Who are the middle class and why do they matter?

Exploring the climate of Canadian economic inequality and the realities of low wage earners.

Growing the “middle class”

While presenting to a group of seniors at a National Association of Federal Retirees dinner last week, I was grilled about why all federal political parties in this election are focusing on the “middle class?” Who do we mean by the “middle class”? Why are we – the federal NDP – organizing a campaign around growing, serving, and protecting the middle class? Why does our new TV ad feature Tom Mulcair in a cafe extolling the middle class and his place in it?

New Democrats focus on middle class Canadians for a reason. What they mean by the “middle class” are the 60% of Canadians who enjoy a standard of living between the bottom 20% and top 20% of household income brackets. This doesn’t mean that the other 40% of Canadians are excluded. The bottom 20% are targeted to be served by this emphasis on the middle class. How? The point is that all Canadians should be able to enjoy the quality of life afforded by a middle class lifestyle. For this reason, we refer to growing the middle class. The top 20% need to contribute more, even if that means they drop into that 60% middle class bubble.

Inequality and the Working Poor

Therefore, the reason the NDP focus on “the middle class” is to emphasize, in agreement with many leading economists from the Organization for Economic Cooperation and Development (OECD), that Canada’s biggest economic problem is inequality, the widening gap between the rich and poor, and the increasing percentage of those referred to as the working poor.

Working poverty in Canada is higher than in most other 34 OECD states, with a large number of households living below the poverty line despite the fact that one or all adults in the home are gainfully employed. This form of poverty is on the rise but is NOT associated with unemployment, so it requires special policies. In other words, people are working but they aren’t earning enough money to push themselves up above the poverty or subsistence level.

Inequality has widened in Canada since the 1980s under Conservative and Liberal government policies. Here in British Columbia, we now have one of the worst income gaps in Canada with only 10% of the population controlling 54% of the wealth. In the 1980s, we had the smallest wealth gap in Canada, so we have suffered disproportionately to other provinces. This provides the urgency that we are voicing in this election.

Other troubling trends identified by a 2014 OECD report include an increase in unemployment or insecure and part-time jobs; a sharp increase in the number of Canadians who can’t afford food – a rise of over 2% since 2007 to over 11%; and a steady drop in government investment in social services.

Why trickle-down economics don’t work?

The trickle-down economics of successive Liberal and Conservative governments in Canada over the last two decades have failed. They have generated and reinforced rising inequality in Canada. Their ongoing policy proposals promise to perpetuate and deepen these troubling trends. OECD economists have joined the critique, suggesting that governments in Canada have stunted growth by focusing tax and other benefits on corporations and the top 20%. Instead, these economists state that growth is most significant when policies focus instead on benefiting the bottom 60% of income earners and households. These middle and lower income earners stimulate the economy more directly than the rich by spending more on basic needs rather than luxury goods or investments, many of which are outside of Canada.

What policies do work?

The principle is simple: Governments need to help to increase the income of the bottom 20% of the population by raising the Guaranteed Income Supplement (GIS) to above poverty levels and increasing the minimum wage to at least $15/hour.  At the same time, they need to implement fairer taxation to reduce the drain of the economic benefits of growth to the top 20%. As the middle class grows by raising those below to above the poverty line, an NDP government would protect working families through initiatives like small business tax reductions and rebates and affordable housing and childcare to make it easier and more affordable for adults in a household to work. These benefits need to include seniors, especially the GIS and affordable housing initiatives, as outlined in the NDP’s National Strategy on Aging in Canada. As the OECD economists argue, these are not just expenditures but economic stimulants that will grow the Canadian economy and ensure that all citizens benefit from growth.

These target policies are the core of the New Democrat platform in this upcoming 2015 federal election. We are committed to ensure that Canada remains a country of equality and social mobility. This is what we mean when we say that we will grow and support middle class Canadians, including here in Chilliwack and Hope. The CCF and later NDP were formed and developed to promote social equality. As Ed Broadbent reminds us: “Everything we’ve worked for has brought us to this moment. Now let’s make history.”

 

Seonaigh MacPherson

Federal NDP Candidate, Chilliwack-Hope

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