Report warns of squeezed households where incomes lag inflation
Canada has a middle class problem: it’s too small and a real struggle for millennials to achieve.
A new report from the OECD says that Millennials in Canada are “significantly less likely” to be in the middle class than previous generations and are under pressure from rising housing costs.
The stats show that 67% of Baby Boomers were in middle-income households in their 20s. That slipped to 64% among Generation X at that age and has fallen to just 59% of Millennials.
The percentage of the Canadian population that is in the middle class (75%-200% of median) is 58%, slightly lower than the 61% average across OECD member countries.
It gets worse as the OECD forecasts that 19% of middle income jobs are at risk of automation in Canada, higher than the 18% OECD average. For low income groups 20% are at risk and for higher incomes 15% are.
The report also highlights that middle income households spend a growing share of their income on housing costs – 29% in 2015 compared to 27% in 2005.
Not just Canada
The OECD says that the struggle for the middle class is not just a Canadian problem.
Across the member countries – including the US, UK, Australia, Mexico, and France – the OECD says more needs to be done to help the “squeezed” middle class, which has seen inflation rise faster than incomes.
Across the OECD area, except for a few countries, middle incomes are barely higher today than they were ten years ago, increasing by just 0.3% per year, a third less than the average income of the richest 10%.
“Today the middle class looks increasingly like a boat in rocky waters,” said OECD Secretary-General Angel Gurría. “Governments must listen to people’s concerns and protect and promote middle class living standards. This will help drive inclusive and sustainable growth and create a more cohesive and stable social fabric.”
Gabriela Ramos, OECD Chief of Staff and Sherpa overseeing the Organisation’s work on Inclusive Growth added “our analysis delivers a bleak picture and a call for action. The middle class is at the core of a cohesive, thriving society. We need to address their concerns regarding living costs, fairness and uncertainty.”
