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The shrinking middle

Dene Moore: There’s a reason political parties focus on the middle class: it’s crucial for a healthy economy and society. But in Canada, the middle class needs help. Will they get it?
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A brief PST holiday or a one-time pandemic rebate on auto insurance?

A seniors’ home care services tax credit or a student grant that covers about 1/5 of the average costs of attending post-secondary in B.C.?

I know the pandemic has taken its toll and the provincial cupboards are bare but the parties vying for votes need to come up with something more to win the hearts and minds of the remaining middle class.

I say “remaining,” because the middle is a disappearing class in British Columbia, as it is throughout Canada and most of the western world.

Wages have not kept pace with the increasing cost of living, especially housing. The tens of thousands of job losses due to the pandemic are just a taste of what increased digital automation will do to the working class in the years to come.

Last year, the Organization for Economic Co-operation and Development (OECD) released a report on how the middle class is faring in member countries, including Canada.

It was not good.

“The middle class used to be an aspiration. For many generations it meant the assurance of living in a comfortable house and affording a rewarding lifestyle, thanks to a stable job with career opportunities,” says the report, Under Pressure: The Squeezed Middle Class.

A strong and prosperous middle class is a foundation of healthy economies and societies.

“However, there are now signs that this bedrock of our democracies and economic growth is not as stable as in the past,” it says.

You don’t say.

In the United States, the Pew Research Centre has suggested that if the decline continues, the American middle class will one day no longer be the economic majority in that country.

Canada has fewer middle class and more poor-income class than the OECD average. Fifty-eight per cent of Canadians are in the middle-income category, meaning they earn between 75 per cent and 200 per cent of median household income after tax. Across the OECD that figure is 61 per cent.

The report does not look at specific provinces but overall 14 per cent of Canadians are poor, compared to an average of 11 per cent across the OECD.

At the same time, the top 10 per cent holds almost half of the total wealth in OECD countries, while the bottom 40 per cent accounts for only 3 per cent.

And the problem gets worse for each generation.

Millennials are significantly less likely to be middle class than previous generations. They face precarious employment in an increasingly gig economy and skyrocketing housing costs that eat up an average of 29 per cent of household income.

And in this country one in five current middle-income jobs are at high risk of automation, says the OECD.

In the U.S., a certain sector of the middle-class is not going down without a very ugly fight. The decline of the American Dream has given rise to the Average Joe extremism that put Donald Trump in the White House and locked immigrant children in cages.

The OECD says governments and policy makers need a comprehensive action plan, including policies that encourage affordable housing, an investment in vocational training, and social insurance and collective bargaining for the increasing number of part-time, temporary and self-employed workers.

But ultimately governments need to make income taxes more progressive and fair, the report says.

“The OECD has shown the extent to which middle-income households… in many OECD countries have seen their standard of living stagnate or decline, while higher income groups have continued to accumulate income and wealth,” Gabriela Ramos, chief of staff, wrote in her foreword to the report.

“A strong and prosperous middle class is crucial for any successful economy and cohesive society. The middle class sustains consumption, it drives much of the investment in education, health and housing and it plays a key role in supporting social protection systems through its tax contributions. Societies with a strong middle class have lower crime rates, they enjoy higher levels of trust and life satisfaction, as well as greater political stability and good governance.”

So maybe the question isn’t whether B.C. can afford any bold, long-term plans to relieve the pressure on the middle-class, but whether it can afford not to.

Dene Moore is an award-winning journalist and writer. A news editor and reporter for The Canadian Press news agency for 16 years, Moore is now a freelance journalist living in the South Cariboo. Moore’s two decades in daily journalism took her as far afield as Kandahar as a war correspondent and the Innu communities of Labrador. She has worked in newsrooms in Vancouver, Montreal, Regina, Saskatoon, St. John’s and Edmonton. She has been published in the Globe and Mail, Maclean’s magazine, the New York Times and the Toronto Star, among others. She is a Habs fan and believes this is the year.