Canada's Affluent Middle Class At-Risk
August 28, 2015
The American middle-class continues its losing streak. In a remarkable achievement, the Canadian middle class has surpassed their American counterparts in per capita median income. While households in the U.S. struggled along during the Great Recession, Canadian households fared much better in large part due to the notable stability of their banking system.
- In the last decade, Canadian incomes grew nearly 20 percent, while U.S. incomes grew only 0.3 percent.
- Much of the difference is attributable to U.S. fiscal policies that propelled the destructive housing bubble and subsequent bust.
- Toronto area house prices have increased 95 percent in the last decade, more than three times the earnings increase rate of Ontario workers.
- Vancouver City Savings Credit Union (Vancity) indicates that present trends could drive Vancouver detached house prices to $2.1 million by 2030, double current prices.
However, some economic indicators suggest that Canada\'s newfound distinction may be short-lived. In some parts of Canada, particularly those concentrated around metropolitan centers, skyrocketing house prices are chipping away at discretionary income. House prices in Toronto and Vancouver have exploded in recent years. Rising house prices threaten socioeconomic stability: lower income households lose a greater share of discretionary income to higher housing prices while middle income families are shut out of homeownership, a useful tool for building wealth through equity.
In order for all income levels to enjoy the benefits of homeownership while preserving discretionary income, policy reform must target current urban containment legislation and prevent similar programs from being implemented elsewhere.
Source: Wendell Cox, "Canada's Affluent Middle Class At-Risk," Huffington Post, August 26, 2015.
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