Misplaced euphoria over Canada’s middle-class supremacy
TheStar.com – Opinion/Editorial – The New York Times says Canada has the world’s richest middle class but its analysis is flawed and its conclusion is dubious.
Apr 25 2014. Editorial
The Tories chortled, the Liberals and New Democrats choked and economists waved red flags following a front-page report in the New York Times showing Canada has the world’s richest middle class.
“After-tax middle-class incomes in Canada, substantially behind (the United States) in 2000, now appear to be higher,” the Times declared, basing its analysis on the Luxembourg Income study database, which allows international comparisons. “Median income in Canada rose to a tie with median U.S. income in 2010 and has most likely surpassed it since.”
Anyone who reads the preceding paragraph carefully will spot the weasel words. But Employment Minister Jason Kenney had no time for that. Shortly after the report appeared online, he tweeted a curt message: “If Justin Trudeau is interested in evidence-based policy on the middle class, he should read this @NYTimes study.” Prime Minister Stephen Harper’s spokesman, Jason MacDonald, went further: “This study would appear to confirm that our government’s approach to creating jobs and economic growth, while keeping taxes low, is working.”
The study undercut the two opposition parties, which have been competing for months to represent Canada’s vote-rich middle class. Both Liberal LeaderTrudeau and New Democrat Leader Thomas Mulcair claim middle-income families are losing ground, drowning in debt and jeopardizing the nation’s economic vitality.
Not according to the Times. There is no problem — and never was.
But that is not what the statistics actually show:
For one thing, its numbers only go as far as 2010. The journalists who wrote the story extended the trend line to 2012, saying it was “most likely” Canada had surpassed the U.S. The Times headline was based on conjecture, not fact.
Moreover, its analysis excluded sales taxes, public and private health-care benefits and proceeds from capital gains. That is a very incomplete measure of household incomes.
In addition to these design flaws, the report was widely — and wilfully — misinterpreted on this side of the border.
- It merely affirmed that the U.S. was harder hit by the 2008-2009 recession; not a surprise. Canada had no financial meltdown, no banking crisis and no protracted loss of consumer confidence. It did not have to improve to overtake the U.S.
- It affirmed that Alberta’s oil pulled the rest of the country through the recession. No surprise there either.
- And it affirmed that the impact of the recession was mitigated by Canada’ssocial programs, which are more comprehensive.
This is hardly a cause for celebration or Tory self-congratulation. The chief value of the report is that it shows what happens when a rich nation permits an affluent minority to amass the lion’s share of national income, tolerates below-poverty wages and allows education to become unaffordable. Canada is venturing down that path.
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