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Canada  

Study: middle class thrives

Despite assertions to the contrary, the middle class in Canada is not in a state of stagnation.

In fact, according to a new study by the Fraser Institute, today's Canadian middle class is thriving compared to 40 years ago.

The Fraser Institute says other studies stating the middle class is stagnating or falling behind do not take several factors into account.

These include failing to properly adjust for changes in taxes and government transfers and overestimate the effects of inflation.

They further say the typical family is smaller, meaning income gets spread over fewer people within the household.

“Canada’s middle class is often portrayed as stagnating and not reaping any benefits from economic growth over the past few decades," said Donald Boudreaux, Fraser Institute senior fellow, economics professor at George Mason University and co-author of The Myth of Middle-Class Stagnation in Canada.

"But the truth is middle class incomes have risen dramatically since the 1970s, and those incomes go a lot further today in terms of purchasing power than they did back then."

The study claims the median income for Canada increased 52 per cent from 1976 to 2011, the most recent year data is readily available.

Canadian incomes increased from $25,771 per-family-member in 1976 to $39,200 35 years later.

Further to that, the study says Canadians are working fewer hours to pay for similar, or higher quality, household goods.

Product 1976 cost Hours worked 2011 cost Hours worked
Microwave $579.98 109 hours $299.99 10 hours
Television   113 hours   12 hours
Clock Radio   5 hours   >1 hour

Costs of goods were taken from the Sears catalogue and assumed an average hourly wage of $5.30 in 1976 and $23.30 in 2011.

“Despite the rhetoric in some circles, Canada’s middle class clearly isn’t stagnating or falling behind,” said Charles Lammam, director of fiscal studies at the Fraser Institute.

“The unfortunate reality is that policies intended to fix the non-existent problem of a stagnating middle class can actually make it more difficult for all Canadians to improve economically and prosper.”



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