MIDDLE CLASS MANDATORY FOR DEMOCRACY
41. MIDDLE CLASS REAL OR PHONY CRISIS
GENERAL CONCLUSION: The Future of the Middle Class
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INTRODUCTION
Middle class membership is a subjective notion; but it is the space wherein most Canadians see themselves.
The middle class is the buffer between the rich and the poor. It is more an idea
than a concrete entity. Public policy proponents of programs for middle class
relief often use the term middle class to cover a wide range of the nation’s
population – beyond the reasonable parameters for those who might qualify for
middle class membership by way of various definitions. Who is a member of this
group?
There is ample evidence that people are generally engaged in “group”
identification. This is true for religiosity as well as for partisan loyalties. The
individual subscribes, at least nominally, to the self-identification of close family
members. Following that, the individual self-identifies as an adherent to a
specific religion, and/or political party, as a member of a union or a professional
association and so on. Therein is the challenge for demographers to determine
who actually belongs to the middle class.
Individuals whose parents self-identified with this “class” readily include
themselves in it, in spite of widely varying economic differences related to their
current income, wealth, residential neighborhood, and level of education.
Politicians and economists have a great pre-occupation with the “health and wellbeing” of this rather fluid group. But ask them to define its demographic and the
lack of consensus is endless. Added to this conundrum, middle-class champions
should recognize that it is not universally accepted that those who identify with
the middle class are in a swamp of crisis. This fact undermines the rhetoric of
politicians who salivate to condemn policies that negatively impact on the middle
class for partisan purposes. This optical nuance remains while the current state of
the middle class is debated. Without universal acceptance that there is a problem
with the state of the middle class, solutions will always be tentative and
inconclusive.
Many folks who self-identify as middle class believe that they are “on the edge”
and about to be propelled into crisis mode. So, their imaginings have created a
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crisis – a phony crisis, perhaps - whether or not there is actually a real one; the
political class has taken note to an extent that politicians actively seek to address
issues under the broad umbrella of middle class rhetoric.
In Canada people do not generally distinguish strictly specific levels of class
structure. Rather, the citizen bases his/her perceived membership in a particular
stratum of class according to what he/she consumes, and the particulars of
consumption by those around him/her, with whom he/she lives and observes,
rather than what he/she views as comparative wealth or income. This distinction
is important; it is reinforced by the perceived sharing of interests and common
concerns. The middle-class self-identification is a blurred reality and the
individual tends to identify himself with this group regardless of his/her own
social/economic class reality, probably to the extent of 85% of the population.
This is the overarching challenge for legislators seeking to design public-policy
programs targeting middle class voters.
One basis for definition, if the focus of the topic is relative economic well-being, is
to encapsulate the middle class as being close to the upper edges and the lower
edges of median income and everyone in between. Using this yardstick there are
economic analysts who declare that the middle class is the middle one-fifth of
society. Others declare it should embrace three-fifths of the middle range. From
a global perspective, in 2009 The Economist classified the middle class as those
who do not live from hand to mouth as the poor do and enjoy a reasonable
amount of discretionary income. Membership in the middle class means that one
has one third of one’s income left for discretionary spending after food and
shelter payments, the surplus being available for health care, education, and the
purchase of consumer goods. Of course, any definition is a relative one
depending on global regional differences.
The Economist placed the United States middle class at 45 % of the population
and, therefore, below the world average. As a comparison, in 2012 the
Rosgosstrakh Strategic Research Centre estimated the Russian middle class to be
15% of the population. In Canada it probably consists of 85% of the population.
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But it remains that there is no universally accepted model of what it means to be
a member of the middle class.
The United States middle class is in steep financial-security decline. Currently in the U.S 5% of
the public owns 90% of the money. In Canada, 1% of the population accrues to 10% of the
income.
The state of the middle class in Canada is multifaceted and multi-challenged.
It is a policy-makers conundrum - on the one hand, what defines the middle class;
and on the other hand who identifies himself as part of the middle class, in spite
of not being framed within the multi-standard statistical and financial rational of
middle class definitions.
Should pretending or feeling to be part of the middle class produce the same
conclusions (from public-policy perspectives and future government action) for
the citizen who simply falls somewhere within the twin definition, since one’s
individual perception is a powerful reality?
Is the confusion between perception and reality a lethal mix prohibiting the creation of well-targeted public
policy?
For example, mortgage-related crises are no less meaningful to the citizen
whether or not the citizen clearly fits within the one fifth of those surrounding the
medium income frame, or within the three-fifths’ frame, or simply feels insecure
within a crisis about which the politicians and economists chatter. Simply feeling
in crisis, without actually being in crisis, is a potent force for anxiety on the part of
the citizen. When this anxiety is widespread the ripple effect can stagnate
economic growth. Those who have savings hoard their savings. The would-be
economic clout of purchasing fizzles. Unemployment dives as hiring freezes.
What about the parallel feeling of insecurity in the working class? Does the
broader base of society influence and react to middle class insecurity? Should we
not give importance to the fact that many in the working class (in the range of
15% to 20% of the total population) has pretensions of middle class membership,
one of the concrete realities being its self-imposed pressure to access the
mortgage market?
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Younger members of the middle class are the main engine of the economy when
one accepts that demand produces growth. It is the new generation that seeks
housing and mortgages and consumer goods and accumulates troubling high
levels of debt in the process. Older members of the middle class are generally
pursuing sustainment strategies, not accumulation strategies. The largely debtridden lower-aged contingent of the middle class exists side-by-side with the less
financially-volatile older-generation sector.
The above suggests a never-ending challenge to determine a reasonable focus on
what is precisely meant by middle class and how to craft security-induced comfort
for everyone.
For example, better employment equality does not automatically produce more
income in general for Canadians. Does the inequality of employment income in
Canada require/merit dramatic changes to Canada’s safety-net programs, or
education system or income tax levies? This is discussed under item 7.
Is the part-timer the great victim of employment quality inaction and the first
reaper of middle class decline? For certain, in today’s economic climate the assetlimited working-class part-timer cannot easily access the middle class without an
inheritance or a lottery win or a fortuitous marriage! Universal quality education
and child care is the door, however, through which the working class may access
the middle class.
To strengthen the middle class there needs to be a policy frame-work – resulting
from public policy initiatives – that addresses each hot button pressure point that
gives true meaning to middle class values/aspirations/fears. It is certainly a multifaceted challenge.
Delineating some of these factors is the purpose of this document. This is laid out
in 41 sections. However, many of the subjects overlap with others. No middleclass issue exists in a vacuum.
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The following are general themes being pursued in this paper:
REASONS FOR THE UNREST IN THE MIDDLE CLASS
DEMOGRAPHICS - MICRO ECONOMICS - MACRO ECONOMICS - CHANGES IN PUBLIC POLICY
ESSENTIAL COMPONENTS OF MIDDLE CLASS WELL-BEING
The hours of work each week that a parent needs to sustain a family; the ingredients needed to move
upward from lower class strata; the real value of wages; the relationship between real wages and
disposable income; the essential goods basket affordability.
THE FAILURE TO SUSTAIN MIDDLE CLASS LIVING STANDARDS BY PROXY
The United States Federal Reserve is the world’s banker. It is the Federal Reserve
that signals to the world the pace of printing money. New money is an
accounting entry in the book-keeping of the central bank of each nation-state that
creates enormous implications for each state’s economic well-being - the ultimate
two-edged sword of economic policy.
Its policies impact on every aspect of global monetary policy. It is mandated to
promote the following three pillars of economic policy. Everywhere banks and
bankers, economies and economists, politicians and bureaucrats regularly read
the Federal Reserve “tea leaves” on these factors:
High employment --------- Low inflation ---------- Sustained GDP
However – none of these three pillars, in itself, produces affordable child care,
universal quality education, solvent private pension plans, appropriate
spending/savings ratios, affordable housing, and universally acceptable health
care, among other elements of daily living.
It is clear that these three pillars do not serve as proxies for middle-class security.
It is essential to examine more factors.
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1. MIDDLE CLASS: GLOBAL OVERVIEW
Figuring out how to make today’s vast economic transformation work for the middle class is the central political
issue of our time. Without a prosperous, secure middle class, our national economy can’t flourish in the long
term. Our democratic society won’t endure either.
Chrystia Freeland MP, author of The Rise of the New Global Rich and the Fall of Everyone Else
BACKGROUND
46% of the planet’s wealth is controlled by 1% of the population.
According to a 2013 report of Credit Suisse the top 10% of the global population
own 86% of global wealth.
On March, 6, 2014 the new global individual-wealth figures were reported by
wallstreetdaily.com:
There are 167,000 people worth $30 million or more – up 59% since 2003
37,104 people worth $100 million or more – up 62% since 2003
1,682 billionaires – up 82% since 2003
The average asset wealth per adult on the planet is US $51,600. The average peradult wealth in Switzerland – the highest percentage – is US $513,000. In the
United States the per adult figure is $356,195; in Canada it is $266,808.
By comparison, two thirds of adults globally have assets worth less than US
$10,000.
In the countries of the North Atlantic triangle analysts cannot agree on a strictly
economic definition of the population’s middle class. Their various assertions are
that it is between one fifth and three fifths’ of those clustered around the income
and/or wealth median. Using the wider spread for Canada, and considering the
universality of Old Age Security and the Canada Pension Plan, and other aspects
of the social safety-net, places the middle class at more than 80% of the
population.
Viewed globally Canada’s position is one of envy. Viewed by some struggling
Canadians it is regarded otherwise. Canadian banking and mortgage regulations
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are tightly restricted. There has not been a crisis, therefore, in home mortgages
whereas in the U.S. as late as early March, 2014, 23% of the mortgages are under
water. Canadian commentators and politicians would do well to digest
comparisons since under-water Canadian mortgages do not appear on the radar.
There is no middle-class mortgage crisis in Canada at this time.
At the micro level a glaring omission in the education of Canadian students – and
elsewhere - is the lack of provision of tools to manage one’s own financial affairs
as a young adult. Hence, the rapid accumulation of debt early in one’s adult life
could create a wide-spread crisis when global inflation returns – and it will –
fueled by the instant expectations of the “me-too” generation.
Our ability to cope in the next inflation period – around the planet - will reflect
the level of prudent financial-planning of those under thirty.
Pessimists will argue that the prospect of being dragged down in our economy
with debt, that cannot be individually managed, could be the collective future of
the new generation.
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2. MIDDLE CLASS: WHO IS IT? WHAT IS IT?
Party leaders of all stripes federally and provincially have been blathering about helping the “middle class” but
have yet to define the term. I will take seriously the first one who delineates the ranges of income and net worth
that he or she considers to be middle class.
Lyman MacInnis, Toronto; letter writer to the Globe and Mail, 25 February, 2014
Since 1745, when the term middle class was first coined, its meaning has often been contradictory. At one time
it simply referred to those engaged in capitalism, at other times it identified folk who lived in towns rather than
in the countryside. The modern middle class definition dates from 1913 England when the United Kingdom
Registrar-General’s report classified middle class membership to include senior civil servants, managers, and
professionals.
Credit Suisse reported in October, 2013, that in the previous year the planet gained nearly 2 million more
millionaires and predicted that by 2073 there will be nearly 1 billion millionaires, about 1 in 5 adults alive today.
It also predicted that by 2073 there will be 11 trillionaires – count those zeroes: 41,000,000,000,000!!! Of course,
one can only speculate what it will mean in practical terms to be a millionaire relative to the rest of the
population by 2073
.
BACKGROUND
There is a general feeling that the middle class is shrinking by being squeezed,
constricted, and diminished at both ends. Those sliding into the lower end are
suffering and the ones climbing at the upper end are prospering. However, both
groups will generally continue to self-identify as middle class. Economic analysts
do not agree on a universal definition of the parameters of its membership and
the extent to which middle class members are actually suffering. There is an old
joke that states: when you lay all economists end to end, they will still point in
every direction!
Classification of membership in the middle class includes a variety of features that
are sociological, geographical and genealogical, along with the usual nod to
income and disposable income, savings-wealth, pension entitlement, urban,
suburban, and rural differences and the quality of housing.
Feelings of one’s sense of belonging (self-identification), based on family
background, societal relationships and post-secondary education, are very
powerful realities. There is certainly a variety of middle class manners, middle
class values and middle class lifestyles.
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Recently a Canadian Senate legislative assistant related, that while his parents live
in a $1 million home, these folks are adamant that they are certifiable members
of the middle class! This feeling of middle class membership, notwithstanding
statistical or analytical parameters, is the single most important challenge to
public policy makers who seek to find solutions for middle-class anxieties because
middle class membership will never have a universally acceptable definition.
As well - in Canada particularly – wherein a corner stone of public policy is
multiculturalism – the concept of middle class is very fluid given that there is a
wide variation of what middle class membership means depending on ethnocultural origins. Policy makers ignore this at their peril.
In the United States the middle class has been traditionally associated with wealth
and pop culture; in the United Kingdom it has been associated with social status
and the absence of interest in pop culture. In a 2011 British survey three quarters
of the respondents self-identified as middle class. Canada is a mix of the two;
however, the children of immigrants (and especially the grand-children) have a
tendency to reject their cultural antecedents including their self-identification.
Another factor leading to the feeling of belonging to the middle class is the
tendency of successive generations to morph into middle class membership. This
is a complicated inheritance of tastes, attitudes, manners, education, and
economic realities. Therefore, inheriting feelings of middle class membership
serves to further frustrate any basis for a tight definition based on current
economic realities.
An interesting twist to the definition of middle class in Great Britain is the current
British Broadcasting Middle Class Calculator. It is an online test that anyone can
take to determine one’s middle class membership. There are seven categories of
stratification. The two top categories are “elite” and “established middle class”.
How one responds to the following question areas determines one’s classification
within the class structure in the BBC Middle Class Calculator:
Household income
Home ownership or accommodation rental
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Savings, etc.
Level of education
Employment in the arts, media, or law or elsewhere
Regular attendance at the theatre and other kinds of entertainment
Frequency of hosting dinner parties in one’s home
No one seems to have created a comparable “test” for Canadians. The BBC polled
more than 160,000 persons to determine the final seven classifications of strata.
Canadian politicians continue to view the middle class as an economic topic
exclusively. One could argue that their perspective is quite limited.
PROPOSED PUBLIC POLICY
Policy makers cannot provide sweeping solutions for issues of security and
comfort for the middle fifth to the middle three fifths of the population that selfidentify as middle class and, at the same time, wear the mantle of intellectual
honesty. There is no single panacea for the arrest of middle class angst. And
providing solutions that imply the need for raising taxes – with an election
approaching – will not receive positive public traction. Therefore, astute publicpolicy election-savvy practitioners can focus on niche solutions rather than
sweeping general solutions, especially if their end-purpose is the achievement of
electoral success. After the election, heavy-lifting public policy can be pursued.
But such policy-pursuit is likely to defy the intellectual honesty that is usually
required to justify public-policy making.
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3. MIDDLE CLASS AND THE HUMANITARIAN SOCIETY
Greed fuels capitalism. Only money matters.
The negative battle-cry of right-wing ideology is to demonize tax and spend; moderate politicians continue to
fail to muster an alternative positive response battle-cry, namely, tax and build.
Prime Minister Harper sees the world, like Canadian domestic affairs, in rather Manichean terms, wherein the
forces of good and evil are arrayed against each other, with threatening enemies everywhere, prepared to
pounce on any weakness.
Jeffrey Simpson, Globe and Mail columnist
BACKGROUND
Since World War II – until the last decade - the long-term trend of Canadian public
policy initiatives has been the development of a humanitarian society. As such it
has continued the tradition of support for the values of the middle class. The
humanitarian record is a long recital of social and economic safety-net features
and generosity of spirit. Old age security, a national pension plan, open-door and
welcoming multiculturalism, employment insurance, disability support and
income supplements, increased funding for post-secondary education, public
affordable housing, the Charter of Rights and Freedoms, and so forth, have been
major factors in reducing Canadians’ anxiety about the future and enhancing
social trust. They are also termed the great equalizers of Canadian society. And
they do comprise the country-specific over-arching equalizers of modern liberal
democratic societies in the industrialized world.
To establish a resilient middle class, governments need to tax so they can build.
Dare we suggest the battle-cry, tax and build!? We will need wisdom to use tax
revenue wisely.
Until recently Canadian public policy clearly took the philosophical approach that
Canada is a society, not simply a collection of men, women and their children.
The kind of politics pursued briefly by Canada’s sister nations – the United States
(Reaganomics) and Great Britain (Margaret Thatcher’s assertion that there is no
society) had been rejected in Canada until the general election of 2006. However,
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in the last eight years there has been steady pressure nationally to reduce the size
of government. This has enormous implications for the future of the Canadian
middle class regardless of whatever framework is employed to identify its
parameters. Many current federal government policies challenge the middleclass humanitarian heart of the majority of Canadians. The enemies of social trust
are down-sizing and disengagement. The greatest right-wing victory will be the
long-term demonization of taxation which is challenging our ability to maintain
the core of our society’s humanitarian values.
Tax Is Not A Four-letter Word is the title of a new book by Alex Himelfarb, former
clerk of the Privy Council. He notes that federal spending as a percentage of GDP
is now half of what it was almost three decades ago, 24% vs. slightly more than
12%. Corporate tax was 36%, 20 years ago. It is now approaching a downward
slide to 15%.
In the perspective of the well-being of the middle class these trends erode the
financial basis of the social-safety-net underpinning of our humanitarian society.
Right-wing political rhetoric demonizes taxes and destroys robust government.
Canadians have had many global advantages. These are being swept away by
conditions that enable income inequality to accelerate. Today only 40% of the
unemployed have access to employment insurance benefits. This is the Canadian
adoption of the grand embrace of the concept of Margaret Thatcher’s “no”
society, only a collection of men, women, and their children.
When the Iron Lady died in April 2013, Canadian government leaders almost
openly wept in public. She was their spiritual hero. At the time Canadian cabinet
minister Tony Clement offered the following: “Before Lady Thatcher took over
you got the sense that for Western democracies, the wheels were coming off.
And she was the savior”. So the conclusion is that Canadian Conservatives have
been “saving” Canada from the humanitarian society. Prime Minister Harper
declared: “the world has lost a giant among leaders”.
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The government’s conclusion: humanitarian-based government is one with its
wheels coming off.
The right-wing international CATO Institute applauds the current administration
for its persistence in reducing the size of government. But shrinking government
is a recipe for wide-spread anxiety. Declining government programs and services
reduce the sense of security that the middle class craves and could eventually
lead to the demolition of the long-term foundation of social trust among
Canadians.
In Canada there is a general reduction in the funding of important elements of the
social safety-net. Some will consider raising the age eligibility for seniors’
pensions and the squeezing of funding for essential infrastructure renewal and
the relentless unloading of federal programs to the provinces as part of this issue.
Improvements to the standard of living are hollow when focused tax cuts
dominate the government’s policy agenda. This is the methodology of votebuying targeted at specific ideological groups, not the panacea for a stronger and
more secure middle class.
PROPOSED PUBLIC POLICY
The current Canadian government’s long-run anti-tax campaign can only be reversed by a massive
education program to promote the role and value of government. Canadians should understand that the
collection of taxes is good for them because it is the basic foundation of well-being, security and
prosperity.
Our government should return to the pursuit of Canada’s humanitarian legacy
rather than reject it. In so doing, creative taxation will be required to provide the
grounding for the renewal of our humanitarian middle-class society. Returning
the HST to its previous level would be the simplest action to reverse the bleeding
of social programs by way of insufficient revenue to support them, but, from a
competitive electoral perspective, would not be advocated. The process of
privatization of essential state enterprises must be reversed, but only with
accompanying public education of the need for government.
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Parts of the broad issue are the elements of social trust; this is not identical to
political trust but certainly influenced by it. Do Canadians trust their next-door
neighbours? For this to prevail, Canadians must share responsibilities and goals.
The key factor in the development of social trust - and ultimately political trust - is
both the real and perceived extent of equality. Conditions of equality only exist
when taxation is progressive and government programs can become meaningful
by way of providing significant access to public funding and accompanied by
appropriate public communication and marketing.
In a recent column in the Toronto Daily Star, Alex Himelfarb discussed the
importance of inspired public policy for the well-being of Canadians. He related
that in Scandinavian countries, where taxes are highest, one also finds the highest
level of social trust.
Enhancement of humanity must return to the core motivation of public policy.
Where social trust is high, political trust and participation increases. These factors
are the ultimate recipe for the reduction of crime and corruption and shatter the
notion that a society must be homogenous in order to create equality.
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4. MIDDLE CLASS CHARITABLE GIVING
“And though I have the gift of prophecy, and understand all mysteries, and all knowledge; and though I have all
faith, so that I could remove mountains, and have not charity, I am nothing”.
1 Corinthians 13:2 KJV
Universities and colleges desperately need endowment funds that provide for professorial chairs and student
bursaries.
Donald Johnson, member of the advisory board of BMO Capital markets.
The vast majority of donations from the wealthy go to education, the arts, religion, and other organizations
which do actually not help the homeless, the hungry, and the deprived.
GIV3 Foundation
BACKGROUND
There are currently 85,600 registered charities in Canada.
Middle-class charitable giving has been a pivotal part of citizen engagement in
human civilization. It is deeply rooted in our psyche. Today it is in decline. That is
part of the collective diminishment of humanitarianism.
If the motivations of the middle class continue to sink into the psychology of the
“me too” generation, the level of charitable giving will continue its downward
slide. Canadians will increasingly consider themselves as simply a collection of
men and women and their children, nothing more. In fact, the charitable-giving
crisis may be upon us. The implications for our humanitarian society, built over
many generations, will be wide-spread.
A second reason for the decline in charitable giving is the middle class conclusion
that trusting charities to do what they purport to be doing should be questioned.
The Edmonton-based Muttart Foundation reported in November, 2013, - based
on 3,800 interviews with Canadians - that the level of trust in people running
charities has dropped from 80% in 2004 to 71% in 2013. This drop in the level of
trust, for the same period, is much steeper than for lawyers, politicians, and
religious leaders. Nearly 70% said that charities spend too much money on
fundraising and administration.
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The survey reported the following:
 Highest level of trust – hospital sector – 80%
 Environmental charities trust level – 67%
 Religious entities trust level – 59%
Charities do a good job providing information about fundraising costs – 21%
Twenty years ago almost 30% of Canadians gave to charity. In 2011 Statscan
reported that the figure had dropped to 23%. The steady accompanying decline
in religiosity-related membership may be an important link to this development,
along with reductions in disposable income that are fueled in part by the “me
too” attitudes of consumerism.
Currently Canadians give less than 1% of their income to charities. The Fraser
Institute’s annual charity index reports that Canadian charitable giving was 0.64%
in 2013 compared to the American being “the paragons of virtue” at the level of
1.33% of income. But that is hardly a fair picture since charitable-giving
deduction-regulations in the U.S. are much broader than in Canada. Because of
deduction restrictions, the Canadian level of giving is probably comparable.
However, American charitable giving may be more obvious given the greater
income disparities in the United States compared to Canada. In the U.S. a
charitable donor may give securities rather than cash, which avoids both capital
gains tax and allows the donor to claim a deduction.
Statscan figures for 2010 report that women donate more than men, those with
religiosity membership donate more, and the national median amount of giving is
a mere $123.00. An Ipsos survey reveals that churches, mosques, synagogues,
and temples received 40% of donations followed by the health sector which in
turn was closely followed by the social services group.
When the middle class turns inward regarding charitable giving in terms of trust,
coupled with “me too” preoccupations, the level of giving seriously drops.
Viewed alongside the comments [Item 3], related to the issue of social trust
among Canadians, the middle class clearly needs the support of government
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(through revised charitable tax regulations) to sustain its commitment to society
beyond its commitment to family.
At the time of writing this, the Ottawa United Way fundraising effort was $5 million short of its annual
charitable campaign objective of $21 million. In practical terms the shortfall could mean that 19,000 persons
who usually benefit from the Ottawa United Way campaign each year will be left behind in 2014.
PUBLIC POLICY PROPOSALS
There is an urgent need for a comprehensive review of charitable-giving
regulations to assist middle class Canadians to increase their engagement in
citizenship participation. The American model needs to be closely examined, if
not copied, to dramatically enlarge the level of charitable attribution for the tax
payer. [See item 10].
A review of the inner workings of charitable foundations, with the objective of
creating more transparency regarding their operation, would help to assure the
middle-class base of charity-supporters that monies are being well spent. Both of
these efforts would stimulate citizen engagement in the charitable sector.
21
5. MIDDLE CLASS HOUSEHOLD AND INDIVIDUAL INCOME
Household and individual incomes are standard economic means to establish middle class membership. But
analysts do not agree on the range of household income that definitively qualifies middle class parameters.
BACKGROUND
Regardless of the width of middle-class range it is generally true that the entire
group “feels” middle class membership inclusion. To arrive at a more precise
definition disposable income factors can be considered. Added to this is the
comparison of essential income needs based on urban, rural, and suburban and
regional circumstances. This all points to the need to respond to the “feeling” of
middle class belonging.
The human resources firm Mercer predicts that the annual Canadian salary will
increase 3.1% in 2014. This is a slight drop over recent years but not much of an
increase considering inflation.
Here are the Statscan figures based on the 2011 census:




Median Family Income
Median Individual Income
Median Income of the Richest 10%
Median income of the top %1 – 272,600 persons
$76,000.
$50,700.
$80,400.
$381,300.
The Happiness Index pegs “ideal” income at $75,000 [See item 38]
The rich are mainly white males between the ages of 45 and 54.
The bottom 10% of the population lives in cities, particularly in Montreal; the
group is dominated by recent immigrants and visible minorities.
NOTE: Statscan refuses to discuss income history and does not pursue trends in this area
The BC Office of the Canadian Centre for Policy Alternatives, show a divide into
three categories of middle class income
22
The three middle groups represent 59.7% of the population. Add 6.3% from the
“near poor” category and 18% from the high income group and one counts 84%
of the population that “feels” it belongs to the middle class.
Canada
Quintile 1
Quintile 2
Income range Percent of
families
up to $40,000 21.1%
$40 – $60,000 17.9%
Quintile 3
Quintile 4
Quintile 5
$60 – $85,000 20.4%
$85 – $125,000 21.4%
over $125,000 19.2%
Description
Poor & near poor
Lower-middle or
modest income
Middle income
Upper-middle income
High income or welloff
PROPOSED PUBLIC POLICY
In discussing what the middle class is, who belongs to it, and what income levels
encapsulate it, caution should be used. Since most Canadians feel as if they
belong to the middle class it is a waste of public policy energy to attempt to
pigeon-hole the term or condense a confined precise group into a definition of it.
So the mantra “the middle class needs this or that” should be unencumbered by
narrowly-focused qualifying phrases about to whom one is referring.
23
6. MIDDLE CLASS INCOME STAGNATION
The Canadian Federation of Independent Business estimates that every 10% hike in minimum wages could
trigger up to 321,000 job losses nationally. Instead it advocates more budget-sponsored tax exemptions and an
increase in government-sponsored skills-training investment.
When the minimum wage goes up, it affects all wages whether one is at minimum wage or not. Everyone
expects a pay raise.
Nancy Stern, president of 400-employee Marco Corp of Brantford.
BACKGROUND
Statistics Canada data shows that today’s typical 25 to 34 year old is taking home
11% less in wages than in 1976 while the older Canadian is earning a mere 3% to
7% more. This translates into more household wealth for a small number of older
Canadians and more debt for younger ones. So the younger Canadian stays in
school longer, marries later, and pursues home ownership much later, than in
previous generations.
Stagnation is the current state of middle class income. According to Statscan,
median incomes in Canada have only increased 5.2% in the last three decades.
Median after tax income was $48,200 in 1981; in 2011 it reached $50,700, a very
slight increase of $2500 over the last 30 years.
In 2014, 13 states in the United States are expected to raise the minimum wage.
A further 11 states show interest in doing so as well. U.S. wage-earners stand to
be more flush with cash than in previous years, relatively speaking. The Ontario
government has announced a minimum wage increase for the spring of 2014.
Perhaps the minimum wage landscape across the nation would be a good starting
point to arrest general middle-class income stagnation.
But every economic action produces a counter action. Corporations will be
financially challenged to pay the increased minimum wage.
After many years of relentless cost-cutting, there may be little “fat” left to trim off
corporate earnings to meet higher wage standards. Most companies are engaged
in planning for consumer-cost discretionary tactics. The consumer will be
24
burdened to produce more cash for goods and services. The more wide-spread
minimum hourly wage increases become in the next couple of years, the more
likely that the inflation spiral will be re-energized.
The Bank of America’s equity strategist, Savita Subramanian says that companies’
current operating margins of 10.6% are nudging close to the long-term historical
high of 11.1%. Companies may not be able to be sustainable beyond that level.
Cost cutting can easily be focused on employee reductions. And such reductions
could become wide spread.
As for a “living” wage in Canada, one that provides for basic expenses and a
decent standard of living, the figure for Vancouver is pegged at $19.62 per hour
while it is $15.95 in Guelph.
Provincial minimum wages in Canada are:












Nunavut
Yukon
Manitoba
Nova Scotia
Ontario
British Columbia
Quebec
Saskatchewan
Prince Edward Island
NWT Newfoundland
New Brunswick
Alberta
$11.00
$10.54
$10.54
$10.30
$10.25
$10.25
$10.15
$10.00
$10.00
$10.00
$10.00
$9.95
It remains obvious that two wage earners are required in most households in
Canada to provide the basic conditions for living.
25
PROPOSED PUBLI C POLICY
A royal commission or Senate Special Committee could be struck to examine
income rationalization. It could have very broad terms of reference to explore the
relationship between national economic well-being and wage requirements for
reasonable standards of living, mortgage affordability, appropriate disposable
income levels and policies to challenge the limitations of the growing sector of
part-time employees.
But the scope of such a study will need to be sufficiently wide-spread to
thoroughly explore corporate costs as well.
[See items 18, 19, 20]
26
7. MIDDLE CLASS INCOME INEQUALITY RISES UNEQUALLY
The consequence of low wage is that society has a “missing middle”, a huge explosion of pay at the top and
many more low-wage workers.
Rafael Gomez, labour economist, associate professor of industrial relations, University of Toronto
Wages in high-paying industries are rising faster than low-and mid-paying industries. Sluggish wage-growth at
the bottom suggests that the income gap will continue to widen.
Benjamin Tal, deputy chief economist at CIBC World Markets.
The only comforting aspect of the Canadian income inequality debate is that Canadians are better off than
Americans who live in the most unequal society of any industrialized nation.
The Pope has denounced trickle-down economic theories as unproven and naïve. The famous Reaganomic
dictum, “a rising tide lifts all boats” has only exacerbated the great divide between the “have-not” and “have-itall” groups. Perhaps the dictum is better stated today as “a rising tide lifts all yachts”.
Globe and Mail letter-writer Arlie Freer of Bracebridge.
Distinct higher-priced boxes for patrons at sports events are now common in the United States. This is the new
skyboxification of American life. People of influence and people of modest means, lead increasingly separate
lives. It is not good for democracy, nor is it a satisfying way to live.
Michael Sandel, professor of philosophy, Harvard University
BACKGROUND
Rising income inequality is a global issue. But Canadians fare better than most
people on the planet. Canadian social mobility is higher than in the United States
and Canada’s tax system is more progressive. And from a global perspective,
according to Princeton University professor Angus Deacon, in his about-to-bepublished book on inequality, The Great Escape, the global reduction in poverty
since 1980 may be the most important economic story of the 20th century.
The Canadian experience has been an extremely successful one since Canadians
are among the best educated on the planet, in spite of recent dismal comparative
international math scores.
Among the top 34 developed countries on the planet, the U.S. is number four on
the list of most unequal societies, surpassed only by Turkey, Mexico, and Chile.
Canada ranks in 12th spot. But Statistics Canada reports that only the most
affluent group of Canadians – 20% of the population - has increased its income
27
since 1976. At the other end of society, low-wage jobs – positions that pay 20%
or more below the average – constitute about 28% of paid, full-time employment.
The OECD reports that since 1980 every “first world” economy has seen an
increase in share for the top bracket of wage earners. The most significant gains
have been in Canada, the United States, Australia and Great Britain. In 1982
Canada’s top 1% earned 7.1% of national income; in 2011 that figure climbed to
10.6%.
The United States comparison for 2011 shows the top 1% at 19.7% of national
income. This figure grew to 22.5% in 2012. The top 0.1% in Great Britain take
home an astonishing 7.5% and economists there predict that the figure will reach
14 % by 2035. In the U.S. in 2012 the top 10% of earners took home half of the
nation’s total income. There are no figures available for Canada yet for 2012.
Statscan reports that Alberta (2011) has the top Canadian income spot with 1%
earning 17%; New Brunswick is the lowest with 4.4% of income. In terms of cities
Calgary is at the top; Trois-Rivieres is at the bottom.
As a further comparison, in 2011 the top 5% of Canadians earned 23.8% and the
top 10% earned 35.1%. Therefore 90% of Canadians earned only 64.9% of the
national income. But these statistics do not address accumulation of wealth and
assets such as housing, so they only show part of the middle-class picture.
Rasmussen, the United States pollster reported in the spring of 2013 that 65% of
Americans self-identify as middle class. The Canadian comparison is about 84% of
the population.
The following four pillars of inequality are common in all developed states.
1.
2.
3.
4.
The disappearance of manufacturing jobs due to globalization
The decline of labour unions
The increase in pay for executives and bankers
The mismatch between the skills people have and the ones that are
needed.
28
Income inequality is being driven by technology. Knowledge is doubling in fewer
than 12 months and continues to accelerate. One hundred years ago it took
several years for knowledge to double. American economist Tyler Cowen, in his
book Average is Over, says that the United States trend is that of a hypermeritocracy where only the most gifted and technologically-skilled workers will
command good wages, leaving everyone else behind.
With big technological forces at work, Canadians are likely to experience the same
realities. And millions of North Americans will slide into lower wages – even
those who are gifted – as the relentless advances of technology out-pace and outstrip them.
Of course, all countries have inequality. And the fact remains that inequality can
be a powerful inspiration to some people to work, to invest, and to succeed.
When ambition is pursued in the framework of the great equality equalizers,
universal child-care, affordable education, universal health care, and universal
pensions, as found in Canada, the mild variance of equality/inequality is more
palatable than in some countries.
After government transfers, Canada has much lower income inequality than in the
United States. In the 1980s, the U.S. began a dramatic reduction in the income
tax rate. The highest wage-earners who were paying 70% then, now pay a mere
34%. In addition there are generous tax loopholes reinforcing the process of
ongoing income inequality including charitable tax donation benefits that are
unheard of in Canada.
Another element in the equality/inequality debate is the transfer of money from
one generation to another. Alan Krueger, former chair of President Obama’s
Council of Economic Advisors calls this the “Great Gatsby Curve”.
Children from families of economic advantage are more likely to be better off
than those who did not inherit from their parents, and their poorer counterparts
are more likely to stay poor. He adds that there is a stronger association between
father and son earnings in the United States and Great Britain than there is in
Canada.
29
The promise of the American Dream is seriously being challenged for the U.S.
middle class since upward mobility is stagnating. In fact parents in the U.S. and
Great Britain characteristically pass on as much as half of their financial advantage
to their own children compared to somewhere between a fifth and a quarter in
Canada where wealth is more dispersed due to different tax policies.
Canada’s relative equality is deemed to be due to wide-spread quality education,
child care, and equally wide-spread health care – key over-arching societal
equalizers - in comparison to the other two nations.
Miles Corak, professor of economics at the University of Ottawa, suggests that the
equality/inequality debate is being shaped by choices. “Inequality lowers mobility
because it shapes opportunity,” or lack thereof.
Canada’s National Child Tax Benefit is an important player in this debate. It
provides a basis on which children can enter a relatively equal playing field and
maintain the middle-class status of their parents as adults.
The Child Tax Benefit may be the key for Canadian society to avoid the excess of
inequality found in the U.S. Sean Reardon, professor of education at Sandford
University found that the gap on standardized tests between rich and poor U.S.
students is about 40% greater than it was 30 years ago.
Furthermore, he discovered that, not only are students from affluent families
outperforming poor students, they are also outperforming students from middle
class families. The U.S., therefore, has become one of the hardest places in the
developed world for a child to earn more than his or her parents. [See Items 18
and 19]
PUBLIC POLICY PROPOSALS
In most of Canada successful wide-spread increases in income will be the result of
replacing relatively low-skilled manufacturing jobs with technologically focused
high-skilled employment.
30
Canada needs to drive hard on the road of innovation and talent. This is the
medium-term solution. The basis of building this wide road rests with further
attention to the development of equal opportunities for children, accelerated
focusing in the areas of early childhood education, school health programs
accompanied by nutritious noon-meal-time availability and wide-spread access to
mathematics, science and technology programs and arts, and sports coaching.
Any creative public-policy initiatives related to the above will capture the support
of middle-class parents. Surely this is a key for public-policy makers who have an
eye on positive electoral outcomes.
31
8. MIDDLE CLASS HOUSE PRICES, INVESTMENTS, INFLATION, AND SECURITY
Low interest rates are a form of economic junk food.
Rob Carrick, Globe and Mail Personal Finance Editor
BACKGROUND
As long as the U.S. Federal Reserve continues to print money – and as long as the
Bank of Canada follows in those foot-steps - our greatest long-term concern will
be inflation. The world of the zero interest rate is over on the retirement of U.S.
Federal Reserve chairman Bernanke. The planet will respond. Ultimately
everything we do will be peripheral to paying the mortgage, or the rent, and our
ability to retain employment.
Paying the mortgage may become stressful as soon as two years from now.
Middle class home owners should be reading the tea leaves.
According to wallstreetdaily.com a 2% bump in inflation rates can make a
difference between losing one’s wealth at the rate of 70% versus 52% over a 25
year time-frame. Inflation is not a current concern, hence the drop in the price of
gold. But if the Federal Reserve continues to print money indefinitely– and the
Bank of Canada follows – inflation will likely erode our savings dramatically when
it takes off on another spiral. Of course, the traditional investor response will be
a return to the purchase of gold.
Part of the reason for the long-term decline of the economic security of the
middle class rests with the interest-rate bubble of the late 1970s/early 1980s. At
that time bonds gave interest rates in the 15% - 20% range. Thousands of middle
class Canadian seniors – and their children - fueled the bond market with
purchases believing that the good life would have no time limit. But interest rates
gradually declined. Bond purchases were no longer as sexy in the 1990s.
Suddenly a great number of Canadians could not support the retirement life-style
they thought they had bought into with high-yield bond purchases.
By the early 1990s a massive readjustment of expectations occurred in the wake
of dramatically reduced bond interest income. This adjustment led to a
32
substantive tightening of middle-class discretionary spending, not only by seniors
themselves, but by their offspring in the work force who had to give more
financial support to their senior loved-ones whose income was withering.
The micro psychological impact of this loss of bond-interest income is still being
felt today in the middle class even though seniors are certainly not suffering
financially. [See items 26 and 28]
There is a direct “security and well-being relationship” between Canadians’
opportunity and ability to purchase high-yield investments and the sustainment of
adequate Canada Pension Plan/Old Age Security earnings. When inflation finally
rises, the proceeds of social security instruments will need to rise as well.
House prices have surged ahead of income since 1997. Then the average house
price in Canada was 4.9 times the average pre-tax annual income of $31,484. As
of July 31, 2013, the average house price was $379,725, 7.8 times average income
of $48,497. [See end of 2013 below] In the past 17 years incomes have only risen
by an annual rate of 2.6% while house prices have gone up 5.4 %. What is the
significance of this for the future financial viability of middle class families?
House prices have more than doubled, incomes only increased by slightly more
than half, inflation has almost flat-lined, and interest rates are negligible, except
for credit card users. The low interest rates have been a steady stimulus for the
housing market and non-existent inflation has subdued consumer prices.
Middle class consumers are living in a kind of economic dream world in spite of all
the hype about income stagnation and dramatic changes in the demographics of
employment because of minimum inflation and borrowing rates. But the
economic signs suggest that the middle class is going to have a big financial shock
in the next 24 months.
The OECD predicts that interest rates will begin to climb before the end of 2014.
Home owners with high mortgages will be experiencing a sudden reality curve.
This is the succinct issue, therefore: In October, 2013 house prices had risen a full
8% from one year earlier. Salaries have not kept pace. Median income for fulltime employees is slightly less than $50,000. If the average household income is
33
double that, the price of one’s home should not exceed $300,000. The average
house price was $306,724 in 2007; by the end of 2013 it had risen to $391,820.
In 2014, there is a sober message for the Canadian middle class property owner
from New York-based economists from Deutsche Bank: they say that Canada is in
trouble. Canada’s house prices are 60% too high. There is general agreement
among economists that prices are too high but profound controversy about the
implications of this on the Canadian economy. Canadian Bank of Commerce
Benjamin Tal pegs the over-valued house figure at 25% but does not believe that
prices will drop by half that amount.
A combination of low unemployment, rising incomes and government awareness
that the situation may be precarious may work together to temper the possibility
of serious economic downturn.
Fitch Ratings pegs national home prices about 21% too high (27% too high in
Quebec; 18% too high in Alberta). Herewith a late 2013 average house-price
snapshot:




Vancouver: $603,400
Toronto: $520,398
Calgary: $472,200
Montreal: $401,714 (two storey); $291,050 (detached bungalow); $239,322 (condo)
Construction activity, a pivotal aspect [percentage] of the health of the Canadian
economy is currently 7.1%, up from 5.2% in 2000. If there is a sudden reduction
in housing starts of 30 to 50 thousand, as many as 100,000 jobs, in addition to
ancillary employment, will be impacted. Will Dunning of the Canadian Association
of Accredited Mortgage Professionals believes that Canada is at the cusp of
construction downturn.
34
PROPOSED PUBLIC POLICY
The attempted moderating influence of the Canadian government regarding
mortgage financing availability has not dampened house and condominium
construction. The government is walking a tight-rope balancing act.
Of course, one of the long-term solutions to the issue is the advocacy and reality
of more immigration. That would mean keeping it higher than the traditional
level of about 250,000 per year. But for every action taken there will always be a
counter action. That is why we have a central bank as a moderating influence.
It has become obvious that the new governor of the Bank of Canada likes the drop
in the Canadian dollar. And it seems as if the Minister of Finance concurs.
Perhaps he agrees, in fact, with the prestigious firm Goldman Sachs that the
Canadian dollar will likely settle around 88 cents American for 2014, thereby
boosting Canadian exports so greatly, that Canada’s economy will enjoy a sudden
burst of energy.
But perhaps Canadian tea-leaf readers should not hold their breath?
35
9. MIDDLE CLASS SAVINGS AND DEBT
The remarkable thing about the statement “one has to pay one’s debts” is that even according to economic
theory, it isn’t true. A lender is supposed to accept a certain degree of risk. If all loans, no matter how idiotic,
were still retrievable – if there were no bankruptcy laws, for instance – the results would be disastrous. What
reason would lenders have not to make a stupid loan?
David Graeber, author of DEBT: The First 5000 Years.
BACKGROUND
Consider this: The mantra that one must pay one’s debts is not an economic
declaration, rather, it is a moral imperative. The International Monetary Fund is
the world’s debt enforcer.
It seems that consumer debt is the life-blood of our economy.
The October 2013 Royal Bank debt poll pegs the annual Canadian personal debt
load at $15,920 up $2,779 from a year ago. Quebec per-capita debt remains
lowest at $10,458. In the same period the poll reports that 24% of Canadians are
debt free compared to 26% a year ago. The 2013 year-end report of the Canadian
credit-rating agency, TransUnion tells a bleaker story – the average Canadian
consumer currently owes $27,355, excluding mortgages. Total Canadian
mortgage debt is now $906 billion up from $461 billion in 2007.
As for debt comfort levels, 38% of Canadians are anxious about it and the same
percentage – 38% - are comfortable with their debt. The anxiety level only
increased 2% between 2012 and 2013. Of course, individual attitudes toward
debt vary considerably depending on an almost endless variety of circumstances.
As for savings, fifty years ago Canada was regularly cited as one of the highest
nations of per capita savings. In the 1950s it exceeded 12% of disposable income.
In 2009 it was 6%. By 2013 it dropped to 5.5%. By way of contrast however, the
last quarter savings rate in the United States is more than double the previous
rate of 2.5% there. There has been a steady decline in Canada during the last two
generations. In January, 2014, the Bank of Montreal reported that only 43% of
Canadians with registered retirement savings plans intend to increase them
before the March, 2014, deadline.
36
This is a dramatic decline from 50% last year. Of those not contributing this year,
70% declare that they do not have sufficient funds to do so. Concurrently
Scotiabank has reported that 16% more of retirement savings-plan holders
withdrew money from their accounts in 2013 compared to the previous year.
The Sun Life Financial/Ipsos Reid poll from late 2013 reveals that 57% of
respondents say they are not in better financial shape than they were a year
earlier. Quebecers were the highest group stating they are not better off at 63%;
Albertans at 43%. Only 36% of Canadians are planning to increasing contributions
to their RRSP according to the Ipsos poll, compared to the BMO poll.
Statistics Canada reports another angle to this picture. In the 1990s Canadians
owed less than a dollar for every dollar earned. Today Canadians owe nearly
$1.64 for each dollar earned, representing a truly dramatic shift in the debt picture
of the individual Canadian.
A major issue dramatically affecting the consumer debt/burden is the
intransigence of the high credit card interest rate. But lower interest rates would
likely not change the patterns of consumerism. The contrary could occur. At a
time when the Bank of Canada endlessly maintains a low interest-rate policy and
commercial bank interest rates are remaining at historic lows, the credit card
companies – which are controlled by the banks – continue to rake-in high interest
on unpaid credit card balances. And no one does anything about it, in spite of the
persistent efforts of Senator Ringuette and others.
The credit card costs for Canadians are extremely lucrative for financial
institutions. The competitive fight to increase the number of credit card holders
is a major preoccupation of Canadian banks as they try to steal customers from
each other. But who is protecting the consumers in an extended period of low
interest rates?
PUBLIC POLICY PROPOSALS
To suggest that there is widespread discomfort about debt on the part of the 75%
of Canadians who have debt is false since only 38% of those in debt (actually only
37
28.5% of the total population) are anxious about their debt status according to
the RBC report.
Therefore, it might be assumed that there would be limited traction among voters
for public policy preoccupations with lectures about personal debt and schemes
to reduce personal debt. One could argue that vast numbers of Canadians have
simply learned to live with their debt.
But the niche issue of credit-card rip-off should find resonance with Canadians if it
is appropriately crafted into public policy proposals.
38
10. MIDDLE CLASS AND THE TAX BURDEN
The income tax system is used to ensure a more equal sharing of society’s total output. The greater the after-tax
income inequality, the less prosperous and healthy the society. A society that cannot share prosperity will not
remain prosperous and healthy in the long run. Those fortunate enough to be in the top income category should
take pride in their success and in their capacity to share it with the less fortunate. The tax system is the simplest
way to make it happen.
Dave Jobson, Globe and Mail letter-writer
Several hundred thousands of Canadians have significant wealth in real estate and private company shares.
Many Canadians would consider making major donations to social service agencies, such as United
Way/Centraide, if they weren’t required to pay capital gains tax on such gifts.
Donald Johnson, member of the Advisory Board of BMO Capital Markets
BACKGROUND
One could safely generalize that many Canadians feel overly burdened by taxes.
For many years, back-bench members of the House of Commons have been
trumpeting tax relief for their favourite causes by way of advocating the
elimination of the sales tax. Regular subjects of private members’ legislative
initiatives have included tax-free funeral expenses, the tax-free purchase of books
by libraries, and tax-free hearing devices for seniors. There is a lengthy list of
favourite would-be tax exemption projects.
The arguments about sales taxes being regressive have been around since their
commencement to satisfy the hunger – insatiable appetite it would seem – of the
tax man. Governments pursue a mixed-taxation approach including pay-forservices levies, all embracing the government’s decision-making processes for the
creation of revenue.
In addition to obvious tax payments such as income, property and the
harmonized sales tax, there are many hidden taxes that vary from jurisdiction to
jurisdiction.
Canadians remain uninformed about the extent of their real tax burden.
39
Great Canadian taxation puzzles, however, have never been resolved. What
conclusions are there to the conundrum of determining taxation fairness between
the relationship of property and income taxes? Should only those who use the
highways pay for road repairs? Should those who refuse to follow the advice of
their physicians be forced to pay for medical service and stand at the back of the
line for hospital admissions? Should property owners continue to pay school
taxes? What about the particular tax challenges of the middle class selfemployed? These are the hot-button issues that are certain to preoccupy
decision-makers as tax dollars get more thinly apportioned to society’s
requirements
There are thousands of Canadians who have significant wealth in real estate and
in public and private company shares. Broadening the charitable donation
regulations could bring significant tax payer engagement and benefit many
Canadians as well.
PUBLIC POLICY PROPOSALS
The rationalization of taxation policies at all levels of government and the fair
application of taxes could be the subject of a national high-profile examination of
the Canadian tax structure. It could be driven by a national parliamentary task
force, travelling from coast to coast, which would permit a wide variety of
individuals and organizations to participate in plotting a transparent, equitable,
and progressive tax regime for the next generation of Canadians – a tax regime
that would consider the issues of development, charitable giving, social safetynet, and the increasing longevity of Canadians.
It is imperative to include in the discussion the issue of TAX and BUILD referred to
elsewhere in this paper. That could mean the launching of an information
program unparalleled in Canadian history.
40
11. MIDDLE CLASS UPWARD MOBILITY, DECLINE AND GLOBALIZATION
A new era of production has begun. Its principles of organization are as different from those of the industrial
revolution as those of the industrial era were different from the agricultural.
Advisers’ memo to U.S. President Johnson
The economic revolution favours a “very small and very lucky and very smart group of people”.
Chrystia Freeland MP
“Opportunities for upward mobility in America have gotten harder to find over the past 30 years. That’s a
betrayal of the American ideal”.
President Barack Obama, 24 July,
2013
BACKGROUND
The future of a wide-spread middle class in North America is entwined with
technology and the strength/weaknesses of employee sectors. It is also entwined
with both the American and Canadian Dream.
Loss of jobs, to technology and cheap labour off-shore, is accelerating. The
effects of globalization are slowly sinking into the public consciousness. Labour
unions encompassing those in non-technological employment have dramatically
lost their clout to the third-world job drain, outsourcing to lower-wage
economies. But other groups are making strident gains. We are grasping the era
of productivity with substantial adjustments in the reduction and use of labour.
While the global economic revolution does favour a small group of citizens at the
summit of the economic ladder it also dramatically enhances selective sectors in
the middle.
For example, firefighters and policeman are flooding into the upper reaches of the
middle class, many with $100,000.00 plus annual salaries and are rapidly creating
budgetary nightmares for Canadian municipalities. For a few short years they
have been leveraging municipalities with their demands based on the urgentsounding cries of their lobbying and public relations efforts. The firefighters union
has been playing hard ball with Canadian municipal governments for some time.
41
Advertisements suggesting that fire-response times will be greater without high
salaries for firemen have been perplexing policy makers and budget framers.
Municipal councillors in Toronto have been receiving a high volume of calls from
those worried about the future of fire-fighting response. Although there is a
growing weakness of organized labour generally resulting in the widening of
inequality within the two extremes of middle class income.
Clearly the firefighters union and police unions in general are the exceptions to
this trend. Their membership is rising in the middle class ranks. When one adds
the $100,000 or so that a first class constable makes, coupled with a spouse at the
median income level of $50,000, it is clear that police-occupied households are
enjoying upward mobility within the middle class from an income point of view.
As for the police numbers in Canada, even though violent crime has fallen, the
number of police is increasing. In 2007, there was one policeman for every 513
Canadians; it has increased in 2013 to one per 502 persons. Canadian municipal
councillors – budget-scarred, weary, and generally under siege - can expect the
level of police in their communities to remain steady and more numerous given
the strength of the police unions. This is in spite of a general decline in crime
according to Canada’s Crime Severity Index based on 100=2006 as follows:
 2007 – 97.7
 2009 – 94
 2012 – 81.4
In previous generations auto workers enjoyed the same upward-mobility into the
middle class simply because their unions were well-financed and well-organized.
But the police and firefighter unions have played the “fear” card to top-up the
incomes of their members. The days of strong unions dedicated to lower-middle
class Canadians and their non-technological employment may have passed.
Perhaps firefighters are the more aggressive of the two groups. Last year in the
small Ontario community of Owen Sound (pop. 32,092), 25 of the 29 firemen
made more than $100,000 annually. Job seekers believe that it is so “lucky” to be
a fireman that in 2013 there were 500 applications for only 20 firefighting
42
positions in the Ontario urban cluster of Cambridge/Kitchener/Waterloo. This
pattern is currently repeating itself across Canada.
In most middle class families it takes two adult wage-earners salaries in the
household to reach the $100,000 level that single firemen and policemen enjoy.
Isn’t there something wrong with this picture? Are high salaries for some groups
an impediment to the growth and security of the broad middle class, particularly
for those who are not organized into wage-bargaining groups?
Certain unions are engines of upward-class mobility for their members; others are
not. The decline in the union movement generally reduces the traditional
bargaining power of countless middle class “wannabies” who do not have
membership associations to champion their causes.
Municipal governments are currently straining to keep pace with the financing of
social safety-net programs and capital works priorities due to the power of police
and firefighter unions to demand and receive higher salaries. Senior levels of
government are constantly down-loading services to local governments.
Municipalities have limited taxation sources and flexibility. The cost of education
takes a large share of local budgets. And in Ontario the Roman Catholic public
school system is an expensive luxury.
Perhaps the most frightening aspect of middle class decline is the growth of the
part-timer who is not unionized and often unable to qualify for a mortgage
because of limited weekly work-hours that reduce income levels below the
capacity to access mortgage financing. Arguments abound that some large retail
outlets have grown rapidly on the backs of part-timers.
Another barrier for middle class mobility is within the multicultural component.
For a variety of reasons, middle-class new Canadians struggle to transfer their
skills – and their accompanying middle class values and norms to their new
country. Sabina Michaels, Business Edge program manager cites the barriers for
immigrant professionals to adapt and be acceptable in the Canadian business
community citing, for example, that Canada is less hierarchical than many
European and Asian business cultures. Within Canadian corporations the nature
43
of inner-office communications can deter advancement for immigrants who do
not value water-cooler networking chatter and small talk and tend to look down
on office relationships not realizing that office “politics” is a way of life in most
Canadian workplaces. Responsive understanding of how Canadian corporate
culture works is key to upward mobility for multicultural transfers into the
Canadian business reality.
Upward mobility goes hand in hand with the transformation of education.
Experts predict that dramatically enhanced pre-school education is the
foundation that will provide the most enduring and solid basis for this mobility.
PUBLIC POLICY PROPOSALS
The capping of salaries is probably a non-starter. However, policy makers should
look for a “salaries rational” before too many “unorganized” folk slide further
away from the median income threshold. Uniform firefighter and police income
levels could be considered and tied to inflation increases. Relative standards of
income/work value could be assessed. Reasonable bargaining-power provisions
could be proposed. Most of this area is in provincial jurisdiction which excludes
federal policy-making.
However – the growing crisis for the part-timer could become a national policy
mantra. For example, fifteen years ago the National Liberal Caucus was grappling
with the issue of the right of Canadians to open a bank account illustrating federal
policy involvement of what would at first blush appear to be a provincial matter.
Full-time employment entitlement could be a national policy based on
appropriate criteria. Shouldn’t every Canadian have employment conditions that
lead to eligibility for a mortgage loan? This would require a national framework
for substantially limiting the uncontrolled spread of part-time work. More
Canadians would have one full-time job instead of two or more part-time jobs
which would enable them to quality for car loans and mortgage payments. Such a
policy framework would certainly serve to decrease the erosion of the middle
class.
44
12. MIDDLE CLASS: THE INFLUENCE OF THE FINANCIAL SERVICES INDUSTRY
Financial genius consists almost entirely of avarice and a rising market.
John Kenneth Galbraith
The middle class citizen desperately needs help to navigate the route to financial security. The government has a
role to play. When will it?
Every middle class family should have six financial safeguards: wills, RESPs, power of attorney, income
protection, and family trusts.
BACKGROUND
In our society, culture and politics interact and shape each other. The operation of
the banks may be the exception to the rule.
The mantra of the financial services crowd is summarized as follows: you are not
well off because you did not want wealth badly enough. But to succeed in
achieving financial security, to whom should one listen?
Financial planning – at home - is a key to the well-being of the middle class. It is
becoming clearer that, when seeking financial security advice, one should look
beyond the big banks for starters. For example, most middle class citizens hold a
mortgage on their home.
Informed Canadians try to shop for good mortgage deals but may not understand
the real costs of breaking an agreement when a big bank is in control of one’s
mortgage.
According to financial services Editor Rob Carrick of the Toronto Globe and Mail,
seven out of ten Canadians make changes to their five-year mortgage before
maturity. Breaking a mortgage contract entails harsh penalties when the owner of
the mortgage is a large Canadian bank. And Canadian bank profits escalate,
added to by exorbitant credit card interest rates at a time when inflation has
remained constant for almost two years. Smaller institutions are much less
aggressive than the big banks.
45
Debt repayment is the best investment that Canadians can make. Given the
privileged position of the big banks in the Canadian economy, their employees
should be leaders in coaching consumer-debt reduction for Canadians. Instead
the sales folk at the banks specialize in tactics to control the financial holdings of
their customers.
The National Liberal Caucus Task Force on the Future of the Financial Sector,
appointed by Jean Chretien in 1998, heard hours of testimony from Canada’s
senior bankers who were promoting the sale of insurance by the banks.
Among the facts that caucus members found shocking were the following:
Canadians do not have a legal or constitutional right to open a bank account; and
a Canadian middle class woman, trying to access micro credit for the
establishment of her own small business, usually needs to have her husband go to
the bank to co-sign a small-business loan, even though the husband is not a
participant in the operation of the wife’s business.
Canadians need to have discussions around financial decision-making. Objectivity
for solution-seeking may not be a consistent service of the big banks. The same
questions remain after decades of financial planning. In fact, the main symbol of
big-bank greed continues to be bank fees and the penalties to the consumer
when changes are made to mortgage contracts.
The middle class needs help. Often the banks are not prepared to provide such
help; they should be mandated to do so.
Canadian politicians extol the superior regulatory framework under which the
banks function. But the regulatory framework is relatively silent when it comes to
basic consumer protection.
PROPOSED PUBLIC POLICY
The government should change its focus on bank regulations to make the banks
into the friend of the consumer while at the same time being less aggressive with
46
the consumer to envelop him in the achievement of the banks bottom-line profit
rather than in assisting in the distribution of wealth.
Many Canadians believe that bank profits are too high. The middle class suffers.
This is a long-term issue. The banks must share the responsibility for the middle
class’ reduced capacity to meet its responsibilities to families by the rapidly
diminishing disposable income of the middle class. Banks should be key players in
the development of middle-class resilience.
47
13. MIDDLE CLASS PERKS: FEELINGS OF SUCCESS AND ACCOMPLISHMENT
BACKGROUND
Do perks trump pay increases? Many middle-class employees argue that they
want more than salary increases. Some want perks instead of salary increases.
Are they sacrificing salary increases and, therefore, more disposable income for
“feel good” substitutes? The vice-president of human resources at American
Express Canada tells employees that they should focus on what is most important
for them: Is it salary or perks?
The relative value of each category is not always weighed. Perks may blind the
employee to the critical need of appropriate salary, not just to match the value of
work, but to sustain the family viability. However, this issue has a totally different
connotation when one is not employed by a wealthy corporation that provides
perks choices.
Canada’s top 100 employers, and others, provide extraordinary perks for their
employees. At the same time they drive a wedge between the middle-class
Canadians who work for these employers, and those who work in small
entrepreneurial settings where few, if any perks are available.
Since some perks may fly underneath the tax-return radar, the disposable income
advantages for those who work for Canada’s top employers may be substantial
and unfair when viewed across the middle class employment landscape. This may
be a far wider long-term contribution to middle-class decline than currently
imagined.
Top employers may provide a gym, sauna and spa facilities, financial-services
advice, flexible working hours, family-friendly maternity leave, training and skills
development, showers and change rooms for bicycle commuters, organized
sports teams, and an extra week of vacation between Christmas and New Year’s.
Some companies provide in-vitro fertilization subsidies, on-site day care,
employee purchase programs, a quiet room for meditation and religious services,
book exchange libraries, 15-minute coffee-break massages, tuition and
48
professional accreditation subsidies etc., etc., leading to an unending sense of the
middle-class employee feeling valued. In this vein companies like Google Inc.
provide free lunch to employees.
The Canadian prime minister provides free lunch on Wednesdays for
approximately 125 staff members.
KPMG provides a personal benefit program for employees mandating 50 hours
“personal care time off”. Staff may use these hours for personal appointments,
family emergencies, bereavement, and religious observance. PepsiCo Canada
provides $5000 tuition subsidies and $10,000 of post-secondary support for the
children of employees. Alberta-Pacific Forest Industries provides a 40-acre fullystocked trout pond.
Deloitte and Carswell both provide generous financial support to employees who
adopt children. Accenture, a Hamilton-based consulting firm gives employees a
$6000 referral bonus for new customers. The Desjardin Group offers its
employees generous discounts on self-bike transit programs in Montreal and
Toronto. Some companies offer profit-sharing to employees, noteworthy among
them being the Great Little Box Company of Richmond, B.C.
Examples of perks are endless and very creative.
Of course, the middle class parents of today’s newest employees simply did not
think about perks. The work-place is seeing a dramatic shift in both employee
attitudes and benefits.
Polling by the Canadian consulting firm Hays Canada reports that 71% of
Canadians would take a 20% salary cut if offered a variety of benefits.
But is the free lunch at Google Inc. just simply a “feel good” gesture, along with
free financial advice and a gym for its employees? Wouldn’t more disposable
income for the family actually strengthen the family and the broad middle class?
How deep/wide is the wedge going to become between two sectors of the middle
class, the perks group and the non-perks group? While the “feel good” approach
may be appropriate for corporate Canada, is it detrimental to family well-being?
49
These perks are not available for the employees of small companies. This is the
flip side of this issue. An expensive gym or golf membership is not usually
available for the employee of a small firm.
Add the costs of a couple of other perks that are not available and one gets the
picture of expanding inequality between middle class employees of small firms
and those of large firms.
PROPOSED PUBLIC POLICY
Research is urgently needed in the area of perks, satisfaction and happiness and
the strengthening of the middle class family. Perks at the expense of well-being
and resonance may have debilitating long-term effects on the very future of the
middle class.
Fewer income increases and more perks may have the capacity to shift middle
class emphasis from the home to the office. However, for the single employee
the perks may be a substitute for many of the feelings of home which may, in fact,
be a good thing. So, the issue is complex and should be given appropriate
attention.
50
14. MIDDLE CLASS DIVORCE
th
Canadian marriages are expected to end at the rate of 43% before the 50 wedding anniversary.
BACKGROUND
In Canada divorce was a major social taboo until the conclusion of the Second
World War. The Special Joint Committee of Parliament headed by Senator Arthur
W. Roebuck (former attorney-general of Ontario) and A.J.P. Cameron M.P., paved
the way for major changes in divorce law that were sponsored in the House of
Commons by Justice Minister P.E. Trudeau. Divorce rates have been on a steep
incline since then (late 1960s).
Number of Divorces in Canada from 1970-2003
120000
100000
80000
60000
40000
20000
0
1965
1970
1975
1980
1985
1990
1995
2000
2005
Data retrieved from: http://www5.statcan.gc.ca/cansim/a26?lang=eng&id=0530002&p2=46
It is well known that divorce has a preponderant tendency to promote class
fissure with respect to those in the middle class who pursue marriage break up.
The male tends to move into the upper reaches of the middle class and the
female tends to slide into the lower side. Understanding divorce rates in the
51
middle class is important as divorce and marriage can be factors of economic
stability, as well as indicate changes in family structure.
According to Statscan, 43% of marriages in Canada are expected to end in divorce
before they reach their 50th anniversary. Every year more than 100,000
individuals in Canada go through a divorce but a new study by BMO has found
that most couples are unprepared to deal with the personal, legal and financial
consequences of divorce:
Divorce increases the risk of “near poverty” for a large proportion of women.
Studies show that women can actually experience a decrease of income by over
40% after a divorce.
An important explanation of why women tend to earn less after a divorce is linked
with children and laws that tend to favour women getting custody of children
over the husband. Long-term childcare responsibilities strongly impact a
mother’s earning potential in any given career. Even when assets are divided
equally, divorced women are more prone to slide to lower earning level, as a
result of reduced working hours, as more focus is made on their children. As
such, most divorce settlements do not adequately account for the damaged
future earning potential of a woman with child-care responsibilities. Reduced
earning capacity is not usually factored into divorce settlements, which divide
property.
Ultimately, the overall economic quality of a man's life, based on earnings and
amount spent on living expenses, increases after his divorce. He continues to earn
more but bears fewer family expenses. The overall economic quality of a woman's
life, post-divorce, decreases.
After a divorce, both parents are expected and legally required to contribute to
the cost of raising their children, but the law still does not provide a mechanism
to compensate a woman for the earning potential she has lost based on her
decisions to marry and have children.
52
PROPOSED PUBLIC POLICY
The current state of Canadian divorce would be a useful research project for a
sub-committee of the Senate Standing Committee of Legal and Constitutional
Affairs.
53
15. MIDDLE CLASS FAMILY STRUCTURE AND LIVING APART TOGETHER
We are supposed to live in a rich social environment, and part of it is long-term bonds with special people. It
sometimes feels like modern society is just determined to forget this.
Dr. Sue Johnson, clinical psychology professor, University of Ottawa; author: Love Sense:
The Revolutionary New Science of Romantic Relationships
Evolutionary psychologists say the lonely feeling developed to alert humans – social animals who rely on each
other to survive – that they were too close to the perimeter of the group and at risk of becoming prey. Spending
time alone is more fun when it is by choice.
Elizabeth Bernstein, Wall Street Journal Staff
BACKGROUND
A massive Canadian study, Balancing Work, Childcare, and Eldercare: A View from
the Trenches, completed in early 2013 and drawing on 8000 samples, highlights a
growing trend of expansion, rather than contraction, currently being experienced
by Canadian middle class families. It reveals that one-fifth of Canadian
professionals are now caring for both children and adults at home.
Middle class stress is a daily challenge. The trimming of sleep time and reduction
in socialization accompanying this challenge is having an impact on employment
productivity. The survey reports that, in expanding families, males are missing
13.4 days of work and females are missing 19.4 days on average per year. The
longer hospital waits and shorter hospital stays for family-cared-for seniors is
adding to care-giver stress.
Herewith other results of the study:
 Need for senior care is rising – one out of three seniors will be over 80 by
2016
 Seniors will be 23% to 25% of the population by 2036
 40% of Canadians report home and work overload.
54
 25% to 30% report bringing work home/losing sleep/trimming social
activities.
 20% of male and female employees have turned down promotions because
of family-related home care.
 Six out of ten family care-givers work more than 45 hours per week.
There is an opposite trend to family structure changes as well. Many members of
the middle class live together without being a “couple”. There is a growing trend
to do so. How can the government encourage this trend?
Brigham Young University has done an extensive co-relation of 148 studies on
loneliness encompassing more than 300,000 participants. It was determined that
loneliness was as strong a predictor of early death as alcohol consumption and a
smoking level of 15 cigarettes per day. And it was a stronger predictor than either
obesity or a sedentary life style. The centre for Cognitive and Social Neuroscience
at the University of Chicago reports that the level of loneliness in the United
States has doubled in the last 30 years.
The percentage of one-person households in the U.S. rose form 17% in 1970 to
27% in 2012. The Canadian figure is slightly higher at 27.6%
There have been numerous Canadian suggestions that the definition of “family”
should be extended to close-relative relationships and beyond, for the purpose of
encouraging sharing of accommodation and earning appropriate tax deductions.
The cost of mental health services increases daily in Canada while mental health
remains a big taboo for people to talk about. Loneliness is a factor of mental
health realities.
Statscan reports that 27.6% of Canadian homes have just one occupant.
Sixty years ago aged parents usually lived within the family. Today, unless they
are part of a traditional culture where seniors remain in the household forever, or
have family care –givers in the same community, many of the aged are now
placed in warehouses. In many cases their only monthly support comes from old
age security payments and the Canada Pension Plan.
55
In summary, there are no overarching solutions since the changes in family
structure are so diverse.
PROPOSED PUBLIC POLICY
Employers have a role to play in the reduction of family-related stress for their
middle class employees. They need to adjust their strategies to recognize the
increasing role that men and women are playing in the well-being of families.
Companies need to provide flexibility in working hours and offer compressed
working hours to enable employees to have three-day weekends. And they
should remove family-related stigma attitudes from the work-place atmosphere.
Employers should not only offer subsidies for day care but also consider support
for elder care.
The right to have emergency absences for work should be contracted and
expanded.
All of the above could be promoted through government leadership.
Tax deduction considerations should be created for couples and relatives who
“live apart” while at the same time share common accommodation.
56
16. MIDDLE CLASS GENDER INEQUALITY
We socialize girls to be cheerful and good-natured and pleasant and compliant. We teach boys to be focused on
promoting their own interests, where they are their own agents. Men typically ask for 30% more.
Sara Laschever, co-author of Women Don’t Ask
We have to teach our boys the rules of equality and respect, so that as they grow up, gender equality becomes a
natural way of life.
Singer Beyonce
Women are affected by lunar tides only once a month, after all. Men have raging hormones every day, as we
noticed when Dick Cheney rampaged around the globe like Godzilla. Rob Ford, a hot mess of a mayor, has had
many wild outbursts that, if he were a woman, would certainly be labelled hysteria (from the Greek for womb).
Who but a hysteric excuses himself for smoking crack by saying he was in a drunken stupor when he did it?
Maureer Dowd, winner of the Pulitzer Prize, 1999
Things have changed for white, middle-class women, but nothing has changed outside this group.
Doris Lessing, Nobel Prize recipient for literature, 2007
The current explosion of female creativity, power, sexuality, and will is thrilling. Beyonce’s new album is out
soon. Angela Merkel rules Europe, women outstrip men in academic achievement, and the shifting global labour
market favours someone who can spend ten hours a day wearing a headset.
Caitlin Moran, British broadcaster, 2010 British Press Awards Columnist
On women becoming involved in politics: “They don’t want to put themselves in that toxic environment where
people are ripping each other apart”.
Kathleen Wynne, Premier of Ontario
Janet Yellen, new Federal Reserve Chair, doesn’t want to be called “chairman”.
BACKGROUND
More and more the financial focus of middle class families is the need for two
adult wage-earners to pay the bills. Women have the talent and the skills to earn
as much as their husbands do, but often they do not match the spouse’s pay
cheque.
Fundamental issues of equality for women have only been settled in Canada
within the last 100 years. Universal suffrage, the right of women to sit in both
houses of parliament, and the freedom for women to pursue formerly male-only
57
occupations are recent. In January, 2014, the obituary columns in the Globe and
Mail recalled that one of Canada’s outstanding immigrant doctors who tried to
access the medical community in Toronto as a professional in the 1950s was flatly
told that there was no need for women medical practitioners. This occurred in
the current lifetime of most Canadians.
Universal suffrage at the federal level arrived in the 1920s; at the provincial level
the last jurisdictional holdout was Quebec which prevented women from voting in
provincial and municipal elections until 1940. The first woman elected in the
Quebec legislature was in 1961, almost two generations after federal universal
suffrage was achieved.
Demographers argue that 30% representation within any group is the critical
mass or tipping-point level. Middle class women have yet to make a substantive
contribution to Canadian public life. As for women’s representation in the House
of Commons it has been hovering around 20% until recently. The Supreme Court
women appointments have never reached four out of nine women on the bench
at the same time.
The greatest victory for women’s representation in Canada first occurred during
Jean Chretien’s term as prime minister. Senate appointments of women placed
Canada above the 30% threshold then, not only highlighting the role of women in
public life, but suddenly vaulted Canada into the top five legislative upper houses
on the planet in respect to women’s representation. There have been three
women governors-general, one woman prime minister, two women speakers in
the Senate, one woman speaker of the House of Commons, seven women
premiers and one woman chief justice of the Supreme court.
Women’s progress in Canada:
2001
2014 (March)
Senators
34.6%
39.58%
Order of Canada
30.2%
18.5%
Lieutenant Governors
70%
10%
58
Federal Deputy Ministers
22.5%
?? *
Provincial and Territorial Legislators
20.86%
30.17%
Members of the House of Commons
20.59%
25.16%
Federal Judges
18.6%
39.6%
Heads of Diplomatic Missions
16.6%
18%
Mayors of Municipalities
8.2%
16%
*The federal deputy minister figure is unavailable; 45% of senior federal government executive positions are
occupied by women.
As an international comparison there are currently 21.8% women legislators:
22.2% in lower chambers and 19.6% in upper chambers.
The gender gap is a complex issue. In the work place a frequent observation
concludes that women are more passive and less confrontational than men.
Women Don’t Ask, written by Carnegie Mellon University professor Linda Babcock
and co-authored by Sara Laschever found in their research that men ask for things
and negotiate two or three times as often as men do. They claim that by simply
not negotiating one’s salary for the first job, one could lose at least $500,000 in
income over a life-time. And women who refuse to negotiate their first job salary
are less likely to negotiate later in their careers.
A study by the women’s advocacy group Catalyst, in 2011, reported that it is a
myth that women are treated the same as men when they seek a raise in salary
while many male employers continue to insist that there is no gender-based wage
gap. The study found that male supervisors often conclude that a woman needs
less pay because her husband is employed or simply refuses salary increases
believing that women still should not be paid at the same level as men.
The U.S. National Bureau of Economic Research reported that men are more likely
to initiate wage negotiations than women, even if there is no sign that one’s wage
is negotiable. Catalyst published a study of high-potential women in their first job
after having achieved an MBA, in December, 2013, which revealed that women
59
were earning $8,167 less than their male colleagues and received fewer career
enhancing opportunities than men.
There is a growing body of anecdotal evidence that women in graduate studies
and research at Canadian universities face barriers to advancement when they
marry and particularly when they become pregnant. As for participation in
politics the middle class woman tends to believe that confrontation and lady-like
behaviour are incompatible. Ambition is often seen as virtuous in men and not so
virtuous in women. It seems odd that 87% of Canada’s citizens are governed by
women premiers but only 25.16% of the House of Commons is made up of female
members.
Women do not welcome the vocabulary of conflict – the election fight, combat,
campaign; political warfare; the focus on the race, the victory and winning.
Ontario premier Kathleen Wynne labels the political environment as toxic when
she explains why she does not have more women colleagues in the Ontario
Legislature.
PROPOSED PUBLIC POLICY
The enhancement of middle class women in politics, the professions and business
should be a priority for policy-makers.
The promotion of targets for women’s increased representation would greatly
enhance the contribution that women could make, to say nothing of the example
of women role-models for the new generation. It was clearly the target of Jean
Chretien to give women a high profile by way of Senate appointments.
Some political parties have actively recruited women candidates – but far too
often they stand as candidates in constituencies where demographic barriers and
history prevent success.
Articulating targets for women’s presence in the senior public service would give
great impetus to the promotion of gender equality in the middle class.
60
17. MIDDLE CLASS WOMEN IN THE BOARD ROOM
While countries like Norway and France have imposed mandatory quotas on companies for the proportion of
women they must have on their boards, middle class Canadian women remain pariahs in too many corporate
board rooms. Currently women are represented on boards at the paltry level of 12%, an unbelievable and
painfully slow increase of 3% from a decade ago.
With various European countries passing mandatory quota legislation to increase the number of women on
boards…regulators have faced increasing pressure to take a close look at the issue.
Anita Anand, University of Toronto law professor
BACKGROUND
The middle class woman seeks success on her own merits. The lack of access to
the senior levels of corporate Canada may be the last major frontier of women’s
rights.
When Madame Pauline Vanier, widow of Canada’s first French-Canadian
Governor-General was invited to sit on the Board of Directors of Bell Canada
following the death of Major-General Georges Vanier, more than 40 years ago, it
was heralded as tokenism by some, and regarded as a revolutionary breakthrough
in the advancement of women by others. History records that it was more of the
former than the latter.
In corporate Canada diversity policies have been scarce at the most senior levels
of business. There are encouraging signs that gender diversity may be on the
edge of positive explosion.
The Ontario Securities Commission (January 2014) has finally decided to turn up
the pressure – just a notch – to push male-dominated corporate Canada to
welcome more women into the rarefied club of the corporate elite. The OSC
hope is that disclosure-reporting of female board membership will nudge the
business community to become more proactive on this file.
The attitudes of Ontario-based corporations were revealed in 2013 when
companies were asked by the OSC to respond to a women-in-the board-room
attitude-survey. Some of the questions and answers:
61
How many females do you have on your board?
 1/2 women = 32%;
 3+ women=7%
 no women=60%
Are you satisfied with the number of women in your company’s executive ranks?
 no answer/don’t know=2%
 no=35%
 yes=67%
How concerned are you about the number of women on boards and in senior
management at Canadian corporations?




somewhat concerned=31%
very concerned= 11%
not very concerned=36%
not at all concerned=22%
Do you support the “comply or explain” approach of the Ontario Securities
Commission that would make companies describe how they are increasing the
percentage of female directors and executives?




strongly oppose=32%
somewhat oppose= 24%
somewhat support=29%
strongly support=15%
It is remarkable that the hot discussion in the media about the presence of middle
class women in the board room has barely resonated among senior corporate
executives. And it is astonishing that corporate executives do not appreciate the
competitive and performance implications of the absence of more women in
senior corporate ranks.
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Recently there were media headlines about the appointment of women to lead
the Royal Bank of Canada, General Motors and the Federal Reserve. These
gender changes in the corporate world seem to have produced barely a ripple
among this male-dominated business community.
In reaction to the dismal results of the OSC survey, Jim Leech of the Ontario
Teachers’ Pension Plan called for regulations and quotas for women in the board
room. He suggested that the time for discussion has very-much passed and
companies must be compelled to act on issues of gender inequality.
Promoting better public policy to have women on boards and in senior
management positions is beneficial for the economy and for the state of the
middle class. Making a policy effort to achieve gender equity has a meaningful
and positive impact on the economy as staying in the workforce becomes a more
lucrative option for more women. Improving childcare benefits and having flexible
parental leave are all factors that facilitate women reaching status as board
members.
Furthermore, the equal presence of women and men in the workforce and
especially in top positions allows for more diverse perspectives, which contributes
to productivity and innovation.
Legislating gender equality into the boardroom yields results that show a
significant increase in women’s representation. In 2011, Quebec legislated that
50% of Quebec representation on crown boards would have to be women. Ansgar
Gabrielson, former minister of trade and industry in Norway, stated “I really think
you get the best ideas when men and women work together in equal numbers."
Changing the legislation in Norway had the direct result of increasing gender
equity and women’s representation.
The ultimate question – both in psychological and philosophically terms remains:
why would corporate Canada not want to have half the population represented in
the corporate decision-making process when it comes to corporate policies for
consumers? And, in particular, when it comes to fundamental questions such as
the multi-faceted issues of resource extraction and better-business practices? It
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will be a herculean task to break down the remnants of Canada’s old-boys
network. The odd but interesting fact of Canadian reality is that more and more
women are taking leadership roles in government. Male-dominated corporate
Canada beware!
PROPOSED PUBLIC POLICY
The federal government should follow in the footsteps of the Ontario Securities
Commission by exposing attitudes among federal agencies toward participation of
women in senior executive positions and take leadership in making appropriate
changes.
Achieving gender balance on boards in Canada will remain a challenge until
legislation is enacted to increase women’s representations on boards. Moral
suasion is simply not sufficient.
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18. MIDDLE CLASS EDUCATION AND CAREER CHOICES
The modern pattern of education choice is not linear and is followed by delayed and diverse choices.
Expectations of gaining immediate employment are more and more unrealistic. The extent to which parental
middle class work-preferences in Canada restrict choice decisions may be the left-over of British education
elitism. Does society provide for education or for training? The continuing “second class” status of the
community college remains in the middle class mind-set.
“We used to think of automation as just affecting those lower-level kinds of white-collar worker”.
Andrew McAfee, principal research scientist, MIT Sloan School of Management
One only has to be reminded of the negative response in some Canadian quarters to the establishment of
community colleges, considered by some to be a” revolutionary” response to the inadequacies of the old
“technical” high school.
BACKGROUND
The middle class retains somewhat the pattern of past generations wherein the
son assumes the same occupation as the parent, unlike the working class wherein
children tend to break the genealogical mold by pursuing careers beyond their
parents’ limited career focus.
According to Spencer Thompson, CEO of Vancouver-based Sokanu.com, 63% of
career choices are made through families and friends. The Toronto-based notfor-profit CareerMash is seeking to provide broader perspective for traditional
middle class parents decision-making on behalf of their children. So this is the
genealogical burden of middle class renewal.
In the past ten years, Canada’s technological work force has grown from 650,000
to 800,000. By 2016 it is expected to rise by a further 106,000.
One of the great challenges has been to convince young adults from middle class
backgrounds that career choices in technological fields are not just for “geeks”.
The Canadian Coalition for Tomorrow’s Information and Communications
Technology, a non-profit business-based group, is driving the impetus to change
the attitudes of middle-class youth, attitudes that continue to be passed down
from their middle-class parents.
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A key statistic from late 2013 reveals that while the overall Toronto-area youth
unemployment rate stood at 16% the rate is less than 3% in technology and
related fields. This suggests that the task of widening the perspectives about
youth employment in technology continues to be a urgent. A huge variety of
technology careers is available.
The middle class demographic in Canada highlights education-based skills.
Reduction in education standards will parallel middle class decline.
The bottom line: Will the failure of robust public policy accede to automation and
offshoring? Are Canadians developing 21st century skills to pay the bills? And in
the broader perspective is Canada going to be a world competitor or servant? The
level of resiliency and foresight in learning is the key.
The October, 2013, report of the Organization of Economic Cooperation and
Security, dedicated to the ranking of adult competencies, measurement of
literacies, numeracy, and digital problem solving skills between the 16 to 65 age
group shows that the current generation of students in Canada is in a state of
stagnation when it comes to learning. Generally speaking Canadian students are
outperformed, compared to their peers, elsewhere.
More than 40% of Canadians – between ages 16 and 24 - scored at the lowest
levels of the 24 countries surveyed by the OECD in 2013, in the category of digital
problem-solving, for example.
The most disturbing item in the OECD report reveals that the literacy and math
skills of today’s 16 to 24 year old Canadians has declined from the previous
generation.
Canadian jurisdictions do have a record of managing a robust secondary school
system but there is plenty of anecdotal evidence that it is no longer meeting the
task of preparing students for the new highly competitive technological
environment. There are encouraging counter-trends to this pessimism. Ryerson
University, for example, has a Digital Media Zone, which is currently the talk of
the academic community.
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Great strides have been made in the promotion of multiculturalism in the early
years of learning, and issues of importance such as school-yard bullying and cyber
bullying are currently being addressed. There are certain circles that believe,
however, that academic preparedness lags behind in schools.
The great mantra in Canada for the last 50 years has been for students not to
compete against each other in the classroom, but rather to compete against their
own previous academic performance. The main opportunity to compete against
each other is in sports or artistic competitions. Canadian schools have excellent
resources, but our international rankings signify that a focus on preparedness
would be beneficial to continue to stay competitive.
Another element of this picture is the sheer number of University and graduate
students competing for positions. In 1981, 35% of PhD graduates working in
Canadian universities held tenured positions. By 2007 the figure had dropped to
12%.
Carleton university visiting professor of economics, Mahmood Iqbal, authored a
book in 2012 entitled No PhDs Please: This is Canada. He argues that members of
the middle class can no longer be certain of a decent living carrying a PhD under
their belt except for a degree in business or engineering. Academia will never be
the same. Part of this issue is couched in the dismal level of research and
development in Canada.
In June 2013 the OECD ranked Canada in 19th position in R and D among the top
34 OECD industrialized companies. This lack of dynamic is part of the hollowing
out trend in the Canadian middle class.
In 2012 Canadian universities cranked out slightly fewer than 5000 doctorates
while Quebec was cutting $124 million in university funding and several other
provinces were freezing funding. Obviously something is wrong with this picture.
In order for Canadians to prosper when today’s children become adults and for
the middle class to be resilient, and for democracy to be strong, the best
foundation will be the generating of superior childhood education. This means
that there will need to be a dramatic transformation of the kindergarten
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experience. The basis for this will be a greatly enhanced vocabulary – promoted
at the pre-school level - in order to enable the new generation to fully grasp the
challenges of communication that will be driven by relentless innovation. Other
aspects of this include promoting individual excellence and achievement among
students to ensure a competitive advantage.
PUBLIC POLICY PROPOSALS
The establishment of a Special Joint Committee of the Senate and Commons, charged with making sweeping
recommendations on the future of learning and international competitiveness is urgent. The constitutional
barriers frustrating national policy should be challenged.
To be competitive in the 21st century and beyond, Canada urgently needs a
comprehensive national framework of education policies. This has been a
repeated mantra for decades. Fragmented frameworks are not conducive to
progress.
Given the OECD global perspective, Canadian students do not receive today the
means to be competitive tomorrow. Canadian policy makers continue their
persistent mantra that our K to 12 system is as good as anywhere. The statistics
do not support this.
The federal government could demand universal standards in return for enhanced
transfer payments to the provinces for educational purposes. It is probably the
most to expect in terms of national policy given the constitutional barriers.
The public education system is being eroded by more and more participation in,
and support for, private education..
Existing mentoring programs should be accelerated through direct government
involvement including substantial funding and national coordination.
The ultimate challenge, however, is to match skills with tomorrow’s employment
opportunities. [See item 19]
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19. MIDDLE CLASS AT WORK AND THE FUTURE OF WORK
Listen to the mantra: More Pay…..More Stuff…..Less Satisfaction.
There is nothing better for men than that they should be happy in their work, for that is what they are here for.
Ecclesiastes
We used to believe that automation would simply be a manual-worker-replacement phenomenon. Now we
know that it partly substitutes or totally replaces jobs at all levels of the middle class. The question remains: is
this a dismal reality? Or is this enlightened “progress” for mankind?
And what are the psychological and productivity implications of the home office phenomenon?
In a modern-day economy in feverish pursuit of progress, there is no room for Luddites.
We’re going through the same process we went through in agriculture, but for knowledge-work and
information-work.
Marina Gorbis, executive director of the Institute for the Future, Palo Alto, California
Rich business people don’t create jobs, middle class customers do.
Eric Liu, former speech writer for President Clinton
The new phenomenon here is that we’re going to be seeing pockets of persistent high unemployment existing
right alongside serious worker shortages in particular industries.
Perrin Beatty, CEO, Canadian Chamber of Commerce
The emerging new Canadian education reality: As many as 20% of current college applicants already have a
university degree. Obviously it’s not efficient to spend six years in post-secondary education when considerably
less might have done the job.
James Knight, president of the Association of Canadian Community Colleges
BACKGROUND
Students of economic history remember studying the images in England, in the
nineteenth century, of Luddites violently protesting the introduction of
mechanical weaving looms. They also were taught that the great revolution of
the southern cotton economy in the United States was propelled by the
introduction of Eli Whitney’s cotton gin in 1793 which automated the separation
of cotton seed from the short-staple cotton fibre. Progress has never looked back
from these important events.
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One hundred years later, both science fiction writer Isaac Asimov and economist
John Maynard Keynes made predictions about the eventual work-place, occupied
in part by robots and the possibility of domination by robotics. Asimov said that
robots would not “hurt” humans but he never wrote about the loss of jobs. In the
1930s, however, Keynes warned of widespread “technological” unemployment.
The nature of work, the location of work, and the future of work are in continuing
transition. Ten years ago one never heard of the following employment
categories: online community manager, mobile applications developer,
sustainability expert, elder-care services coordinator, big data analyst, searchengine optimization-specialist, etc.
Initial research on the growing “home-office” phenomenon suggests that there
may be long-term psychological implications related to the absence of human
contact in the isolated home-office work place. At the same time human progress
moves forward as people are no longer tied to tedious work that can be
effectively completed through robotics.
The execution of portions of many employment frameworks by robotics resonates
everywhere - in banking, the ATM has removed some of the tasks of bank tellers;
in education, a change in some of the tasks of teachers; in marketing, automated
sales calls, in agriculture, most aspects of animal and plant production, etc.
It is inevitable that when computers take over, some folks lose their employment.
This is accompanied by changes in the roles of middle managers, particularly in
their relationship with the workers that are left behind.
Our own relationship with our office – our clients, our staff, our colleagues, and
our superiors - and the details of our work, have dramatically changed in the last
generation.
The working-day dynamic has a pervasive new imperative: the sound of the email
“ping” rings in front of you several times, every hour of your working day.
Today, the average person spends 28% of the work-week – about 13 hours, based
on a 46-hour week - dealing with email, according to the firm McKinsey Global.
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That is about 70 workdays per year. So our email traffic, a mix of chatter and
correspondence-exchange, computer- input work-related productivity, and the
sharing of jokes, prevails, if not dominates, our work day. Perhaps the most
revolutionary aspect of this is that the middle class has become a real captive of
the email process.
Every time one hears the sound of the email “ping” one knows that someone
wants you to do something – perhaps often it is not even job-related. The middle
class is now “wired” and constantly subject to the “mental indigestion” of
information and communication-overload, that regularly transforms one into the
feeling of being swamped by the necessity to be “email-responsive” in a timely
fashion.
Can traditional middle class employment eventually become irrelevant?
Globalization and technological change have rendered thousands of middle class
jobs obsolete and the advent of the NEW computer generation indicates, that as
the nature of work changes, there could be enormous pressures leading to the
division of a delineated upper and lower middle class.
Some middle-class economic analysts are pointing to “progress” in this direction.
This is certain to be a major future topic about the evolving nature of the middle
class. The polarization of jobs could sharply divide income levels.
Is the future for the demobilized middle class worker a future of drastically
reduced incomes? Or are lower middle class jobs going to produce enough wages
to pay for the mortgage? For example, the computers cannot clean hotel rooms
yet, so the suddenly dislodged middle class worker, without employment due to
the changing circumstances of the economy, can do that cleaning, but perhaps
only by earning a much reduced bi-weekly pay cheque.
Futurists predict that there are seven middle class jobs that robots want. They
include radiologists, analysts, lawyers, hospital orderlies, chemists, pharmacists,
and truck drivers. All of these categories require skills that will be undertaken by
robots - and probably very soon.
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The case of truck drivers is noteworthy. In a speech delivered by Tommy Banks,
former Canadian senator from Alberta, several years ago, the image of an
automated highway, for the transportation of goods, between Edmonton and
Calgary was drawn. Few areas of the economy, if any, will be bypassed by the
sweep of robotics.
Students choosing to study in the following disciplines and members of the
middle class currently working in the following areas might want to be concerned
about their future employment:
RADIOLOGY – The work is basically routine. It is focused on the interpretation of
images. Computers are getting better and better at this.
FINANCIAL ANALYSIS – It is work that deals with formulas. It will soon be
dominated by digital replacements for “live” analysts and managers.
LAWYERS – Legal research is rapidly becoming automated. Richard Worzel,
Toronto-based futurist author states that since the practice of law is a rules-based
system with elements of game theory, both of these play to the strengths of
computers.
CHEMISTS – Since the advent of computers the grunt work that lab assistants
pursued at entry-level positions is rapidly disappearing, there will be greatly
reduced opportunities for chemists without a doctorate. Even at the higher level
of achievement in this field fewer and fewer positions will be available.
PHARMACISTS – Robots do not dispense advice yet, but they are beginning to
dispense drugs.
The future of work for truck drivers, train engineers, and urban mass-transit
operators is limited as well.
At the very least the computer will be the companion of the middle class
professional; at worst it will gradually supplement and ultimately replace many
wide-spread occupations of the early 21st century. This phenomenon is a
constant reminder that the doubling of knowledge in about every 11 years, 100
years ago, has been accelerated to less than 10% of that time today.
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There is another side to this story. The Canadian Manufacturers and Exporters
Association predicts that by 2016 Canada will have 1.3 million skilled labour jobs
sitting vacant because there is no one to do them. The Canadian Chamber of
Commerce pegs the figure at 1.5 million by 2016 and at 2.6 million by 2021. A
skilled-labour shortage is expected to be 4 million in the next 25 years.
We have an acute shortage of workers who actually build and fix things. It
represents an alarming structural deficit that could cost the economy billions. We
must remember that these skilled jobs are middle-class jobs.
Many people who are out of touch with reality – and this certainly incudes many
middle-class parents who are advising and often directing their children regarding
career choices - still determine stubbornly that these jobs are for “workers”.
Since they must be dirty jobs, they must be low-paying as well. But today, it is not
unheard for such employment to be in the $90 to $135 per-hour range!
Nearly half of Canadian adults lack the required numeracy and literacy skills to
participate in a modern economy according to the 2013 report of Toronto
employment consulting firm Miner and Miner. James Knight, president of the
Canadian Association of Community Colleges says that 75% of jobs being created
in Ontario now require a post-secondary education but only about 58% of the
population has one!
Miner and Miner also repeats the continuing concern that parents who guide
their children’s education choices still tend to promote the idea that there is no
“status” associated with a community college education – in spite of almost
immediate possibility of excellent wage returns from technical training
background.
A CIBC study reports that up to 20% of Canada’s labour market is challenged by
the unavailability of qualified job seekers. This is particularly critical in the fields
of health care, mining, business services, and advanced manufacturing. The
average unemployment rate for those sectors is a mere 1%.
The same CIBC study pegs surpluses of would-be employees at 16% in the
occupations of clerical, recreational, and food services. The CD Howe Institute in
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March, 2013, reported that the employment mismatch between education
choices and available employment is most serious in the four western provinces.
The British Columbia government estimates that there will be 150,000 vacancies
in trade-related employment – everything from brick-laying to welding – almost
immediately. Given the high salaries that these trades command this is certainly
a middle class issue.
The situation has become so acute that a coalition of B.C. construction companies
has returned to Ireland – again – to recruit 600 qualified tradespersons.
Companies in Saskatchewan are also targeting Ireland for skilled-employment
recruitment.
It is important to note that in Ireland trades employment is not considered to be
demeaning and “dirty” work as it often is in Canada. [See item 21]
One of the roots of Canada’s challenge has been the inability – or reluctance - of
our education system to promote non-academic employment as both dignified
and financially productive. Many cultures adamantly promote traditional whitecolour professional jobs as the only acceptable employment for the new
generation.
Immigrant working-class parents, for example, often want their first generation
Canadian economic sacrifices, made on behalf of their offspring, to be rewarded
by their vicarious satisfaction that their children are employed in professional
activities that they could only dream about before leaving their country of origin.
The long-term solution to the future of work is co-operation and co-ordination
between education institutions and industry. The current skills miss-match has
the potential to sink the economy. There has been much chatter about this in the
last decade. Action seems to be finally taking hold among the key players, along
with the department of immigration.
There has never been sufficient marketing and perspective focused on how
technology has dramatically changed the nature of trades-related jobs. Students,
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and parents, also need to know that the demand for tradespersons is now so
great that wages in this area are being pushed into uncharted territory.
Will this be the space that those laid off from technology will be occupied by
technologically trained tradespersons? There will need to be an enormous effort
to retrain these folk. This is a truly mind-boggling challenge, not only for the
middle class in Canada but globally as well, where the middle class will need to
learn to adapt to new conditions if it is going to survive as a wide-spread middle
ground in democracies everywhere.
As an international comparison of the employment/capability mismatch issue, a
survey by Milwaukee’s ManpowerGroup reported in 2013 that 38,000 companies
in 41 countries were unable to find enough workers that could be matched with
the right skills. Miss-match challenges are certainly not particular to Canada’s
economy.
The following “warning list” of surplus skills not likely needed in the market place
ten years from now is a sober look at the reality of employment classification
transition:










Managers in art, culture, recreation, and sport
Security guards
Athletes and coaches
Fishing vessel skippers
Cashiers
Computer and information system professionals
Chefs and cooks
Pulp and paper machine operators
Physicists and astronomers
Geologists
Another more philosophical view of the “future of work” is contained in the
mantra: More Pay…..More Stuff…..Less Satisfaction. A new book, Everything That
Remains, by American authors Joshua Fields Millburn and Ryan Nicodemus, who
call themselves minimalists, argues that the future of work must deal with the
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issue of life-balance. The problem with our pursuit of careers is the likelihood
that one’s work will eventually dictate who one is, not simply what one does.
And in this process the middle class worker, in particular, falls into the trap of
endless consumerism.
Wage-earners may become preoccupied with working hard to spend more, to
help one work even harder. Consumerism itself creates the noise around which
we exist. In turn we respond more and more to this noise by seeking the pacifiers
that consumerism offers, which in turn leads each of us to a state of compulsory
consumerism.
[See item # 13 for a list of perks that large corporations offer to both seduce and pacify employees]
One could argue that we are spending our lives pacifying ourselves to death. The
great challenge for us as humans is to seek improvement to our lives without
constantly going shopping.
The shopping malls, with endless stores, beckoning us to spend our wages, more
and more become a regular weekend pastime. All of us need to take a break from
consumerism occasionally, to re-examine who we are, where we are going, and to
contemplate what we will likely look and act like a couple of decades hence. Of
course, the above arguments are counter-productive ones when considering that
enhanced consumerism drives employment.
Jobs and the immigrant experience is not always a pleasant Canadian legacy. At
the core of the issue are the accreditation barriers for well-educated foreign
professionals. This is well-known and well-documented.
Today nearly half of the immigrants living in poverty in Canada have come as
skilled workers. It is frequently cited by those who work with the immigrant
population that bureaucrats should not be taking the lead on who should be
chosen to re-locate in Canada. Industry should be deciding on the skill-sets that
are needed.
The current government claims that it is addressing this problem. The outcome
will probably be the reduction of the five-year-wait immigrating-period to one
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year, by way of industry-driven decision making. Disenchanted immigrants would
certainly agree that this change is long overdue.
Finally – the employment situation in Canada appears to be rather soft and some
economists now predict that unemployment will rise above the U.S. rate in 2014,
for the first time in five years. The Pink-Slip parade of jobs lost during the fall of
2013 and the winter of 2014 is not a rosy picture:











Rogers Media
94
Loblaws
275
Novartis
300
Michelin
500
Kellogg
500
H.J. Heinz
740
Encana
800
Sears
800
Potash Corp 1,045
Big Lots
1,600
Canada Post 6,000 +
It is a sobering reality that the 179,000 jobs that the Canadian economy created in
the 12-month period prior to November, 2013, was only half the new jobs created
in 2012. In terms of further down-turn, the housing sector is the one to watch.
Taken together, construction and real estate employment account for more than
9% of all Canadian jobs and represents 20% of the economy. If there is a slowdown in housing construction the effect on the over-all economy will be truly
significant.
In the long run the saving grace for Canada will be the resource sector but there
will likely be many casualties along the way and battles with environmental
groups, related to a number of projects, will need to be settled, hopefully through
a broad-based consensus that does not appear to be happening yet among the
various stake holders. [See item 35]
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PUBLIC POLICY PROPOSALS
A variety of mechanisms need to be activated in order to soften employment
interruptions. Along with pensions and child care assistance, unemployment
insurance is one of the great equalizers of Canadian society. It needs to be used
creatively to maximize security for the middle class in times of economic
transition.
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20. MIDDLE CLASS HEALTH MENTAL HEALTH AND PAY-CHECK TO PAYCHECK
Many Canadians live in unsettling domestic economic circumstances, some live frantically; every couple of weeks
they juggle their income among important choices and frequently collect health issues as a result.
BACKGROUND
Stress is stress - in the workplace or at home, meeting deadlines, as parents, as
care-givers for elderly family members, etc.
Those who live from pay cheque to pay cheque – and too many in the middle
class are faced with this reality - are financial jugglers. Life is preoccupied with
trade-offs. Some weeks there is a sustained level of frenzy as resources need to
be stretched beyond the obvious capacity to match needs.
Gary Bloch, a family physician at St. Michael’s hospital in Toronto, reports that he
and his colleagues are seeing an increase in medical problems for those earning
barely enough to live from pay cheque to pay cheque. There is a greater
prevalence of diabetes and cancer, work place injuries, along with the inability to
pay for medication.
Scarcity plays a pivotal role in middle class lives, to say nothing of the impact of
scarcity on the working class.
The unfortunate surprises that life brings require crisis-management within the
context of minimal savings and tough decisions whose impact unnerves the
stability of the middle class.
From a technical point of view our brains crave focus. Our brains are not built for
multitasking. According to David Rock, president of the Neuroleadership Institute
in Australia, we need to train ourselves to have a more reflective reaction to any
stressful situation that surprises us. This raises the ongoing importance of mental
health services for the middle class and recalls the taboo that raising the profile of
mental health issues uncovers.
Work-place stress is often a hidden mental health issue for middle-class staff. The
stress may be offset by the corporate supply of perks – from counselling to more
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clinical interventions - to employees of large businesses, but smaller companies
may not be in a financial position to relieve employee stress by this means. The
Bank of Montreal, Goldman Sachs Group Inc. and Credit Suisse are among the
companies charting new stress-related provisions for employees. BMO is now
guaranteeing junior staffers one weekend per month completely free of workrelated communications. It is also preoccupied with technology upgrades to
enable employees to complete tasks more rapidly. At BMO senior bankers are
now prohibited from assigning new tasks to junior employees after 2:00pm on
Fridays. Credit Suisse is telling employees to stay away from work on Saturdays.
JP Morgan has mandated a “protected” weekend schedule.
Health care is the number one public-policy issue that Canadians continue to cite
when being surveyed by pollsters. Persistent financial challenges, stress-filled
reaction to sudden loss of employment, family emergencies and unexpected
bereavement situations play havoc with our lives. Standards for health care
across the provinces are essential; and the resilience of nationhood and cooperative federalism are at play.
One element that persists is the continuing level of smoking. Smokers rely on the
nicotine habit to relieve stress. This is both a domestic and work –related issue,
notwithstanding the health costs.
Fifty years ago, 61% of Canadian men smoked while 38% of women did as well.
Today the national average has dropped to 17%. The middle class pays for the
health care needed for the treatment of the hard-core smoker whose smoking
habit persists. Annually there are 40,000 smoking-related Canadian deaths, more
than 20,000 from lung cancer, 11,000 from heart disease and stroke, and 8,000
from chronic obstructive pulmonary disease. Eight hundred Canadians die each
year from second-hand smoking. The Canadian economic impact of smoking is
estimated at $29 billion annually.
Dr. Andrew Pipe, chief of the division of prevention and rehabilitation at the
Ottawa Health Institute says it is time for Canadians to be honest and label
smoking for exactly what it is – an addiction. In terms of what society has done,
through the spending on anti-smoking programs, “we have educated the bejeezus
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out of them”! He declares that the smoking-cessation programs we have been
pursuing are outdated because they are based on outdated notions such as
smokers being weak-willed.
Smoking is more deadly than the wide-spread concentration on blood-pressure
control – a general current preoccupation of the middle class - but never taken as
seriously. Cigarette smokers do not need any more education sermons, they
need medical assistance for their persistent addiction in spite of the fact that they
say they smoke because they like it, it helps them to relax from stress, and it
enhances the contentment of sociability.
It seems that the recent federal government increase in the price of a carton of
cigarettes will prove to be meaningless to the hard-core nicotine addict even
though one is strained to survive financially from pay cheque to pay cheque from
the heavy financial cost that the hard-core smoker faces each week. Smokers are
addicted to nicotine; it affects every organ in the body. Users response to
education is not as effective.
In the spring of 2013, the federal government announced the demise of the
Health Council of Canada. Michael McBane, national co-ordinator of the
Canadian Health Coalition predicts that this development will eventually lead to
the end of national Medicare as Canadians know it. The health care system – one
of the great Canadian unifiers for the middle class - is in danger of fragmenting
into 14 pieces – federal, provincial, and territorial. Former Saskatchewan premier
Roy Romanow says that abandoning the current system removes co-operative
federalism from future health planning.
While the government expresses the intention to continue health-care transfers
to the provinces and territories until 2016/2017 at the rate of a 6% annual
increase, the removal of the Health Council is providing considerable stress in the
health-care community and beyond. Raisa Deber, professor of Canadian Health
Care Policy at the University of Toronto praises the work of the Health Council for
increased efficiencies and accompanying cost reductions in health care across the
country and laments its cancellation.
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There is an insightful item in the most recent federal budget, tucked away on
page 278, that will make it impossible for provinces to provide health care
services on equal terms and conditions by providing the beginnings of a slide
toward private, for-profit health care. As Michael McBane observes, the single
factor that stands in the way of rapid dismantling of Medicare is the people of
Canada. The item means that the equalization portion of the Canada Health
Transfer will be replaced by an equal per-capita transfer. It means that some
sparsely populated provinces will have a far greater challenge to deliver quality
universal health services.
Justice Emmet Hall, principal architect of Canada’s health system, envisaged high
national standards for health care based on a funding formula that would achieve
such standards. In other words there would be no national Medicare without
equalization in health transfers. The budget declares that beginning in 2017 the
formula is to be changed.
PUBLIC POLICY PROPOSALS
There are several issues affecting the middle class and those below the poverty
level: Security in health care is a fundamental mantra of middle class Canadians.
Programs designed to reduce stress are creeping into the large-business work
place. Those in smaller business settings are being left behind. Middle class
households without a savings cushion are more and more vulnerable when health
emergencies strike. Smoking cessation programs need to be re-thought. And the
very future of Medicare appears to be uncertain.
All of the above urgent public policy issues, thrown into the same basket, sound
like the ingredients for a nationally created entity to re-examine where Canadians
are going from this point in time. While some argue that forms of privatization
are inevitable, it is certain that the middle class will not tolerate that trend
without a fight.
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21. MIDDLE CLASS VOTING, CHERRYPICKING AND ELECTORAL PERSUASION
Politics, as a practice, whatever its professions, has always been the systematic organization of hatreds.
Henry Adams
Several generations of U.S. government got elected on law-and-order platforms, but they weren’t hallucinating
a trend the way it’s happening in Canada now. If crime is going down, you shouldn’t be increasing resources for
crime prevention. Or you should be taking note of what has worked and concentrate the crime-prevention
methods on policies that have a track record of success.
Steven Pinker, Canadian; Harvard University psychologist; author of The Better Angels of Our Nature.
BACKGROUND
The occupants of the group “middle class” may be difficult to define but politically
speaking they are the target of every shade of partisan recruitment. For
Conservatives, they mainly live in the suburbs. The rich – whatever that means –
are capable of taking care of themselves. As for the poor, partisan groups do not
focus on who they are and what they need even though they are about 20% of
the population and rely on government for about 55% of their income. It seems
that the latter group is more and more being ignored by the rush of partisan
groups to seek and contain middle class support. So there is a general scramble
of persuasion and pursuit to identify niche tidbits of public policy to strengthen
electoral outcomes.
North Americans currently live with the mantra that the middle class is suffering,
squeezed, and endangered. If these folks did not “feel” they were in this category
they are being made to “believe” so. Both policy wonks and selected politicians
hammer the mantra. And with the current media coverage therein the message
appears to be resonating. However, the United States political focus may be a bit
clearer than the Canadian one.
Whatever the ideological bent of the political party in power, there is often an
attempt to cherry-pick issues in order to rake in votes. So-called “motherhood”
issues are popular targets. Soccer moms and hockey dads constitute one of such
a popular target population. Specific items from the “law and order” policy
basket, such as minimum jail-term requirements and consecutive sentencing
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time-frames, are easy window-dressing for political party programs that appeal to
certain targeted voters. The Harper government’s signalling that new mandatory
impaired driving sentences are to be proposed, however, has broader appeal but
may not have the impact of “game-changing” for voter patterns. The current high
profile support for Israel, for example, is said to be a significant voter-persuasion
alignment in 10 federal constituencies.
In Canada, the great opposite classic example, by way of engaging in what turned
out to be negative cherry-picking, was prior to the general election of 1957. The
St. Laurent government announced that senior citizen pensions would be
increased by $6.00 leading to the Conservative mantra condemning the “six bucks
boys” (Liberals) because the increase was so minimal. This cherry-picking
backfired and contributed to the defeat of the St. Laurent administration. This
was in spite of the Liberal Party gaining 150,000 more votes than the Diefenbaker
Conservatives.
One can certainly expect new and well-targeted cherry-picking promises from the
current government to be trotted out during the next election campaign. The
current government’s middle-class target-persuasion has been termed the
“middle-class loot bag” by Globe and Mail feature writer, Craig Offman. It seems
there is “loot” for everyone. The contents of the “loot” bag include the following:
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Turning the immigration minister into judge and jury for deportations
Children’s Fitness Tax Credit
Demonization of public servants
No harm reduction for drug users
Children’s Arts Tax Credit
Silencing of scientists
Abolition of gun control
Family Caregiver Tax Credit
Down-grading of the Canadian Wheat Board
Over-the-top support for Israel
Trade Person’s Tool Deduction Credit
Reduction of Banking fees (Not yet)
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Textbook Tax Credit
Cyberbullying: the new criminal offence
Mandatory jail-sentencing and fines
The Tax-Free Savings Account (Not yet)
The Public Transit Tax Credit
Unemployment insurance reforms
The death of Katimavik
Telecom bargains
The Volunteer Firefighters Tax Credit
The demolition of the Status of Women
Abolition of health care for illegal refugees
Downgrading of the Census
Income splitting
The First-Time-Donor Super Credit
The Election Reform Act
Rail safety de-regulation
Abolition of the Court Challenges Program
No-cost basic banking for seniors
PROPOSED PUBLIC POLICY
Is this cherry-picking game something the out-of-power party should pursue, or is
there a different, if not a high road to travel? How should the high road be
articulated?
Legalization of marijuana, proposed by the Liberal Party, is a cherry-picking item
but it is both a positive and negative issue that crosses income, class, and ethnocultural divisions, and may turn out to be an over-reaching proposal. However,
the Conservative Party sees the subject as anathema to its own voter base and is
using the issue to condemn the Liberal proposal in order to reinforce that base.
Whether or not this issue is a propaganda gift from the Liberal Party, to the
Conservative party as a voting benefit, remains to be seen. So the optics of
cherry-picking is multi-faceted and in the case of marijuana legalization may be
positive for Conservatives and negative for Liberals and lead to unintended
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consequences similar to the $6.00 pension increase of 1957 mentioned
elsewhere.
One can assert that law and order policies are simply a package of well-targeted
band-aides based on ideological mythologies rather than on statistical analysis.
Caution: This is only partly true. There is statistical analysis employed to
determine ideological-driven preferences. This analysis is segmented
neighborhood by neighborhood for electoral purposes. The preferences of soccer
moms and hockey dads can be determined and targeted. Such analysis
unfortunately does not translate into objectivity which should be the basis of
public policy proposals. For an out-of-power party to effectively pursue cherrypicking, a number of pre-conditions must be met including those of geography,
ethnicity, and income/wealth concentrations and categorizations. And in the case
of marijuana many such policies are a double-edged sword.
If there is no identifiable base (especially a geographically-based one) to match a
particular cherry-picked policy, the target-persuasion electoral-tactics become
diluted, risky, and not cost effective in terms of advertising and marketing. For
example pro-Israel policies can achieve electoral effectiveness because ten
federal constituencies can be targeted wherein the Canadian Jewish community
of 250,000 resides. Why not target Muslim voters for their support? There is no
seat-by-seat rationale to do so, since the Muslim vote of one million in Canada is
everywhere, but totally lacking in neighborhood concentration, anywhere.
But the answer to the ultimate issue is evasive if not down-right unavailable. And
the inevitable election mantra awaits the voter: it’s about the economy stupid (!)
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22. MIDDLE CLASS VOLUNTEERISM AND POLITICAL PARTICIPATION
Like donations, volunteering appears to be declining as our society becomes more self-centered.
GIV3 Foundation
Only by bringing humanity back into public policy will we bring people back into politics.
Alex Himelfarb, former clerk of the Privy Council
Partisanship has come to be seen as a negative factor in public life because it allegedly prevents politicians from
acting in the public interest.
Paul G. Thomas, emeritus professor of political studies, University of Manitoba
BACKGROUND
There has been a steep decline in partisan and neighborhood/community
involvement by the middle class in Canada. Leaders of volunteer organizations
can readily attest to that. In remote communities this decline is particularly
evident. It would be easy to conclude that the reduction in partisan participation
has to do mainly with the growing negativism of partisanship but the reality is
that non-partisan volunteerism decline is occurring concurrently alongside the
partisan variety.
Community participation – individual middle-class outreach - is now lopsided with
ageing volunteers. Organizers of community programs have always bemoaned
the shortage of volunteer help. But currently the aged volunteer is not being
replaced in sufficient numbers for many traditional community services to
continue to be functional.
The current Canadian volunteer rate according to Statscan is 7% of the
population, while 75% of volunteer work is actually accomplished by only 25% of
that group, or less than 2% of the total population.
In terms of national politics, many partisan constituency organizations exist in
name only, in the case of all three main political parties. More and more the
Canadian voter refuses to be pegged by left-right ideological restrictions. At best,
ideology is somewhat blurred. Political parties have lost their lustre and appeal as
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vehicles for grass-roots change and policy discussion. The middle class
increasingly sensing that partisanship seeks to control the behaviour of the voter
for the purposes of gaining power and control.
When leaders say that the grass-roots development of policy has meaning and
usefulness – speaking out of one side of the mouth, but ignoring those policies for
sudden electoral imperatives out of the other side of the mouth – the reaction of
cynicism to partisanship resonates.
Constituency-level partisan campaign managers at election time are increasingly
hard-pressed to recruit a sufficient number of volunteers to accompany
candidates while door-knocking or simply to execute the wide distribution of a
candidate’s pamphlets.
The case of the new Liberal Party membership category is noteworthy. The party
“supporter” rather than the party “member” was heralded as a great vehicle to
attract Canadians to participate in the national Liberal leadership process. But a
great many of the non-paying supporters’ group did not take the process seriously
by way of not voting for a leadership choice.
Non-partisan volunteer organizations contribute an economic value annually of
$6.5 million to the economy. But volunteer hours are not tax-deductible in
Canada. Canadians need an incentive to donate more volunteer hours.
PROPOSED PUBLIC POLICY
The me-too generation needs encouragement and challenges to contribute to
society. The U.S. tax-deductible regime, which recognizes the value of volunteer
hours, should be adopted by Revenue Canada.
As for greater participation in political parties, that day may have passed since
non-government organizations currently attract the majority of available
volunteers, where working for a common cause is generally free of the rancour
and antagonisms of partisanship.
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23. MIDDLE CLASS IN THE SUBURB VS MIDDLE CLASS LIVING DOWN TOWN
America should try to remake itself as a nation with populous, walkable neighbourhoods, rural land, and
nothing else.
Visshan Chakrabarti, author of A County of Cities
BACKGROUND
There is a new reality – suburban middle class. This is the class with the
potentially excessive stress. [See item 39] Perhaps it is reaching its apex. Some
urban planners seem to think so.
House prices are cheaper in the suburbs - in fact about $250,000 on average,
according to the Toronto Real Estate Board. The details, however, reveal further
costs.
Comparative costs: The average downtown household pays $6000 annually for a
pair of transit passes, occasional car sharing, car rentals and a few taxi rides. The
average suburban household pays - according to the Canadian Automobile
Association -$19,000 annually for a pair of commuting vehicles. Obviously
commuting cost must be calculated into one’s housing affordability profile.
A $50,000 down payment for a suburban house of $500,000 compared to the
same amount for a $720,000 down town house when added to all other costs
including a mortgage at 3.5%, suggests a mere suburban savings of $63 per month
according to David Hughes of Mortgage Group Ontario Inc.
So the cost of suburban commuting will likely kill one’s savings to say nothing of
the long-term mental and physical stress resulting from the number of
commuting hours per year. There are important mental health considerations,
while not immediately apparent, related to rapid transit planning. [See Item 39]
The alternative approach to the next 100 years is the elimination of the suburb.
Life in the suburb is becoming more and more unpleasant. Trends are appearing
that suggest a reversal of migration of the last couple of generations, to the
suburbs, by North American millennials.
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An American statistic may be the clearest window on the development of this
projected trend over the next generation. 3% of America’s land mass, basically
the cities, generates 85% of its economic activity. While 2/3 of Canadians
currently live in the suburbs, the superior attractiveness of city living is just
beginning to resonate.
City living offers the most economically productive, sustainable and mobile
environment for stress-free living, and for time-after-work discretionary activity,
including sociability enhancement.
The city “carbon foot-print” is very small compared to the suburban one. The
suburb is car-oriented, there is constant traffic congestion to enter and exit, gas
prices are high, and no one walks anywhere. However, in the cities more and
more neighborhoods have their own resources within walking distance including
neighbourhood shops, parks, recreational, cultural and education facilities.
Ken Greenberg, the distinguished Canadian urban designer observes that the
current Vancouver and Toronto condominium booms are the early stage of a
dramatic and massive reversal of the daily trip to the suburb by the middle class.
This reversal is being led by young middle class Canadians who want a hassle-free
daily segment of discretionary time that they forgo each day by commuter trips.
He reports that currently in down town Toronto an impressive 46% of residents
actually now walk to work. The growth of suburban living will gradually decline as
new young adults seek accommodation. The Brookings Institute reports that the
most valuable city-core real estate is where everything is within walkable
distance.
The conclusion for the moment is that the middle class is on two parallel trends –
walking to work in the cities and seeking improved transit in get home to the
suburbs. But many urban designers now predict that the cities will be the winners
in the medium-to-long-term.
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PUBLIC POLICY PROPOSALS
For those who believe in the future of suburbs, high speed commuting proposals
are appearing everywhere.
There is an important and wide-spread national government role herein, in spite
of constitutional and transfer payment considerations, which will become more
and more imperative and costly, not least of which will be the price of addressing
mental health middle-class issues, especially related to the effect of long-term
commuting on the middle class
The eventual trend may be to return to the cities. Urban condo booms may be
the window on the future. More and more young adults are choosing not to
commute. Government policies will need to follow.
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24. MIDDLE CLASS HOUSEHOLD: TO OWN OR TO RENT?
Home ownership, be it in the form of a single-family detached dwelling, a row house, or a condominium has
been the middle class dream.
The American collapse of the housing bubble, while not effecting Canadian home owners directly, sent a chill
through the housing market and prompted much discussion of the comparative virtues of ownership as opposed
to decisions to rent on the part of would-be home purchasers.
Canada’s cult of home ownership may be in trouble.
Richard Harris, professor of urban geography, McMaster University
BACKGROUND
The United states Commerce Department reported in 2013 that home ownership
dropped to a 17-year low in the first quarter. American economists predict that
home ownership may decline further since 10.4 million home owners owe more
on their mortgages than their homes are worth (23% of mortgages are under
water) and the availability of credit remains tight.
The Canadian Real Estate Association predicts that housing prices will continue to
rise at the rate of 5.5% as has been the case annually for the last 17 years. This
rise is considerably more than the inflation rate and the rise in family incomes.
If the annual house-price increase continues at the same rate for the next ten
years, the average house will cost more than $500,000. If the average down
payment is $25,000 and the principle and interest payments per month average at
$2700, plus taxes and heating, with a modest 2.5% increase each year, a
household income of almost $125,000 will be needed when one considers the
entire basket of per family household costs. The current median family income is
$72,000. One will need to have pay increases of 5.6% each year for that period.
This is highly unlikely, translating into housing that will be too expensive for most
Canadians.
The issue for the middle class is that rising prices may be an illusion of happiness.
Increased housing value no doubt makes us feel good as a nation. David Chilton,
author of The Wealthy Barber argues that it is ultimately better for us if housing
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prices are affordable so that one has surplus cash flow earmarked for other
purposes. Canadian house prices have increased close to 6% annually during the
last 15 years, triple the rate of inflation. No wonder the middle class can feel
good about it. But the argument continues that these high house prices have
generated unprecedented debt through uncontrolled borrowing. Our individual
debt is now at historic highs compared to income. House prices themselves do
not help us to pay down our debt. Soaring high prices do more harm than good
by preventing access to home ownership for first-time buyers. And home
ownership itself may be a bad idea as an investment unless the value of the home
rapidly appreciates according to U.S. real estate guru Gary Shilling.
The great demographic implications of high-priced real estate forces first-time
home owners to reside in the suburbs or rent downtown. And the accelerated
costs suggest that some of those with average incomes will eventually never be
able to afford to live in the core of the big cities until middle age. This trend is a
divisive force within the middle class; but the more frightening prospect is that
when the boomers want to downsize their expensive city –core properties, who
will be buying them? It may be the affluent children of those who own downtown properties, not the middle class folks in the suburbs with the average
incomes.
For many young members of the middle class it makes more sense to rent
accommodation rather than to own one’s home. In Toronto (2013), the average
home sells for more than $500,000. With $20,000 in savings – accumulated after
five years on a mid-range five-figure salary - one can spend $17,500 on a down
payment on a $350,000 property. Is it better to spend $1000 per month on
rented accommodation rather than $1700 for the interest and principal on a
mortgage?
Richard Harris, professor of urban geography at Hamilton’s McMaster University
reports a decline of home-ownership intentions among his students. While the
sample of analysis is too small to make clear predictions, he says that there is a
trend on the part of students to rent upon graduation having become sceptical of
Canada’s housing market resiliency. One of the issues persuading students to
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rent is the need to be flexible for employment opportunities in a technology job
market that may require re-location.
PUBLIC POLICY PROPOSALS
If the cult of home ownership continues among Canadian middle class youth the
financial resiliency of the middle class may take a hit.
Governments should be wary of the promotion of home ownership for those who
cannot afford it. Higher savings deposits should be a condition of home
purchasing. Rob Carrick, personal finance specialist for the Globe and Mail argues
that the young Canadian adult should have five years of employment savings
before vacating the rented apartment. If the young adult has accumulated five
years of savings to the extent of $20,000 one might be wise to add to that rather
than use it to convince a lender to provide a mortgage for ownership.
There are, of course, many variations in circumstances beginning with the issues
surrounding marriage and the raising of a family
Rented accommodation also provides more employment flexibility for the young
adult. The challenge of selling a home from afar while pursuing employment
opportunities in a distant city is often a hassle-filled frustration
Being a member of the middle class need not be coupled with the notion that it is
necessary to be a home owner before one’s financial circumstances warrant it.
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25. MIDDLE CLASS ACCOMMODATION, DEBT, AND WEALTH
Background
The overarching landscape: Statistics Canada reports that Canada’s total national wealth increase in
the second quarter of 2013 by 1% while the total national debt increase in the same period is 1.6%
Is it the role of the middle class to be financially squeezed now in order that upon
retirement it will benefit from its own sacrifices? Is it the duty of public policy to
provide a broad level of societal equity? Where does it say that the rich must
support the poor? Is Canada simply a collection of men, women, and their
children or is Canada a society?
Canadians have never been so rich nor have they ever been so much in debt.
In the second quarter of 2013 Canada’s wealth grew by 1% to $7.4 trillion but
government net debt rose by 1.6% to $937 billion. What does this mean to the
economic health of the middle class?
The current debt-to-income ratio of Canadian households stands at 163.4%
compared to American households at 148%. In 2011, household disposable
income in Canada was 6.9% higher than in the United States, according to
Statscan.
The level of wealth is always precarious. While debt does not vanish instantly,
wealth can and does so from time to time. When stock market or house prices
suddenly dive, wealth dives too. Some economists put a smiling face on wealth
increases while ignoring the fact that the level of wealth is actually inflated. It
means that Canadians may borrow more against the value of their homes but in
the long term it also means that many Canadians will never own their own homes
mortgage free.
Here is the rub. In recent years house prices have dramatically out-paced income
increases. Low interest rates enable the middle class to spend more on house
purchases. A stampede develops in many communities. More and more house
are sold above the asking price. The middle class feels good. It is wealthier. Then
suddenly house prices drop. Household debt remains. And a combination of
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marriage breakups, an accelerated number of home owners on pension, and
increased interest rates deflate house prices. Analysts say that it only takes a
drop of two percentage points on house prices to seriously damage first-time
home-owners’ buying power.
Canadians have never been so much in debt. Rising house prices prevent people
from supplying their savings accounts and planning for retirement. When housing
is more affordable household income can be diverted to retirement vehicles.
House prices in Canada have increased about 6% per year between 1998 and
2013. This pattern of steady increase has made Canada a nation of spenders and
borrowers rather that savers.
But should the stock market suddenly decline and should house prices fall by twodigit percentages, the mobility of home owners to sell will be greatly reduced.
Longer-term mortgages might serve to lessen the pain.
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26. MIDDLE CLASS SENIORS: THE NEW LONGEVITY
The middle–class senior is wading through an enormous demographic shift. By 2036 seniors are expected to be
almost 25% of the Canadian population. More middle class bread-winners are being sandwiched between
caring for senior family members and their own children. The result is an increase in absenteeism at work and
pressure on financial resources.
BACKGROUND
The greatest public policy focus – and headache - may be the rapid increase in the
senior population. By 2019 seniors will number 6.4 million, a 3.5% increase each
year from 2013/2014. Government spending on seniors is expected to rise 5.3%.
The 60-year old Canadian woman of 2014 can expect on average to live another
29.4 years; men will live an average another 27.3 years more.
Pollster Frank Graves observed prior to the most recent federal Throne Speech
that there is no burning crisis in Canada, especially not for seniors. For them the
reality is that, on a comparative basis, these are relatively good times. Politicians
might wish to heed this while they strive to generate a lot of hype about chaos for
the middle class which they predict lies so close just around the corner. Mobile
seniors are almost living in heaven on earth at the moment in Canada. When one
removes oneself from the daily headlines of doom and gloom, and reflects on
history, the current life we live – particularly the life of the average senior - is one
of relative comfort, not unlike the quiet life of the 1920s and 1950s.
Canada’s mobile seniors receive generous transit subsidies. Seniors have discount
days at drug stores, department stores, and at many hotels, taxi services,
optometrists, movie theatres, arts festivals, and hamburger joints. When
planning their weekly schedules seniors can have seven days of discount shopping
and entertainment and free fishing licences, too! National Parks fees are
discounted in Alberta and New Brunswick; Toronto shovels seniors’ snow for free;
numerous universities discount or remove seniors’ tuition; and property-tax
rebates abound. In Manitoba, seniors do not pay for the education portion of
their property tax.
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Governments that contemplate reversing senior subsidies simply don’t pursue
that course of action when they recall the fury that seniors generated when Prime
Minister Mulroney tried to re-jig the de-indexing of seniors’ benefits in 1986.
The seniors lobby is probably the most potentially potent one on the Canadian
political horizon. Seniors are the new heart of the middle class in terms of
security and affluence. In the 1970s, according to Statscan, 30% of seniors were
poor. Today seniors’ poverty level has fallen to a mere 5.2% within the group. In
1976 their median income was 41% of the national average; today it has climbed
to 67%.
Statscan calculates that the true net annual income of retired households is 87%
of the income of a working household. The obvious conclusion is that nonemployed seniors are the best well-off group in the nation, particularly since they
are not preoccupied with the daily stress of raising a family and commuting to
work. There is no middle-class crisis for the mobile senior. [See Item 27]
In more general terms our life in Canada is relatively peaceful and content from
an historical perspective. Quebec is relatively calm; regional tensions are, too.
The gloom of the 1930s is far away. There are no foreign threats. Our vaunted
multiculturalism is robust. Our country and our supermarkets are filled with
natural abundance. Is the middle class angst one hears about simply a media
invention fuelled by certain politicians? Yes, there are many arguments to
suggest that Canada has a number of serious problems, but seniors do remember
history, and today they are generally feeling just fine!
From an intellectual view-point the constant mantra about middle-class crisis
does not resonate with mobile seniors. They know they are doing well. From an
emotional view-point, however, it may simply mean that seniors are becoming
more determined than ever to pursue their weekly efforts to accumulate their
regular discounts methodically, as usual. No doubt many of their offspring are
currently “piggy-backing” on their parents discounts, as well.
The 2013 the Ekos year-end research panel reported that 52% of panel members
cite the unmanageable costs of caring for Canada’s aging population as the
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second most important current national issue exceeded only by concerns about
the health of Canada’s democracy. The angst one hears about the middle class is
relatively silent in the poll. But aging and health care are certainly middle class
Canadian concerns.
Healthy seniors live longer; but the great increases in the number of active
pensioners will require more creative and sustainable recreation and culture
facilities. As the population ages, seniors will be multiplying as never before. The
sick/feeble/immobilized pensioner among the senior population will require care
based on standards of dignity and sensitivity. Shouldn’t there be an increase in
special programs that single out pensioners who have no family?
But for those incapacitated seniors who have family nearby in their communities
or within their own households, the stress and cost of care will substantially
multiply. But the broad perspective remains: only 5.2% of seniors are poor.
PUBLIC POLICY PROPOSALS
A national plan to accommodate and care for our rapidly expanding senior
population – based on rapidly increasing longevity – will become more pressing
and should be targeted by public policy makers.
[See National Health Council, Item 20]
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27. MIDDLE CLASS AND MANDATORY RETIRMENT
Type A’s fear retirement because they worry it will bring a personal vacuum.
Eva Klein, McMaster University professor of organizational psychology, De Groote School of Business.
BACKGROUND
It is not unusual for constitutions, institutions, corporations, and professional
associations and societies to force the retirement of skilled, talented, and
experienced Canadians.
As mentioned several times in this document, Canadian society is moving into
conditions of longevity which are among the highest on the planet. We have
arrived into an era unprecedented in human history.
For the educated, healthy, and energetic member of the middle class, who retains
the personal will-power and desire to continue to contribute to our collective
well-being, retirement policies are short-sighted, counter-productive, and simply
downright dumb.
Daily rounds of golf are a boring substitute for mentally and physically active
Canadians. More and more “seniors” face this unwillingly.
Any reform of the Senate – particularly if the Senate is to be elected – must
require the elimination of mandatory retirement at age 75 that is proscribed in
the Constitution Act. Why should Canadians be prevented from electing a fellow
citizen to the upper chamber of Parliament on the basis of age discrimination
when there is no such rule for the House of Commons’ membership qualification?
Similarly the issue of supernumerary status for members of the judiciary should
be revisited. In fact this matter needs to be re-thought in every avenue of workrelated activity in our nation.
Where businesses operate on the basis of partnerships, rather than
employer/employee conditions, the pathway to retirement needs to address the
essential element of consensus implicit in partnership agreements and
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relationships. New business partnership agreements will need dramatic re-writes
to keep pace with increased longevity.
In early 2014 the issue of law firm partnerships were highly profiled when the
partners in the prestigious firm of Heenan Blaikie LLP announced that they had
voted to disband. Law firms often force the departure of some of their very best
partners a when they reach the age of 65. In January three partners of the law
firm Blake, Cassels and Graydon suddenly decided to join other law firms, refusing
to accept compulsory retirement.
It has become very clear to Canadians that 65 is not as old as it used to be.
According to United States projections, 25% of American lawyers will be 65 or
older in 2014. And it is increasingly obvious that thousands of Canadians work
beyond the age of 65, not necessarily for the money, but simply because they
wish to remain engaged in their life-long professions. Many people, particularly
in the legal profession, work beyond the age of 80. Some corporations retire the
least productive 10% of staff each year in order to always have fresh “blood’
joining the staff. Such an approach avoids blatant age discrimination and tends to
ensure that high performers who reach 65 can remain employed for an unlimited
time.
PUBLIC POLICY PROPOSALS
This subject would make a great legislative study for a sub-committee of the
Senate Standing Committee on Social Affairs, to review the implications of rapidly
increasing longevity and build on previous Senate studies that harken back to the
seminal document on aging prepared by Liberal Senator David Croll three
generations ago.
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28. MIDDLE CLASS PENSIONS AND WEALTH
It makes no sense that Old Age Security and the Canada Pension Plan are not aligned.
BACKGROUND
Canadians are not saving as much as they should for retirement. But today’s
seniors are generally in good shape with their pension income.
The Canada Pension Plan/Old Age Security is one of the great equalizers of
Canadian society along with the Child Tax Credit and universal education and
health care. It is a portable national plan; it continues to rack up points in spite of
employment changes, even when one becomes self-employed; and it enables one
to retire early or late in the regular employment stream. But the commencement
of benefits begins first for CPP at age 65 and for OAS at 67.
CPP will rapidly become inadequate to meet the retirement requirements of
tomorrow’s senior Canadians. A new deal between the federal government and
the provinces is urgent to meet changing economic conditions and pressures. The
urgency is greatest for those working in the private sector, for those without a
private pension plan. Only 24% of Canadians contributed to a Registered
Retirement Savings Plan in 2011. Expanding the CPP is probably the only truly
decisive solution since probably a majority of Canadians do not think about
pension plans since their date with retirement is too far in the future to
contemplate. The new deal should include pension alignment.
While the government has recently introduced pooled registered pension plans to
help combat pension issues, the jury is still out on the efficacy of this
development.
The future of Canada’s national pension plan is certain to be a key policy issue in
the Ontario election that most political analysts expect in the spring of 2014.
The current cap on CPP pension-activation income is a mere $50,000. Times have
changed! Doubling that amount would meet the income and life-style
expectations of the middle class. Of course CPP premiums would need to be
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accelerated. The maintenance of the standard of living for the middle class
remains in the balance.
Middle-class Canadians can be thankful that they do not face municipal
bankruptcies over pension plan payouts as is the case in many American cities.
Moody’s, the credit rating agency, down-graded Chicago’s credit worthiness by
three points in July, 2013, where the average policeman receives a pension of
$55,000; the firefighters get an average of $60,000; and 94 former policemen get
more than $100,000 annually.
While the majority of workers in Canada do not have access to pensions on
retirement, other than the nationally mandated Canada Pension Plan, the history
of pension plans has arrived at a critical crossroads. Continuing low interest rates,
the dramatic lengthening of mortality, and government and private sector
solvency issues, are concurrently colliding. Many pension plans in Canada are not
solvent. While low interest rates help those seeking mortgages and loans, this
welcome reality does not help pension plans to grow. The life span of both men
and women increasing beyond pension commencement is producing an
expanding number of active seniors into their ninth decade.
The CPP is itself in good shape. The contributions simply need to be accelerated
in order to meet changing times. As of February, 2014 it has topped $200 billion,
earning an increase of $8.7 billion in the last quarter of 2013. The CPP is invested
half in equities including 32% in public stock market holdings, 18% in private
equities, 33% in fixed income securities, and 17% in real estate and infrastructure.
According to RBC Investor and Treasury Services the 5.9% average annual return
in the final quarter of 2013 is comparable to the private Canadian pension plan
average annual return of 6.1%. The best-run Canadian pension entity, however,
seems to be the Ontario Teachers’ Pension Plan – with assets of $117 billion and
an average annual return of 10%. However, in 2013 the Dominion Bond Rating
Service reported that only 41% of Canadian private pension plans are in good
shape, after having examined 461 of these plans.
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Canadian companies follow three basic pension plan models: the target benefit
plan, the defined benefit plan and the defined contribution plan. Which plan
should be promoted and/or mandated by the government? What pension plan
will provide the most security for the middle class?
The target plan offers a mix of flexibility and predictability, a basic level of
security.
The defined plan determines one’s final pension payout based on years of
employment and earnings. The expected payout is clearly known in advance.
Such a plan’s assets are managed by the company supplying the pension.
Employees do not participate in investment discussions
The defined contribution plan takes contributions from both the employer and
employees. The payout on retirement is based on the accumulated value of
investment funds.
There are enormous and growing implications for the creation and development
of wealth. How will the retired senior live in dignity? He/she may enjoy some
dignity but will likely be pursuing part-time employment. A recent BMO survey
reports that 71% of seniors expect to continue to work at “something” in order to
supplement their income. The report adds that the average senior believes that
the asset level for secure retirement is about $650,000. In addition to monthly
OAS and CCP benefits the average saving level of the middle class senior is about
$225,000 which compensates for one’s lower assets.
PROPOSED PUBLIC POLICY
The current CPP regime is inadequate for future retirees. Much has been
reported in the media in this controversy. It is urgent for Canadians to feel that
someone is truly managing this file. Piece-meal solutions, as in newly created
provincial pension plans are insufficiently comprehensive. A plausible national
strategy is urgent. The Canadian “advantage” should be universally applied. The
national government should be in charge of the file.
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Pension contributions from both employers and employees need to be
accelerated now. This will require federal/provincial agreement.
Pension alignment should be established now.
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29. MIDDLE CLASS AFFAIR WITH THE AUTOMOBILE ON THE WAY TO WORK
Canada occupies ninth place on the planet in the production of automobiles at 1.37 million cars.
A new middle class urban mantra in the core of cities: cars are bad and the sprawl that they give rise to, is
worse.
When urban population density is lower, and jobs widely dispersed rather than concentrated in a city centre,
commuter traffic is more widely scattered on the road network, lowering commuter times.
Brain Lee Crowley, director of the MacDonald-Laurier Institute
BACKGROUND
Everyone seems preoccupied with transportation issues. Is it going to become
unfashionable to be pro car?
The bicycle and bicycle lanes in Canada’s big cities are getting a lot of notice.
The transportation secretary of Italy reported in 2013 that the number of bicycles
manufactured there in 2012 exceeded the number of cars for the first time in 50
years – 1.4 million cars compared to 1.65 million bicycles. He declared that there
is a silent revolution taking place in Italy’s cities.
There is no such revolution yet in Canada but the climbing price of gas may point
to a window on the future through which there may be many more cyclists on the
road than now. And we can be certain that there will be many middle class
people sitting on them. Bicycle lanes are rapidly emerging in cities from coast to
coast. Bicycle parking banks are increasing beside office complexes and kiosks for
rental bikes are now proliferating in cities like Ottawa for tourists. Bicycles are
inexpensive and a healthy mode of transportation in spite of the paradox noted
by Globe and Mail columnist Elizabeth Renzetti when she wrote that in Toronto
one sees cyclists ploughing through the snow on the way to work while puffing on
a cigarette.
Fifty years ago our planet produced an equal number of bicycles and cars at the
rate of about 20 million per year. Now it is estimated that car manufacturing has
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merely doubled annually since 1965, while bicycle production has increased fivefold to a current annual estimate of 100 million.
In North America it is unlikely that the middle class will get out of the automobile
and go to work on public transit much more than they already have, particularly
from suburbia. There are several issues that are difficult to address.
Smoking was banned on public transit a couple of generations ago. In this regard
the car is merely a comfortable extension of the smoke-filled domestic
environment. Middle-class smokers would rather be free to “light up” during a
90-minute car commute than “suffer” without a cigarette during half of that time
on transit. And non-smokers would prefer not to be jammed against their
smoke drenched apparel on a long ride by commuter train or bus.
The car ride to work is an element of freedom that the middle class does not
enjoy often during the working day. On the return home it may in fact be a
relaxing experience in the middle of traffic gridlock. It may provide an element of
independence that is a beneficial antidote for middle class stresses in the work
place. But after years of lengthy commuting it may produce resentment at the
accumulated loss of discretionary off-work time. [See Item 38]
This is a complex issue. On the one hand there is emerging information to
suggest that it is going to be much cheaper for the middle class to live in the city
in the next decade. On the other hand, suburbanites continue to cling to the
belief that living in the suburbs is more affordable, and having a suburban yard
the size of a postage stamp is infinitely more desirable than a mere balcony
jutting out from a high rise condo.
The suburbanite is enthralled by being dry and warm in one’s car when it is cold
and wet while standing in wait for transit. It seems more and more that suburban
affordability was true but is rapidly disappearing. Ongoing increases in the price
of gas may outweigh the flexibility that the car offers. And the effect of
commuting stress will permanently impact on mental health. [See Item 20] There
are economic signs that the suburb may have reached its apex. The carbon
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footprint of the suburbanite may need to be tempered and reversed for the
planet to survive.
Economic activity continues to be more and more dispersed. This translates into
complicated patterns of movement between the home and the office. Regardless
of the genius of mass transit planners, it is now impossible for mass transit routes
to match home-to-work and work-to-home patterns. This will create a
fundamental change in the ideals anticipated for suburban life, sooner or later.
PROPOSED PUBLIC POLICY
In spite of the emergence of the above realities it may be that appeals to get
more car drivers to leave their vehicles at home will continue to fall on deaf ears.
The conclusion for urban planners is likely to promote more effort to enhance
road safety and car safety.
Mass transit has never been a pleasant experience in North America. Could a
system of first and second class subway or commuter train travel entice the
middle class out of the automobile? Perhaps. But the costs would likely be
prohibitive and our egalitarian society might prevent the concept from ever being
considered.
The federal government should explore carving a national role for itself in the
rationalization of rapid transit support.
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30. MIDDLE CLASS – THE COST OF KIDS FROM DAY CARE TO UNIVERSITY
BACKGROUND
Public policy initiatives have been dominated by the two book ends of child/youth
rearing. But the hidden and spontaneous spending-pressures between these
bookends are often not foreseen, emerge without warning, and are often costprohibitive. And the failure to include young family members in youth-related
activities can have long-term negative effects on maturation. This is a broad issue
that includes a wide spectrum of sports-related memberships, ethno-cultural
retention, perhaps through heritage language coaching, etc., and cultural pursuits
such as music development, etc. This is the realm of the soccer mom. The Harper
government has cherry-picked this category [Item 25] through sport-and-fitnessrelated tax credits.
What about a comprehensive scheme to provide a level playing field for the tax
payers faced with their own relentless in-house pressures from their children in
response to the latter’s bombardment from peer-pressure?
Most middle class couples want to have children. But the financial challenges to
raise a family are accelerating. Native-born Canadians no longer replace two
children per women. The era of large families ended 40 years ago. Middleincome families now produce an average of less than two children.
Marina Adshade, economics professor at University of British Columbia, says 80%
of Canadian women want to have two or more children but the costs of childrearing are becoming prohibitive. An OECD report says that Canadians are among
the very few who have not down-sized their expectation of family size. Canada
and the United States are unique among OECD countries wherein the desire for
larger families is tempered by perceived costs of child-rearing.
In 1990 the General Social Survey polled Canadian women on their childproducing expectations. 47% of women between the ages of 20 and 24 planned
to have three or more children. Twenty one years later the General Social Survey
– in 2001 – reported that among women between the ages of 41 and 45 the
average birth rate was 1.9%, 6% below expectations.
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Affordable child care is the key to fulfilling child-producing expectations.
PUBLIC POLICY PROPOSALS
Day-care provisions and prioritizing everything related to childhood development
are essential middle class issues. Affordable day care should be the mantra for
public policy advocacy. The true friend of the middle class will be those who
stridently pursue such policy.
Affordable day care must be highly regulated while embracing superior standards
of care, supervision, and learning stimulation.
Quality-based early childhood education coupled with the Child Tax Credit
provide lower class children the best basis on which to enter the middle class.
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31. MIDDLE CLASS VACATIONS
The investment firm Goldman Sachs predicts an eighty-eight cent dollar in 2014. This would be a positive impact
for the middle class Canadian businessman and tourism provider.
BACKGROUND
Canada’s tourism sector, currently employing 600,000, an important sector for
middle class business operations, accounts for 2% of the economy. According to a
Scotiabank report, Canada’s share of international tourist arrivals decreased from
2.9% in 2000 to 1.7% in 2010. Tourist visits to Canada plunged almost 50,000,000
per year. Due to the high Canadian dollar middle-class tourism operators
suffered, border towns were devastated and south-bound border shoppingcrossings decimated small-business sales. This reflected Canada’s ongoing status
as one of the most expensive tourist destinations on the planet.
John Winter, CEO of the British Columbia Chamber of Commerce says that Canada
is becoming less competitive internationally due to airport costs. The recent
decline in the Canadian dollar compared to American currency may lead to more
Canadians vacationing in Canada. Middle class tourism operators may already be
seeing a positive reversal of the down-ward trend.
Those operating in the traffic corridors to the Stratford Shakespearian Festival,
one of North America’s top destinations for classical theatre, are already
experiencing a spike in income. In 2013 U.S. visitors to Stratford have already
increased by 15% from 2012. The middle class is the engine that drives tourism.
Air and rail passenger services need dramatic re-evaluation as welcoming
components for middle class family-tourism mobility.
The current government has downgraded the Canadian Tourism Commission.
The current budget is now $58 million less than that of New York City! This is
strange since the commission has made a dramatic shift in advertising from
“moose, Mounties, and mountains brochures” to screaming young zip-liners
wearing helmet cameras and posting their adventures on social media”.
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One of the main drivers of tourism is Parks Canada which falls under the purview
of the department of Canadian Heritage. It operates more than 2000 structures
including historical houses, fortifications, canal locks, and other heritage gems, all
part of the 200 national parks, historic sites, and marine conservation areas. The
consulting firm Opus International reported recently that 61% of these structures
are in poor or very poor shape. At the same time 20.6 million people visited these
sites in 2012/2013, an increase of 3% for the first time in four years.
The total value of Parks Canada assets is estimated to be $15 billion. It was
estimated by Parks Canada in 2012 that $2.9 billion in repairs was needed.
The relationship of several elements of this issue is obvious. Middle class
domestic tourism, small business revenues, national pride, renewal and
rehabilitation funding, year round employment, summer jobs for youth,
marketing, and multi forms of transportation stimulation from coast to coast
would all be energized components of a visionary trans-national plan. This would
be middle class action at its finest.
PUBLIC POLICY PROPOSALS
In addition to warm-sun options in the winter for the middle class, there needs to
be a dramatic re-evaluation of the via rail network in terms of passenger rail
travel. Not only would attractive and affordable rail travel stimulate interest and
pride among the middle class, and boost the livelihood of the middle class tourism
operator, it would provide a deeper appreciation of Canada among middle class
youth and promote greater resilience for national unity. VIA rail should be
mandated to provide creative family packages beyond any previous efforts in this
regard. VIA rail is currently running at a profit in spite of cuts in government
subsidies. Given the low Canadian dollar the time has come to use this reality for
the benefit of middle class Canadian tourism operators and the middle class in
general.
Airplane transportation is now the victim of American fuel prices coupled with the
high American dollar. Airline ticket costs will likely prevent more tourism
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experiences for Canadians within Canada. Part of the strength of the middle class
has always been family reunions on special holidays. Those annual holidays are
not long ones. Middle class family members have challenging distances to travel.
Airlines should be part of the solution, not part of the problem.
A number of other areas of tourism need re-examination. Restoration of longer
canal-operation hours makes sense. Completion of the removal of Ottawa River
cruiser navigation barriers could be a major motivation of tourism. National Parks
camping fees need adjustment.
Issues of national unity and nation building are key elements of middle-class
tourism mobility.
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32. MIDDLE CLASS AND SMALL BUSINESS
Financial crises are neither rare nor inexplicable. They have been occurring for centuries, and while each has its
own fascinating details, they all have much in common.
Christopher Ragan, associate professor of economics, McGill University
BACKGROUND
It is well known that small business is both the engine of the economy and the
preserve of the middle class. Middle class business has the key demographic role
as the buffer between the lowest and highest classes.
It is important for the survival of the middle class, therefore, that the purveyors
and promoters of small business get it right and that the government regulatory
frameworks, that impact on small business success, are in tune with all of the
economic realities. This is a Herculean task given the rapidly changing world of
life styles, technology and globalization.
The history of small business is a bumpy glimpse into prosperity, recession,
depression, and financial collapse. Its survival has always seemed to be at the
very core of the health of the middle-class based democracy. [See items 40 and
41]. The small-business franchisee however is the new reality.
The great economic events teach us that we do not necessarily learn very much:
the Amsterdam tulip bulb financial collapse of the 1630s, the collapse of the
South Sea and Mississippi companies in the 1700s, the financial booms and
collapses of railway and canal construction in the United States in the mid-1800s,
the Great depression of 1929, numerous financial crises all over the planet in the
latter half of the last century and the global one that began in 2008.
Canadian-born John Kenneth Galbraith wrote about these matters in his book A
Short History of Financial Euphoria. Lessons for Canadian small business and the
role of the Canadian government can be summed up in five points, all leading to
public policy considerations for the current decade and beyond.
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1. NEW KINDS OF INVESTMENT OR FINANCIAL INSTRUMENTS EXCITE
INVESTORS
The creation of mortgage-backed securities created a steam-roller leading to
profound disappointment and disillusionment
2. MIDDLE CLASS BELIEF THAT MONEY AND INTELLIGENCE TRAVELS
TOGETHER
Seeing someone do well financially suggests that we should follow blindly what
that person invests in.
3. BORROWING A LOT GIVES LEVERAGE TO INVESTORS
Leverage is wonderful only when the investment proves to be wonderful; for bad
investments the outcome can be dramatically the opposite.
4. THERE IS RARELY A SHORTAGE OF PEOPLE TO BLAME WHEN THE ECONOMY
DIVES
We never blame the “system”. We always blame the people. Who is going to
actually blame the basis of a market economy?
5. OUR PAINFULLY SHORT MEMORY PREVENTS US FROM LEARNING FROM
THE PAST
There is always a direct relationship between the next financial crisis and a past
financial one.
Every community of any size has a small business known as a restaurant. Today it
is an endangered entity. Every community has been invaded by fast-food eateries
that are corporate controlled as franchise operations. Some small-business
operators have transmigrated into fast-food franchisees. Many others have
closed their doors.
Many other small business categories are rapidly disappearing along with the
traditional down-town main-street landscape.
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Only the most robust, flexible and creative small business operator may be able to
survive without being an owner in a chain of similar enterprises. The old
definition of what it means to be a small business operator is yesterday’s story.
PUBLIC POLICY PROPOSALS
Middle-class investment pitfalls can be tempered, if not avoided, by governments
taking regulatory responsibility for the market place. One argues that the
superior quality of the framework of Canada’s banking system continues to save
Canada’s banks. Balancing this with assistance to women entrepreneurs and the
more wide-spread availability of micro credit will require more regulatory
involvement and flexibility.
In particular, governments should look to further protective measures to support
the small business operator who is part of a chain.
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33. MIDDLE CLASS QUALITY HOUSING
There are many horror stories from condo owners. It ranges from they can hear their neighbour slamming their
cupboard doors to couples having sex.
Cal LaBelle, acoustics manager, Dryco, Langley, B.C., that sells sound-proof drywall and related products.
Public policy makers continue to permit housing and office structures to be built that are unwelcoming,
impractical and often hostile.
BACKGROUND
A key socio-economic factor in the determination of health and well-being of
middle class Canadians is housing, the level of resilience in the habitable
environment of daily living. This is particularly important for the growing
population of middle class seniors, not just for those who are wage-earners.
There are 3.8 million Canadians – 11% of the population – living with a disability.
A further 5 million are over 65 years of age – 14.3% of the population. Among the
challenges for all members of the middle class and especially for those who are
disabled are accessibility to their homes and where they shop and work, including
easy entry; the quality of doorknobs; wide passages; appropriate sink and
furniture heights; stairs, and – beyond the household - a host of challenges of
mobility and access to the essential services that should be available in one’s
neighborhood. For example, the City of Vancouver now has a doorknob ban for
accommodation focused on senior living. National standards should be
established. The United States Center for Disease Control and Prevention is
mandated to guide home-care organizations to promote housing standardization.
Canada should follow.
PUBLIC POLICY PROPOSALS
Governments must strive to keep the middle class in their communities where the
faces of friends and neighbours and the landscape have a comfort familiarity.
More and more Canadians will find themselves being institutionalized in the
absence of more concerted action to make dignified and affordable housing more
compatible with the aging process. It is critical that federal government grants in
the housing sector be conditional on, and tied to the development and adaptation
of enlightened building codes.
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34. MIDDLE CLASS HOUSING AND INFRASTRUCTURE RELATIONSHIPS
Canada is entering an era of challenge and crisis for public works and infrastructure renewal to support middle
class residential neighborhoods, not unlike its American neighbour.
If we can reduce the cost of housing in established neighborhoods with good transit and community facilities,
and include the true costs of urban sprawl, in the price of new housing, all Canadians will be better off.
David Thompson, policy director, Sustainable Prosperity, University of Ottawa
I think it is more important to get the garbage picked up regularly than celebrate Toronto as a nuclear-weaponsfree zone.
Barbara Amiel, MACLEAN’s Magazine columnist
BACKGROUND
In a July, 2013 speech to Knox College in Galesburg, Illinois, President Obama
heighted his intentions to focus on economic prosperity for the American middle
class. He trumpeted a massive and widespread intention to generate
construction jobs by spending heavily on roads, bridges, and ports. Where is the
Canadian equivalent of thoroughly addressing this challenge?
Most Canadians know that bridges everywhere are in urgent need of renewal.
Municipalities do not have the tax base to fund comprehensive infrastructure
programs. And most municipal governments would be hard pressed to determine
whether or not local bridges should be the priority for next year’s budget or
should it be the pot-holed roads or both.
The wider issue for the middle class is the relationship between the increasing
concentration of urban and suburban density and infrastructure costs of
adequate provision for road construction and maintenance, water mains, sewers,
and hydro lines, and the human-services infrastructure costs of fire and police
protection. There are also the added costs of commuting.
The middle class is shouldering directly and indirectly the financial burden of the
above necessities, and even more so when accommodation densities are not
concentrated to a maximum of cost efficiency.
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It is becoming clear that the middle class cannot afford to live in low-density
suburbs any longer. The concept of a garden of substance in every back yard is
yesterday’s life style. Town houses and duplexes are part of the cost efficiency
answer. The redevelopment of underutilized sites in this category may become
widespread.
The entire pattern of shopping mall sites and their relationship to parking
capacities and their surrounding urban accommodation sprawl is likely to be redesigned dramatically in the short term.
The southern Ontario regional government of Peel has estimated that the cost of
servicing low density neighborhoods is $1.50 for every $1.00 received in real
estate taxes. This is a tremendous spread between the cost level and the subsidy
level for the middle class
Calgary projects that it will save $11 billion in capital costs by 2031 by adopting a
lesser density growth pattern that mandates 25% less land and recently increased
its land-development charges.
PUBLIC POLICY PROPOSALS
The national government should play a pro-active role in the future of Canadian
housing development.
There should be a national bench-mark for urban-density standards that focus on
effective housing based on economic, social, and environmental considerations.
Specific solutions to re-structuring development costs that currently rely on real
estate taxes are urgent.
All Canadian municipalities should accurately assess the real costs of housing
developments that lead to move efficient financing for viable high-density
neighborhoods.
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35. MIDDLE CLASS AND THE ENVIRONMENT
Oilsands’ production could double by 2030 and five major pipeline projects have been proposed to ship that oil.
Unless Canada acts soon, increased greenhouse gas emissions will stunt our ability to address climate change
and protect our land, air, and water from harmful energy production.
Ecojustice, a Canadian charity using the law to protect and restore the environment
Three factors that have combined to radically disrupt the relationship between civilization and the earth’s
ecosystem are human population growth, the technology these humans use that magnify the per capita impact
of we humans, and the emergence of a hegemonic ideology that exalts short-term thinking and ignores the true
long-term cost and consequences of the choices we're making in industry, energy policy, agriculture, forestry and
politics. [Otherwise known as "voodoo economics", or "neoliberal globalism”]
Al Gore, former U.S. vice-president writing in the New York times, 16 February, 2014
The popularity of sharing is not only a matter of saving money; it also comes from the desire for community,
bonding peoples through the trust and reciprocity that are at its core, and allowing people to express their
repudiation of materialism and the culture of accumulation.
Lloyd Alter, professor of sustainable design, Ryerson University
That Canadian environmental standards rank among the world’s best and are administered by regulatory
agencies staffed with highly qualified experts matters little in the public opinion market place, where fearinstilling propaganda, that lacks scientific foundation, all too often wins the day.
Gwyn Morgan, retired Canadian business leader and director of five global corporations
BACKGROUND
There are a number of critical environmental files in the hands of federal
bureaucrats today including Northern Gateway Pipeline, Kinder Morgan Pipeline,
Line 9B Pipeline reversal, and arctic offshore drilling.
Does the middle class want jobs that are incorporated into environmental
sustainability and protections or simply jobs, jobs, and jobs?
The 2013 year-end EKOS poll reports that Canadians expect a severely
environmentally-degraded future. There were 1554 participants in the poll,
52.8% of whom revealed that among their top concerns the environment rates
very high.
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It is obvious that the cornerstones of public policy promoted by the current
government are the exploitation of resources and cutting taxes. Critics assert that
there is little emphasis on innovation and environmental regulations.
Of course, issues of the future of the environment are basically controversies that
tend to become polarized between the concept of interaction and the “me-too”
imperatives of consumption. There is a growing divide within the middle class
itself, on these issues. Will there be a TransCanada Keystone KL pipeline project?
Or will the environmentalists win? The EKOS poll suggests that the
environmentalists in the middle class believe that they will lose their fight to
shelve the project.
Another current irritant for the middle class environmentalist is the questionable
role that Revenue Canada is playing with new investigations of charitable
organizations. Audits of Tides Canada, the David Suzuki Foundation, and
Environmental Defence are occurring at the same time as warnings are being
voiced about the effects of the climate-poisoning Alberta tar sands project.
Canada’s prosperity is tied to the development of resources, coast to coast to
coast. In the winter of 2013/2014 there seems to be a tug of war over the
availability of railway cars to move grain due to the high volume of oil transport.
Every day in Canada, some three million barrels of oil is safely transported
through pipelines, but the pipeline capacity has peaked well below the demand.
The large grain farmers and the oil producers, along with their economic partners
and dependents, are both electoral targets for the current government.
The conflict between resource development and environmental protection will be
a staple of Canadian public-policy decision-making for the next generation.
Thousands of middle class jobs are at stake in the environment/resources debate.
Data from National Resources Canada show that in 2011 the resources sector
generated 1.6 million jobs and $233 billion in export revenues.
The economic research firm Informetrica estimates that resource development
will generate $650 billion in hundreds of projects over the next decade. These
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projects are estimated to be worth $1.4 trillion to Canada’s GDP and are expected
to create an average of 600,000 jobs per year.
The stakes are very high, indeed. These programs would be the basis of middle
class prosperity. Not only would massive employment be created, the revenue
from these projects would form the underpinning of Canada’s very generous
safety-net social programs. The search for broad perspectives and possibly
endless compromises and revisions to projected public policy will be the
preoccupation of all the stake holders.
PUBLIC POLICY PROPOSALS
Successful politics is the art of compromise. Extreme ideologically-based publicpolicy decisions have historically been anathema to Canadians.
Public policy decisions should be taken as the result of wide-spread engagement
of a representation of diverse opinions. The economic clout of big business must
not be allowed to drown minority opinion which could actually turn out to be
majority opinion.
Public policy fora need to be established in such a way to encourage people to
both hear each other and to listen to each other. There is a growing sense that
neither hearing nor listening is taking place.
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36. MIDDLE CLASS AND CAPITALISM
BACKGROUND
The history of the development of the middle class is the history of individualism.
Notions of democracy and equality are by-products of the fundamental feature of
the middle class. Middle class individualism sparked the Reformation, The Puritan
Revolution in England, the American Revolution and the French Revolution,
ultimately establishing the basis of the bourgeois society of the last 100 years.
This individualism is the basis of capitalism. And it is historically separate from
the working middle class citizen of today.
However, all of this has become blurred in contemporary society. The practical
result is that the total mass of those in the middle of society are those who run
the society, at least indirectly, through the purchasing power they pursue.
As consumers, the vast middle of society has become rather stable and solid, and
predictable. When their buying habits decline slightly in the pre-holiday season
purchasing/spending nightmare, the market responds in the post–holiday period
with endless sales.
But the great paradox of the middle class is the desire for upward mobility while
usually refusing to self-identify as belonging to the upper class once one has
purchased a house worth $1 million.
This is a very large subject and therefore, beyond the scope of this paper.
Herewith, however, a few observations:
The Canadian middle class is currently going through an enormous employment
adjustment period which could last for a generation. The skills-set/employment
availability miss-match of today demands unprecedented economic planning.
Over the years Canadian corporations have successfully lobbied for billions of
dollars in tax breaks. At the same time they have systematically refused to
release their enormous cash reserves to create new employment.
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Unfortunately this is the under-belly of our democracy. This is “capitalism
rewarded” to the top 10% of the population while much of the middle class
observes the corporate-generated wealth for the few. If there is an “evil”
element in capitalism it can be found in corporate decision-making. Governments
do have a role to play in this regard. The great equalizer components of our
society – mentioned several times in this paper, including pensions, health care,
education, child care and unemployment insurance – need the Canadian
corporate community as its partner.
PUBLIC POLICY PROPOSALS
As indicated in this paper the role of corporations in the promotion of gender
equality is dismal and the attitudes of corporate leaders regarding the potential
for women’s contribution is inconsistent with democratic principles and
unacceptable in the 21st century Canadian economy.
The problem is similar in corporate Canada’s failure to provide leadership in job
creation.
The Canadian government has a role to play. Enforceable public policy should
pave the way.
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37. MIDDLE CLASS LEVEL PLAYING FIELD
Wherever middle class Canadians live, work, and play, the same application of legal standards should prevail.
Too often this is not the case, from coast, to coast, to coast.
BACKGROUND
Do you want to smoke a joint but can’t get to Colorado to do it? Don’t go to
Saskatoon. Think about going to Halifax instead.
There is a patchwork of inconsistent application of law enforcement across
Canada. It is immediately obvious in the matter of cannabis possession. In
Saskatoon prosecuted cannabis puffers number eight out of ten; in Halifax it is
two out of ten! Toronto police chief Bill Blair has declared that the law in Canada
should be applied in a consistent way. The Canadian Association of Chiefs of
Police advocates that officers should have the choice of ticketing pot smokers
rather than charging them.
The national average of cannabis possession charges is 4.7 out of 10. Vancouver
is 2 out of 10. Toronto’s record is 5 out of 10. Guelph is at 2.5; Kelowna, B.C. is 6;
Windsor is 5 and Barrie is 7. Saskatoon is almost twice as tough as Regina. They
are only three hours apart by car! Incidentally, in 2012, Ipsos Reid reported that
66% of Canadians support decriminalization, while 57% supported full
legalization. The middle class has spoken. But according to a 2013 report from
UNICEF using data supplied by the World Health Organization, teens have the
highest level of dope smoking.
In the matter of judicial sentencing, the application of law in Canada has always
been wrapped around judicial discretion. The current government has mandated
a regime of minimum sentencing as part of the roll-out of its law and order
strategy. It seems that a large number of judges – at every level of the judicial
process – are balking at this development. The real possibility of a national showdown between the executive and judicial branches is looming.
In the area of work-place even-handedness of the application of the law regarding
employer-employee relations, there are six areas to watch. This is a very
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important issue for the middle class since employment-mobility, relocationcomfort, and fairness should be operating in tandem for all of the middle class.
There is a shifting legal landscape currently in play.
RANDOM ALCOHOL AND DRUG TESTING – The Supreme Court has ruled that
testing is forbidden unless the employer can demonstrate absolute necessity.
SEVERANCE AND PENSIONS – In a case of wrongful dismissal wherein a company
argued that the dismissal payment was worth more that the person’s pension, the
Supreme Court ruled that a former employee is entitled to one’s pension in spite
of the fact that a company has paid that employee severance.
DISMISSAL TACTICS – Both the Ontario Court of Appeal and the British Columbia
Supreme Court have warned employers that intimidation of former staff during
the settlement of financial issues will be subject to tough judicial-inspired
retribution.
REINSTATEMENT WITH PAY – The Ontario Human Rights tribunal awarded an
employee $500,000 concurrently with an order to reinstate that employee,
something almost unheard of, sending a strong message to employers that they
should settle discrimination cases out of court and in a timely fashion.
HUMAN RIGHTS DAMAGES – The Ontario Supreme awarded an employee
damages because of disability dismissal even though the company argued that
the reason for dismissal was corporate restructuring. This is the first time a court
has done so, usually leaving such decisions to human rights tribunals.
HEALTH AND SAFETY –The Ontario Court of Appeal awarded $750,000 in damages
to the survivors of four victims killed in a construction accident. The court stated
essentially that the extent of damages given may serve to place a defendant
company into bankruptcy – and so be it.
These are victories, not only for the middle class, but for all Canadians. They
serve to cement a middle class sense of dignity, prospects of fairness and survival
if not revival itself.
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PUBLIC POLICY PROPOSALS
Protection, security and survival of the middle class will always be a work in
progress. All of the above facts and recent judicial decisions lend themselves to
creative public-policy development.
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38. MIDDLE CLASS HAPPINESS
A certain slice of the American bell curve thinks happiness is guaranteed by the Declaration of Independence
and it comes before collective concerns like income inequality, climate change, new playground equipment
and whatnot.
Steven Watts, author of Self-Help Messiah: Dale Carnegie and Success in Modern America
BACKGROUND
Canada is currently ranked at sixth place on the Global Happiness Index. A
professor at the University of Toronto’s Rotman School of Management says that
he hears more complaints about the traffic on the way to work than the work
experience itself. The new work experience – for large corporations employing a
broad spectrum of the middle class - is about creating happiness and satisfaction,
not just about base salary increases. [See Item 13] But the Canadian middle class
appears to be restless and cranky, no doubt in part by the constant blabbering of
Canadian politicians about what Canadians should find wrong about their own
current state of being.
In a 2010 study by economist Angus Deaton and Nobel prize-winning psychologist
Daniel Kahneman the optimum annual income for happiness is $75,000.
University of British Columbia psychology professor Elizabeth Dunn and her coauthor, Harvard University business professor Michael Norton, may have the upto-date final word on middle-class happiness in their recent book, Happy Money.
They reveal the following keys to happiness:
1.
2.
3.
4.
5.
Shortening work commutes
Going on trips regularly
Giving to charity
Spending more time with friends and less with television
Solid social relationships, across class and geographical lines
Dunn and Norton argue that “stuff’ does not make us happy and buying more
“stuff’ still does not make us happy. Therefore, increasing our wealth does not
invariably augment subjective well-being.
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If each day begins and ends with the frustrations and unhappiness of commuting,
it is easy for commuters to be seduced by negative messaging about law and
order, high taxes, low math scores for their suburban children, and the life-styles
of the various factions of the down-town urban elites who have plenty of time to
“enjoy” life, because their happiness is not hampered by 60 to 90-minute morning
and evening time-consuming, stressful, and costly rush-hour challenges.
The above is not a “stretch” in thinking. The unhappy suburban middle class folk
may not even realize how accumulatively unhappy they are becoming by their
inability to access more disposable free-time due to commute challenges. After
all, it was the suburban commuter who elected Rob Ford to be mayor of Toronto.
It was those inner-city middle-class folk, with more leisure time, who rejected Rob
Ford. It is Rob Ford who is constantly seen to be fighting to reduce commute
times and it is Rob Ford who could realistically be returned as mayor at the behest
of the middle-class suburbanite who expect Rob Ford to build rapid transit to get
to and from down town faster.
PUPLIC POLICY PROPOSALS
In this scenario the suburban middle class has become numb with unhappiness. It
is ripe for electoral propaganda from the political party that reinforces their
unhappiness while at the same time providing real and practical solutions to that
unhappiness since well-crafted messages of hope ultimately triumph over anger.
Rob Ford crafts hope out of anger for the suburban middle class.
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39. MIDDLE CLASS WHITE COLLAR CRIME
BACKGROUND
The typical middle-class white-collar crime is fraud-related and is committed by a
middle-aged college or university graduate with 10 years of experience within his
company of work, while occupying a middle-management position. 61% of
Canadian middle class crimes fall under these conditions.
The four most common crimes are asset thefts – 58%, fraud in the procurement
process – 33%, accounting fraud – 22%, and cybercrime – 22%.
A 32-page report released by Price Waterhouse Canada, in February, 2014 reveals
that nearly half the Canadian companies responding to their survey-based report
that computer-related crime is increasing. 36% of Canadian firms report whitecollar crime compared to the global survey figure of 37%. This figure has declined
from 50% in 2000. One in ten Canadian firms reporting white-collar crime
revealed that they have lost more than $45 million. Globally, 28% of companies
report they have been approached for bribes compared to 15% of Canadian
companies.
Financial services, retailing, and communications firms experience the highest
level of while-collar crime. One hundred Canadian firms participated in the
survey. Globally there were 1,500 participants in 99 countries. Canadian whitecollar crime is obviously high.
PROPOSED PUBLIC POLICY
Fraud is a Criminal Code issue and, therefore, a national matter.
National standards of employment ethics, and the ethical tone of company
practices, both require the placement of rigorous fraud-prevention systems into
employer-employee agreements. Swearing under oath, by way of promising to
be governed by ethics standards under those agreements, could become standard
business practice for employees. The potency of criminal code fraud-related
sections in the Canadian Criminal Code could be reviewed.
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40. MIDDLE CLASS MANDATORY FOR DEMOCRACY
Widely-shared prosperity is the bedrock of western liberal democracy.
Chrystia Freeland MP
In devising genuine democratic openness, politicians and their parties must do more than post expenses on line:
they must become partners and advocates for renewal. Systematic change demands an informed and engaged
civil society, disgruntled with the status quo, but also determined to act anew.
Jeffrey Roy, professor in the School of Public Administration, Dalhousie University.
Equality, it seems - not civic participation, not the efficiency of government, not diversity - is the key determinant
of social trust. Where equality is high, solidarity more easily coexists with cultural and ethnic differences,
debunking the notion that equality is only possible in homogeneous societies. Universal programs – universal
health care, childcare, education, income security, and access to justice – are the most effective by far in
promoting equality and social trust. They are inclusive and not subject to arbitrary income cut offs and often
degrading means-testing in which officials decide who’s in and who’s out. They bring people together across
income and cultural differences. Because they belong to everyone, everyone has a stake in their quality.
Alex Himelfarb, former clerk of the Privy Council
Societies that have more equality tend to be healthier and more cohesive (America ranks way down on the list;
Canada is about in the middle).
Richard Wilkinson and Kate Picket, British socialists and authors of The Spirit Level (2009).
BACKGROUND
We are surrounded by a decline in civic engagement and social trust.
The massive re-jigging of the family structure may be one basis for the decline in
democratic participation. The traditional family of two parents (straight or gay)
has given way to unprecedented rates of divorce and single-parent family units.
Church and youth-related activities are the two strongest magnets for
volunteerism and social engagement. This has become yesterday’s story.
All of this points to the down-ward trend in social trust. But when it is coupled
with examples of corruption and scandal, the imperatives of the “me-too”
generation and the weekly trek to the shopping malls to buy “stuff” the
combination of factors may be lethal.
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Our greatest challenge in sustainment – and hope – for our democracy may be to
reconcile traditional patterns of top-down federalism with bottom-up efforts to
participate in community engagement. Municipal government, the area of
decision-making closest to the voter, may be the place of salvation for democracy
and the middle class. This is the forum wherein the embracing of open data and
grass roots participation together can bring new stimulation to public policy
renewal.
The polling company EKOS maintains a research panel that responds regularly to
public-policy questions of the day. In late 2013, 1531 members of the panel were
asked to comment on today’s concerns. 54% cited the acute decline of
democratic and public institutions and 51% identified the ethical collapse of
society and soaring corruption. These were judged to be the most important.
Democracy is essential for the smooth functioning of the middle class, the buffer
between the two extremes of the population. It is the group with which most
Canadians self-identify. Our middle-class democracy is the result of a sequence of
events - kick-started by the Industrial Revolution. It will continue to persevere as
governments promote the great universal equalizers - publically funded child
care, health care, education, and pensions. But a bare minimum of middle-class
participants may be the only drivers of our democracy.
The history of public policy decision-making in Canada’s democracy is the mixture
of capitalism and the redistribution of wealth, the protection of minorities from
the majority opinion of the day with respect to specific issues, and the expansion
of the social safety net. That is the central trail of the Canadian narrative.
The political party that embraces and markets this narrative effectively will most
often be the party that gains more than 40% of the popular vote in a general
election, forming a majority government. And that party will be deemed to be
the party of small “l” liberalism “at the moment”. Polling by EKOS Research from
1997 to 2012 identifies that most Canadians subscribe to all of this but do not
necessarily vote for the party with the big “L” Liberal.
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Aspects of democracy appear to be a bit broken. Senate reform is the current
highly-profiled issue in Canada. The issue of robo-calls in the last federal election
could prove to be a much more potent controversy than the issue of Senators’
expenses. A host of other challenges regularly surface including electoral reform,
low voter-participation in elections, the power of the executive branch, the
independence of the judiciary, the promotion of open data to create a more
informed and engaged civil society, and whipped votes in the House of
Commons.
The EKOS panelists were asked two overarching questions in late 2013:
Are you better off than you were 25 years ago?
 32% - worse off
 31% - about the same
 35% - better off
What about the next 25 years?
 48% - worse off
 32% - about the same
 14% better off
These results speak for themselves.
Pessimism is abundant.
A United States comparison is worth noting, however. A Washington Post/ABC
poll from December 19, 2013 shows that a staggering 79% of Americans still
believe they are in a recession. Everything, therefore, should be judged in
comparison.
One may argue that the extreme right-of-centre politicians and their supporters
are the enemy of democracy; the same goes for those on the extreme left. The
segment of the middle class clustered around the income median is the least
ideological group in the population. However, votes are so diversely distributed
among regions and multicultural groups that, until there is a massive focus of
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electoral choice in one centrist direction, politics in Canada will remain “more of
the same”.
Canada is a nation of enormous potential coupled with dynamic differences.
However, for a majority of Canadians to have some degree of satisfaction from
the electoral process there will need to be a modification of the current first-pastthe-post electoral process.
Perhaps really healthy democracy is only possible when there are two broadlybased non-ideologically focused political parties in play.
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41. MIDDLE CLASS: REAL OR PHONY CRISIS
Real income for middle-income families has increased by about 30% SINCE 1997. In the five years since 2006 –
including the recession years – it went up 10%.
Stephen Gordon, professor of economics, Laval University,
Member of the Interuniversity centre on Risk, Economic Policy, and Employment
The cliché of the collapsing middle class has been hammered so hard into our anxious brains that virtually
everyone believes it.
Margaret Wente, Globe and Mail columnist
Economic transitions are never entirely fair or painless.
Conrad Yakabuski, Globe and Mail columnist
BACKGROUND
The world economy is in its period of greatest transition. Some characterize this
as a middle-class crisis. But a transition period for a society does not in itself
mean the end of a particular economic class, no matter how difficult it may be to
classify that class in narrow terms.
The end of the World War II ushered in an equalizing trend across the industrial
world and beyond with publically-funded universal pensions, child care, health
care and education. At the same time there was a gradual growth in wealth
extremes accompanied by the creation of many service-sector jobs that were
often part-time and low paying. Some doom and gloom commentators declared
that the economic tea leaves predicted a hollowing out of the middle class.
What the economic pessimists seem to have not predicted, however, is the rather
extraordinary development of a wide range of new kinds of employment that
appear to be only now in the early beginnings of a massive work-related
adjustment fueled by globalization and technology. New kinds of employment
mean either the elimination of some employment classifications or at least a
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dramatic re-fashioning of what particular employment classifications means in
terms of education, experience, and expertise.
In this emerging transition there are winners and losers. But this reality is only a
temporary one. Ultimately future generations will be winners. In the meantime
there will be much angst and blame-games trumpeted by political leaders.
Anyone who was around in the 1950s will recall that long-distant phone calls
were expensive and flying was only for the business elite. Canada was not a very
customer-friendly place. In his great ground-breaking work, The Vertical Mosaic,
Canadian author John Porter wrote the following in 1965: “Canada is still a long
way from the generalized middle-classness of the popular image”. The Canada of
the early 1960s was a society of very limited mobility – in fact it was highly
stratified – where 40% of all dividends from investments went to 1% of the
population.
By the 1970s politicians were making dramatic adjustments by forcing the breakdown of monopolies in telecommunications, automobile purchasing and in the
financial services sector.
And then came dramatic adjustments for the consumer.
Today the great adjustment challenge is to match education and skills with new
employment opportunities. It is a simple theme with complicated challenges, not
least of all being to educate middle-class moms and dads that there is nothing
demeaning about their children becoming technological experts by way of an
enhanced community college education.
Times have changed. Traditional middle class ideas of proclaiming the statusimperative of gaining a university degree is simply yesterday’s ideal and too often
the recipe for the mismatched lack of preparation for a dramatically and rapidly
changing economic reality.
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Do these facts suggest that the middle class is in crisis in Canada?
1. The median real income for two-parent families with two earners is 100,000 in 2013,
$13,000 higher than in 2000.
2. The rate of poverty is lowest among those over 65 years of age.
3. The ideal salary on the Happiness Index is $75,000.
4. Only 20% of the population lack a work-place pension, do not own their own home, and
do not have sufficient savings for retirement.
5. In 2013, 38% of Canadians claimed to be comfortable with their debt; and 38% were
not. An RBC 2014 report says that those not comfortable with their debt has dropped to
a mere 28.5%.
6. Fifty years ago the retirement age was set at 65 when average life expectancy was only
72. Today it’s 81. It is not a great leap to have the retirement age set in the 67/68
range.
7. The ideal pension is 70% of the final annual wage of the individual. Canadian seniors
actually have a higher percentage of net income when all of the senior perks and
discounts are calculated.
8. The great equalizers of universality: pensions, quality education, health care and child
care continue to foster upward mobility in Canada. These forces of universality are not
at play in the United States.
9. The median amount owed on credit cards is a mere $3000.
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GENERAL CONCLUSIONS
Globalization, public austerity programs, and the digital revolution are reshaping the middle class and the
Canadian economy.
Throughout western civilization the citizen has adopted the religion of progress.
Belief in and pursuit of unlimited growth in the name of progress has produced
globalization.
In 1627, Sir Francis Bacon, author of New Atlantis conceived that the
development of technology would prepare mankind for a perfect society in which
life-spans would lengthen dramatically, and disease would be non-existent. In
this new society, man’s physical and mental abilities would be flawless.
Yes, there has been dramatic progress in the last 400 years and, not least in
importance during this time, has been the development of the middle class. But
mankind is faced with a collective amnesia about our mistakes which we continue
to repeat from generation to generation.
Progress is naïve. It seems to be promoted without reservation, qualifications, or
safeguards. That spells the plethora of reasons for the current malaise of the
middle class, its feelings of anxiety and insecurity. Yes, in Canada, the chestthumping is not as dramatic as in the United States where a recent poll reported
that 41% of Americans no longer believe in the American Dream.
Perhaps the single most important contribution of the middle class has been its
role in the development of democracy in the 20th century. Today optimists assert
that the process of democracy, equality, and prosperity is still a work in progress
and that the economic engine of globalization is simply a bump on the road to
eventual all-embracing utopian democracy on our planet. Others will argue that
continuing with unrestricted and unregulated globalization endangers the middle
class and may force the redirection and redesign of democracy. The pessimists
believe that there will no longer be democracy and its implications of equality and
prosperity as we know it, as dramatic cleavages grow between the rich and the
poor and education continues to be dumbed-down for those not involved in
technologically-advanced employment.
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Innovation and productivity must play much greater roles to promote growth and
diminish social tensions.
Ignorance of our history and the failure to learn from history means that we will
continue to repeat mistakes. We live in a long-term continuing syndrome of
inflation, deflation, stagflation, boom, bust, recession, depression, and both
phony and real prosperity. Frequently we witness anxiety, despair and greed,
certainly as often as we experience satisfaction and optimism. More and more
one senses that no one is managing the store. Whether one is apolitical, or on
the right or the left ideologically, the common conclusion is evident – no one is in
charge of our destiny. The decline in print media readership and voter turnout for
elections echoes British Prime Minister Margaret Thatcher’s assertion that there
is no society, only men, women, and their children. And without society
democracy is simply a shell. But these are only the bumps in the long-term
progress of civilization.
At the centre of future policy development involving the middle class is the
income equality/inequality debate encompassing the fiscal barriers and
challenges to sustain and promote the great universally-applied public-policy
equalizers – the key among them being a variety of public pensions, public health
care, and education.
Education is the key. But the Canadian student is not being taught the value of
money – at the personal, micro level. Since more and more young-adult
Canadians do not seem to respect the value of money, many have enormous
credit card debt challenges. And no one seems to be teaching the necessity nor
the value of government and the intrinsic value of belonging to society. Until
these realities change, the history of financial gain and loss, for the individual,
particularly in the middle 4/5th’s of the population, will continue to repeat itself.
Progress will at least be a bumpy road for the individual.
Where the gap between rich and poor is widening, the dream of being as affluent,
if not more affluent, than your parents were, could become less and less
achievable for the mass of the middle class population. Among developed
countries Canada is at the middle of the equality/inequality curve, in terms of
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upward mobility, better off than in the United States and Great Britain, but
lagging behind Denmark, Norway, and Sweden.
The real challenge for government and political parties is to grasp the big picture.
But the likely role of government – as it has been - will be to cherry-pick the issues
to pursue, promote vote-winning platforms to champion, and continue to muddle
along with piece-meal politics.
The single most important task for government is to shield the middle class from
the effects of globalization. If we accept that globalization is democracy’s enemy,
and therefore the enemy of the middle class, the future of any role for the
individual in our society is perilous. But the opposite is true. Globalization is the
umbrella of the transition in which we all find ourselves. We will learn to adapt.
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Graeber, David: Debt: The First 5000 Years
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Iqbal, Mahmood: No PhDs Please
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