The politicians seeking office often talk about the plight of the middle class. The American middle class seems to be under fire and losing ground every year. The Canadian middle class has its problems too. An interesting question might be “who really belongs to the middle class?” Where is that magic line defining the middle class? Is the middle class growing or shrinking, and if so are people dropping down to the lower classes or attaining a higher earning level?
Why Worry About The Middle Class?
The 1990s were hard on the Canadian middle class and recovery has been slow. The medium income is less today than it was in the 1970s in relative measurements. Keep in mind that life has been hard for people who are struggling to survive, as well as the middle class. Many think that for a country’s economy to be healthy, it has to have a healthy and substantial middle class. After all, someone has to have enough discretionary money to buy all the manufactured goods and services.
If everybody is poor and struggling to put food on the table and a roof over their heads, who will purchase expensive cars, go on vacations, buy nice clothes and furniture, and spend freely on alcohol and dinners out? Where will the taxes to run the country come from?
What Defines Middle Class In Canada?
The middle class of the 1850s was considered to be anyone earning over $1,000.00 per year. This was the difference between a manual laborer earning only enough to survive and a skilled worker in the city. The Canadian economy has changed from one based on industry and farming to one driven by services as well as industry. The measure of the middle class has also changed. There have been several definitions of what constitutes a middle class family over the years. Measuring the middle class is harder now than it was in the 1800s.
What defines Middle class these days in Canada ? Some have defined middle class canada as those who earn between 75% and 125% of the median income for the country. In Canada, that would include families with earnings between $35,000 and $70,000. By that measurement, only 25% of Canadians would be considered middle class. This criteria has been recently changed to include anyone making from 67% to 200% of the median income of a country. For Canada, this would be people earning from $32,000 to $95,000 per year, or just 40% of the Canadian population would be considered middle class.
Other economists define the middle class by how it spends its money. This criteria would define the middle class as families who had at least one-third of their income left after paying for necessities such as shelter, food, and clothing. This money is called discretionary income, or money that families can choose how to spend. In Canada, the household income qualifying for entry to the middle class is approximately $36,000 per year. With this measurement, the majority of Canadians are middle class.
In the 1990s, Statistics Canada redefined discretionary income to be “the amount of money permitting a family to have a living standard somewhat higher than similar families”. The present definition of the “discretionary income” model resembles the middle class ideal of a couple owning a house and a car or two, living near a large city. They eat out at restaurants, can afford to take occasional trips, and do home renovations. The recent advent of cheap credit has allowed more Canadians into this model, but could cause problems later. Go To The website for more information.