Slide in wages , not taxes, to blame for plight of middle class

If these are the good times, I don’t want to know the bad.  Somebody is making a lot of money, but it isn’t middle class Canadians.   Stock markets are soaring, economic indicators are up, but it’s the rich who are getting obscenely rich.

The-Shrinking-Middle-Class-440x330

Middle class Canadians are  working harder, but even with two wage earners in a family they are sinking deeper into debt.  Household debt soared alarmingly by 14 percent in the last decade, according to the Vanier Institute of the Family. Canadians vainly try to maintain a life style they once enjoyed as children when their parents were relatively well off.  They dream of a life of conspicuous consumption that they see  on American television, a life now beyond the grasp of most Canadians and Americans.

The incomes of middle class Canadians are slipping away. Family incomes dropped 6 per cent from 1989 to 1998.  This was a time in which things were supposed to be getting better — the recession of the early 1990s was over.

But try as they might, middle class Canadians are becoming  sucked towards either the extreme pole of poverty, or for a very few at the opposite end, riches.  As they struggle to live the dream, preparation for retirement is sacrificed.  Savings dropped from 10 to 1.5 per cent of after tax income.  Their lost standard of living aches like a phantom limb, a way of life permanently severed. They want answers to the aching loss in their standard of living.

An easy target of their grief is taxes — a cure promoted by the rich, who have the most to gain by tax cuts.  But taxes actually fell slightly in the 1990s, says the Vanier Institute (measured constant dollars). The Tax Revolt should be an Income Revolt, but many Canadians have bought into the mythical benefits of lower taxes.  The billions of dollars of tax reduction announced in the recent federal budget will only amount to a few hundred dollars per person, annually.

No, taxes are not the culprit in the drift towards the bottom . The main reason for the loss in standard of living is a drop in wages, which fell relative to inflation.  Unions participated in the national cause of debt reduction though lower wage demands.  Minimum wages dropped in constant dollar values.  There was a shift from permanent, well paying jobs to part time and  short-contract jobs, and a resulting loss in benefits.  More health care paid out of the employee’s pocket.

Taxes are way of keeping the poles from widening. The plight of low income families has worsened as a result of reduced transfer payments to the provinces from the federal government.  Now that we have a budgetary surplus, more money should be provided in the form of unemployment insurance, universal day care, and other transfers to low income Canadians.

As the middle class slipped into the ranks of the working poor, the poor slipped into the ranks of the destitute homeless.  This was especially true in large cities, according to the Canadian Council on Social Development.  Poverty jumped by the greatest amount in Canada’s largest cities: Montreal, Vancouver and Toronto.

The faces of the poor are easily recognized.  The greatest numbers are single mothers, followed closely by recent immigrants,  urban aboriginals, elderly women, and children.  I would have thought that in a country that loves children, Canadians would gladly pay taxes that goes to see them decently clothed, fed and sheltered.

The urban poor are soon to be joined, I suspect, by farmers abandoned by an uncaring government who is not concerned at all to see them plowed under by global free trade.  Other countries are prepared to subsidize a rural life, but the prime minister’s classic shrug seems to say, “let them eat dirt”.

If you can’t find a compelling social or moral reason why tax dollars should help the poor, think of it in practical terms.   As poor Canadians resort to crime, the cost of policing, the court systems and incarceration increases.  Think about the lost productivity of those millions of people who are not doing useful work that could benefit themselves and society as a whole.

The good times roll, it seems, to the beat of a funeral dirge.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s