August 4, 2007

As reported by Doug Saunders in the Globe and Mail, Steven Pressman, an economist at Monmouth University in New Jersey, has released an intriguing study entitled The Decline of the Middle Class: An International Perspective. In it he examines the movement of the middle classes (those who earn 75% to 125% of a nation's median income around the world from 1980-2000.

Some interesting results: The middle-income ranks in Britain shrank by 4.5%; in Sweden by 7.1% ; and in the U.S. by 2.4%. Switzerland and Germany stayed at pretty much the same percentages, while Norway and Canada were the only nations to see a rise in their middle classes. Canada saw an increase by 4% so that 37% of the population was middle class. While this did mean that Canada's upper class shrank by 1.9% to comprise 33.3% of the population, the good-news story is that more movement occured from poor to middle class.

For some context,
StatsCan reports that the median after-tax income for Canadian families with two or more people rose 1.6% from 2004 to $56,000, after adjusting for inflation. This increase in after-tax income came on the heels of a 1.3% gain in 2004. Median after-tax income of "unattached individuals," or singles, remained stable at $21,400 in 2005. About 14% of the population lived as unattached individuals in 2005, up from 11% two decades earlier.

What is Canada's secret sauce? Government. As Pressman tellingly comments, “I am not sure that the middle class can be self-sustaining. It seems to require active government policies. The market tends to produce great inequalities in income; these inequalities seem greater in a global economy.”

However, the
Canadian Council on Social Development warns that, "In one of the most prosperous decades in Canadian history, incomes among the 20% of Canadians just below the median bracket – low-income working Canadians – actually fell. Among the 10% of families with the lowest earnings, average income was $10,341 in 2000, only a slight increase from $10,260 a decade earlier." Clearly, we have more work to do to genuinely tackle poverty in our country.

Still, the Canadian middle-class, a global success story, owes its sustenation to Canada's long policy of government intervention to protect the quality of life of its citizenry. Indeed, our beloved "Soviet Canuckistan" should take pride in this tradition and progressive vision.

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