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  (Curtis Lantinga)

 

(Curtis Lantinga)

MARGARET WENTE

The phony crisis of the middle class Add to ...

The middle class is in trouble. Everybody knows it. Especially Justin Trudeau.

At last weekend’s Liberal convention, he led off his speech with a promise to address “the historic decline of the middle class.” He invoked a nation of Canadians “strangled by their debt,” with “no savings for retirement.” As an example, the Liberal Leader presented a fictional middle-class mom named Nathalie, who, along with her husband, makes $80,000 a year. She works hard and presumably plays by the rules. As Nathalie sits in traffic on Montreal’s crumbling Champlain Bridge, she wonders about her family’s future.

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Mr. Trudeau warned that our social contract is in trouble, because too many people are being shut out of a fair chance at prosperity. “That’s not a political point,” he said. “It’s a fact.”

So here’s another fact. Nathalie and her family have actually done okay. As Laval University professor Stephen Gordon points out on his excellent blog for Maclean’s, real income for middle-income families has increased by about 30 per cent since 1997. In the five years since 2006 – including the recession years – it went up by 10 per cent.

The cliché of the collapsing middle class has been hammered so hard into our anxious brains that virtually everyone believes it. And maybe the middle class will start collapsing any day now. But it hasn’t yet.

On Tuesday, Statistics Canada released its first comprehensive report on family finances since the beginning of the recession. It found that median net worth for Canadian family units reached a record high of $243,800 in 2012 – 44.5 per cent higher than seven years before. These families experienced the largest percentage gain in net worth of any income group.

The study also looked at how the wealth was spread around. In 2012, the wealthiest 20 per cent of families held 67.4 per cent of all the net worth. But their share was less than it was in 2005, when they held 69.2 per cent. Their median net worth was $1.38-million – up 40.6 per cent from 2005, less than the median.

So what about that crushing debt? In fact, debt loads are up only slightly since 1999. Mortgage debt is higher, but house values are too. About 40 per cent of families carried an outstanding balance on their credit cards in 2012 (the same proportion as in 1999) and the median amount they owed was a not-so-crushing $3,000. The median student debt was $10,000, lower than in 2005. Seniors had the lowest debt by far of all age groups.

There’s more good news for Nathalie. When she trades in her old clunker, she’ll find widespread free financing for her new car. Tuition is not as bad as it’s made out to be, either, especially in Quebec, where more than 100,000 university students receive generous grants. (Thanks to HESA’s Alex Usher for this observation.)

But wait! What about rising inequality? The truth is that since 2000, almost every income group in Canada has gotten richer, while the people at the very top have gotten filthy rich. Is this a problem? You decide. Meantime, this being Canada, “rich” means something different than it does in the United States. In Canada, individuals who earned $80,400 in 2010 were in the top 10 per cent of all income earners, and those who earned $191,100 qualified as one-per-centers. So if you believe we ought to soak the rich, consider that this could mean you.

There is, however, one group of Canadians that really is doing worse: lower-income, lower-educated men. Their job prospects have dwindled dramatically, and their net worth is zilch to negative. On top of that, they make poor marriage material and women can increasingly get along without them. But these guys weren’t at the Liberal convention. They’re not half as sympathetic as Nathalie. And no one is going to get elected by promising to rescue them, especially if that might involve the redistribution of middle-class entitlements.

The crisis of the middle class is an irresistible political message, even if it isn’t true. And if the facts don’t fit the narrative, good politicians know what to do: Change the facts.

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