The shrinking of the middle class
TAVIA GRANT
Globe and Mail Update
May 11, 2007 at 12:47 PM EDT
The number of middle-income families is diminishing, a government study showed Friday.
The share of Canadian middle-income families fell in the 1990s as incomes became more polarized, Statistics Canada said in a study about income inequality and redistribution between 1979 and 2004.
In 2004, 47.3 per cent of families were middle class, as defined by income, from 52.1 per cent in 1989 — a drop of 4.8 percentage points. Of those families, more than half moved into a lower-income category while slightly less than half became higher-income.
“While the increase in inequality is modest, it’s still significant — it’s risen to a point where after-tax family income inequality is higher in the 2000s than it has been since we started looking at comparable statistics in the mid-seventies,” said Andrew Heisz, Statscan’s senior research economist who wrote the report.
Canada sits in the middle level of Western countries in terms of income inequality, Statscan said, citing a 2005 study. Moreover, income inequality grew in most industrialized countries such as the Finland, Germany, Sweden and the U.K. in the nineties. The gap widened more significantly in the U.S. in that time.
During the nineties, changes in Canadian taxes and transfers had little net effect on redistribution, the study said.
Instead, the study suggested some middle class families may be becoming richer because of the rising earning power of the two-earner family, especially when both earners are highly educated.
Others may be becoming low-income as more people started living alone — particularly the elderly. “When you’re unattached, you often can’t pool your resources into a family — it’s a bit cheaper to live as two than to live as one,” Mr. Heisz said.
Low earnings and unemployment could also play a role.
“This may be particularly important among lone-parent families and unattached individuals who are more vulnerable to interruptions in employment,” he said.
Overall, income inequality “is an interesting trend which seems to be developing in many countries,” Mr. Heisz said. “It’s something that would be good to keep our eye on.”
Internet Links：
Statscan: Read the report
Study: Income inequality and redistribution
http://www.statcan.ca/Daily/English/070511/d070511b.htm
