Middle class in decline is the electoral elephant in the room
TheGlobeandMail.com – report-on-business/economy/economy-lab
Posted on Thursday, April 7, 2011. Armine Yalnizyan (Armine Yalnizyan is a senior economist with theCanadian Centre for Policy Alternatives)
As the volume gets cranked up on the federal election debate about tax cuts and family values, a middle class in decline remains the electoral elephant in the room.
Every political party wraps itself up in the middle class flag during elections. Few talk about what is happening: for anyone who doesn’t already have one, middle class jobs with decent wages, benefits and pensions are becoming harder to find.
In the decades following the Second World War, the growth of manufacturing and the expansion of public services extended middle class job opportunities to millions of non-professionals.
By the time I was a young adult looking for a job in the 1970s, the manufacturing and public sectors together accounted for 49 per cent of the nation’s employees.
Importantly, workers in both these growing sectors formed unions, which brought stable jobs with decent wages, benefits and good pensions within the reach of the average person.
Today, taking the rising ranks of the self-employed into account, jobs in the manufacturing and public sectors account for the work of less than 31 per cent of Canadians. Those two primary sources of middle class employment once accounted for almost half of Canada’s payroll.
Union density rose from 28 per cent in 1946 to a peak of 36.4 per cent in the mid-1980s. Since then, rates of unionization have been falling. By 2010, only 31.5 per cent of Canadians were covered by a collective agreement — the same as in the early 1960s.
Not coincidentally, that decline is matched by a rise in self-employment and temporary jobs — term or contract, seasonal, and casual/on-call types of employment — with few, if any, benefits, no pensions, and not even reliable working hours. Self-employment accounted for 16% of all paid work in 2010; 13% of employees were temporary.
Canada’s head count of workers has rebounded to pre-recession levels, but the majority of these jobs have emerged through the growth of the public sector.
As governments attempt to balance their books, the aging work force in the public service will be the cover for death by a thousand cuts, without a peep being uttered.
Stockwell Day, the outgoing minister of the federal Treasury Board, suggested months ago that mandatory across-the-board departmental spending cuts worth billions could be achieved by simply not replacing workers who retire.
Canada did its austerity-style budget-slashing in the mid-1990s. This time, there will be less of a stage show, but the effect will be the same.
Fewer people in the public service means fewer people earning middle-class pay with decent benefits and pensions. Unless the private sector stops urging downward pressure on wages, benefits and pensions, this purchasing power will not be replaced. Fewer people working in the public service also means poorer public services, or less of them.
Less income, less service — this is not a recipe for growing the middle class, or a solid platform for future economic growth.
We celebrate a rising middle class in emerging economies, but stand by and watch as our own middle class continues to get pounded.
The worst is likely not behind us. Even in a time of economic recovery, and even in unionized workplaces, hanging on to a job may mean accepting wage freezes, work-time reductions, benefit rollbacks and two-tiered pensions — one system for the older work force, another for the young.
Instead of trying to improve security and raise employment standards for all, Canadians are egged on by politicians to strip more workers’ rights from those who have them — a political agenda that is accelerating the middle class’ race to the bottom. This is a dead-end strategy.
Once upon a time, Canadians supported the idea of growing the middle class. It meant more people had more opportunities. It stabilized the economy. It produced greater social cohesion. It facilitated consensus and fostered trust in democracy.
The challenge for all who seek a return to broad-based prosperity is to come up with the answer to the question: where will the next generation of good middle-class jobs come from?
The bad news is, there are no shortcuts: widespread prosperity is a product of dedicated, consistent objective to reach that goal by employers and workers, citizens and governments alike.
The good news is, it’s totally possible to match — possibly even exceed — what our parent’s generation achieved. Out of the rubble of the Great Depression and the Second World War, they built a thriving middle class, and a world of opportunity.
It’s up to us to make it so once more.
How will their policies help build the middle class of the next generation? That’s what we need our political parties to tell us, as they ask for our vote.
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