Gap between Canada's middle class, wealthy 'starting to run away'

B00Mer

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Gap between Canada's middle class, wealthy 'starting to run away': report



A Canadian think-tank says the gap between the country's richest citizens and the middle class is starting to "run away," with wealthy 20-somethings now estimated to have a "half-a-million dollar head start" over their middle-class peers.

The report was released by the left-leaning Canadian Centre for Policy Alternatives earlier this week. It analyzed data from Statistics Canada's Survey of Financial Security, collected from 1999 to 2012.

Author David Macdonald, senior economist for the CCPA, said the most startling revelation is how conditions have improved for the wealthiest Canadians over that time period.

"The top 10 per cent, they've seen dramatic wealth gains since 1999 … they’ve seen a doubling of their wealth. In most cases, that means they're worth more than $1 million today than they would have been a decade ago," Macdonald told CTV News Channel on Saturday.

The report calls this growth "breathtaking," and outlines how affluent families with top earners in their 60s in 1999 held, on average, $1.8 million in wealth. Today, the same type of family has an average of $3.4 million in total assets.
According to the report, the affluent have seen substantial jumps in their wealth across several age brackets.

But in the case of the middle class, Macdonald says the gains been "much more modest" overall. For instance, he said 30-year-olds are "worse off" today than they were in 1999.

Fifteen years ago, affluent families, where the top income producers were in their 30s, held $740,000 in assets, which grew to $980,000 in 2012. In contrast, the average middle-class family from the same age bracket in 1999 held $68,000 in assets, which dropped to $63,000 by 2012.

"The gap is growing (and) it is much more extreme when broken down by age. I think what this says is the wealth gap is starting to run away from us in Canada," said Macdonald.

Overall, the report says the increase in the wealth gap between 1999 and 2012 can be attributed to strong returns for the richest Canadians in stock and real estate markets.

"Interestingly, it is not inheritance … they've seen big growth of those assets, big boosts in real-estate prices and that’s gone primarily to the top end," said Macdonald.

Macdonald says this "wealth advantage" begins early on, as young affluent Canadians in their 20s have received a distinct lift from their families.

According to the report, families with top earners in their 20s already have collected $540,000 in assets, or about $500,000 more than their middle-class peers have managed to save over a lifetime. At the same time, families in the middle class are worth about $8,000 in their 20s.

Macdonald says these "million-dollar babies" likely benefited from parental help, either financially or in terms of opportunity and leverage.

In particular, the report points to increases for the wealthy in three key financial assets: principal residence, secondary real estate and family business.

Non-financial help may come in the form of backing loans or spinning off family businesses.

"That's an important way by which families can pass on wealth, through supporting their children in terms of getting loans earlier in life to buy property and also set them up with portions of the family business," said Macdonald.

Despite the fact Canadians currently in their 20s are the most-educated generation in the country's history, the report says middle-class youth are "unlikely" to overcome the "half-a-million-dollar head start" possessed by their wealthy peers.

"The tremendous head start for Canada's wealthiest families in their 20s, prior to any substantial experience in the working world, provides what is essentially an entirely different life for the wealthy in Canada," says the report.

source: Gap between Canada's middle class, wealthy 'starting to run away': report | CTV News
 

damngrumpy

Executive Branch Member
Mar 16, 2005
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So what is being said here is the wealthy families should not help their children?
Or is it these children should not get ahead until they are forty?
What one does with their wealth is there business not mine and I don't have a lot
to spread around but when is the the business of someone else to decide what
cannot be given to children in the here and now.
 

Dixie Cup

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Sep 16, 2006
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My husband and I have more than $68,000 in assets but certainly not 1 million and we're quite middle class. It depends on what you chose to do with your discretionary funds - you can p*** it all away or you can invest and save. Obviously, if we manage to put away, (for an example) 10% of our salaries each and every month and someone who makes double or triple what we do also puts away 10% - by those numbers alone they will increase their worth accordingly. Honestly? It's not a super complicated thing to figure out.


But, just like all progressives state that a 10% flat tax is unfair - to whom? Certainly not to the poor - they don't pay.


What they're objecting to is not the fact that at 10% the wealthy pay more because they earn more, they object because its 10%. They object to EVERYONE paying 10% - has nothing to do with anything else. It doesn't matter that the wealthy pay more taxes - it's still not enough because its "only" 10%.


JMHO
 

B00Mer

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My husband and I have more than $68,000 in assets...

I certainly hope you don't include your home as your asset, I'm mean I hope you have bonds and precious metals and other investments, diversified investments.

Real Estate in Canada is on a high end of the bubble.. any land, home or property being considered an asset may devalue quickly and any loans or mortgage against the home may leave an individual under water.

Many people today are House Rick and Pocket Poor, thinking their home is their retirement nest egg. I wouldn't bet on it.

Invest in grocery stores like Costco.. that company does it's best business during bad economies because people are buying bulk and trying to save money... and everyone has to eat. ;)
 

mentalfloss

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Jun 28, 2010
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This is undeniable.

The greater question is whether or not this truly matters.

It could be argued that even those on the lower end of the spectrum lead comfortable lives.

At least, I'm sure that's something a douchebag conbot would argue.