Social Policy in Ontario

The news sounded good but felt wrong. According to Statistics Canada, most Canadian families are richer than they were before the recession. Their assets have grown faster than their debts. Their net worth increased 45 per cent between 2005 and 2012.

Why don’t people feel better off? Why is economic anxiety so pervasive? Why does Liberal leader Justin Trudeau talk about the “historic decline in the middle class” and New Democratic Party leader Thomas Mulcair say “the middle class is struggling like never before”?

The Conservatives have a curt answer: They’re making up facts. “Thanks to the leadership of Prime Minister Stephen Harper, middle-class families are better off,” the party declared in a news release.

Philip Cross, a research fellow at the government-friendly Macdonald Laurier Institute (and a former economic analyst at Statistics Canada), agrees. “This shows the middle class isn’t withering away,” he told the National Post. “It’s not like they are living from paycheque to paycheque, which is the way a lot of the narrative surrounding the middle class has been framed.”

On Parliament Hill, middle-class angst became yesterday’s news. Today’s news was Trudeau’s shaky grasp of the economy.

But the numbers tell a different — and more troubling — story.

• Families’ net work may have increased, but their cash buffer is gone. On paper, they’re better off because of a 47-per-cent appreciation in the value of homes since 2005. But that kind of wealth can shrink — or vanish — for reasons beyond their control. All it would take is a run-up in mortgage rates, a tightening of credit conditions or a real estate sell-off by aging baby boomers.

• Younger families didn’t do nearly as well in the survey as their baby-boomer parents. Households with a principal breadwinner between 35 and 44 had a median net worth of $182,500. Those with a primary earner between 55 and 64 had almost triple that amount ($533,600). With baby boomers holding so much of the nation’s wealth, it’s not surprising Trudeau and Mulcair are picking up distress signals from the next generation of voters.

• Household debt rose at a faster pace than assets. “Because assets are far larger than debt, net worth still increased,” explained economist Leslie Preston of Toronto Dominion Bank. But that was little comfort to middle-class families carrying a large mortgage, a car loan, a line of credit and a couple of maxed-out credit cards. If interest rates climb — even one or two percentage points — they’ll be in financial trouble.

• The poorest 20 per cent of the population — some 2.7 million families — lost ground. That quintile now includes many Canadians who considered themselves middle class before the recession. The contraction of the manufacturing sector, corporate downsizing and outsourcing eliminated well-paid jobs, pushing them down a level.

These developments reshaped people’s attitudes and expectations. Working hard was no longer the key to upward mobility. A good education didn’t necessarily lead to employment. A job didn’t mean a pension. Career planning became an oxymoron. Condos were the only homes most young couples could aspire to own.

For the federal Conservatives, this is the new normal. “With a fragile global economy, we think Canada needs the strong, stable leadership of Stephen Harper,” the party declared.

For the Liberals, the pillars of a middle-class lifestyle are crumbling. “Anyone who’s spent any time actually talking to Canadians and listening to them knows that people are really, really worried,” Trudeau said following the release of the StatsCan report came out.

For the New Democrats, it’s an affordability problem. Household debt is rising. ATM and credit card charges are rising. Energy prices are rising. But wages stagnant and government benefits such as employment insurance and old age security have been pared back. “We’re seeing a lot of working families who simply aren’t getting by,” Muclair said.

What is beyond dispute — no matter whether wages, income or wealth is used — is that inequality is growing. Those at the top are getting richer and those at the bottom are sinking deeper into poverty.

Canadians in the middle see themselves moving down, not up. Even if they hang on, their kids — burdened with debt, struggling for a foothold in the job market, still living at home — will fall back.

That is what Trudeau and Muclair are tapping into. It’s not acute financial distress. It is a gnawing conviction the ladder of opportunity is broken.

< http://www.thestar.com/opinion/commentary/2014/03/04/paper_wealth_provides_little_security_goar.html >