SQUEEZING THE MIDDLE CLASS
Joe Kowal, a Winnipeg ambulance driver, and his librarian wife,
Daphne, are afraid they’re losing the race with the cost of living. They’re not an extravagant pair; they do enjoy the odd movie, or an ordered-in pizza while watching M*A*S*H, but that’s about it. They’re not lazy; Joe’s shifts mean that often he sees his wife only at the front door, on his way to work, on her return from it. When they married a year and a half ago, the Kowals not unreasonably expected that their joint net income of $21,000 would enable them to buy a house.
But they’re still camping in a one-bedroom flat in a subdivided old house and still saving furiously toward a down payment that seems ever more distant and outof-reach.
“It’s a treadmill,” says Joe. “The longer we wait, the more interest rates and housing prices rise.” They’d need two incomes to carry a mortgage, and that means a tough decision: a house?; or a family? With the cost of their modest lifestyle rising by an inflationary 10 per cent a year, and Joe’s salary increase this year in real terms a meagre seven per cent, the Kowals will probably have to make do with their “surrogate child”—the family dog, O’Hara.
The Kowals’ dilemma is typical of the 40 per cent of the Canadian population that classifies as the middle class—the 10 million individuals whose household incomes range between $13,000 and $28,000 a year.'They are by no means poor. But the things they were taught to expect that middle-class people could and should do—buy a house, raise a family, improve their standard of living—are eluding their grasp. Their goals are becoming teases, their incentives, lies.
Throughout the inflationary 1970s
the middle class has been running faster, panting harder and sweating more. True, for the first half of the decade, Canadians, whose rate of wage increases outstripped those of their American counterparts, couldn’t quarrel with the pace. But since 1976, the average wage has fallen back 4.6 per cent against inflation. And key costs continue to shoot ahead. Taxes have soared 302 per cent since 1960 and, in the past decade alone, transportation cost increases sped up by more than 75 per cent, housing by more than 85 per cent and the Food Price Index has more than doubled. No wonder consumer confidence in the Canadian economy is at its lowest ebb in 18 years, according to a Conference Board in Canada poll. And no wonder economists are biting their nails: consumer spending contributes
about two-thirds of the nation’s GNP.
Although it’s hard to weep for the beef-fed bourgeoisie when the number of officially defined “poor” is growing (in the past five years alone, more than 160,000 Canadian households have joined the ranks of the poor), one should nevertheless worry about the effect their diminishing standard of living will have on the economy and the Great North American Dream. That Dream— everyone is comfortable, there is a chicken in every pot and a car in every garage—is so compelling, that a majority of Canadians (65 per cent, or 25 per cent more than the number who actually fit the income definition) told a recent poll that they considered themselves “Middle Class.” Middleclass aspirations are this culture’s standard reference. George Bernard Shaw, himself the son of a modest singing teacher, has listed those aspirations with sneering precision: to be “a moderately honest man, with a moderately faithful wife, moderate drinkers both, in a moderately healthy house.”
Shaw’s list stinks of boiled potatoes and mediocrity. Yet historically, middle-class pretensions have been the vital source of hunger for progress: for decent plumbing, mass-marketed fresh vegetables and encyclopedias, for public education and broader definitions of justice. Middle-class comforts have been the kite strings for the soaring imaginations of entrepreneurs, revolutionaries and visionaries. And more importantly they have been the source of political stability.
Now these more than moderate contributions of Shaw’s middle-class man are threatened. The property owner’s traditional stake in community and order is undermined simply because it’s harder to be a property owner. Tradi-
tional thrift, and the work ethic itself, are becoming obsolete. So is the traditional family, as more family members work to support the onerous middleclass life (one chilling American statistic: a third of middle-income families depend on three or more contributors). “Middle-class dreams are being shattered,” says Montreal economist Dian Cohen. “There are a lot of psychically depressed people out there.” Joe Kowal’s response is this question: “When the middle-class stagnates, when working people feel they’re losing ground, what’s going to happen to the country?”
Probably the biggest frustration
blocking the progress of the middle class is home ownership. Once, crossing the threshold of one’s own owned home was a symbolic confirmation of middleclass status. Now, according to the October, 1979, Royal Trust Survey of Canadian house prices, a three-bedroom, fiveto eight-year-old bungalow costs $46,000 in Moncton (up 16 per cent from February, 1979); $64,500 in Winnipeg (up 7.5 per cent) and a painful $127,000 in Calgary (up 9.5 per cent). Politicians, recognizing the obstacle such prices present, and recognizing too, how central home ownership is to the middle-class sense of well-being, have dreamed up a wonderland of aid schemes—the federal Progressive Conservatives’ mortgage deductibility and the B.C. government’s mortgage supplement schemes being only the latest.
But these aids keep failing. One reason is rising interest rates, to which potential house-buyers are reacting so cautiously that their behavior contradicts economics’ basic law. People want houses, and supply is short. But in some areas, for example, in Mississauga, Ontario, prices are actually dropping. Fearing future interest rate increases, people won’t buy. Worse, says Joe McRoberts, an anti-tax activist, in Hamilton they are actually abandoning houses they’ve already paid years of mortgage on because of the big increases in interest rates and taxes. In this context, it’s not surprising that the housing industry is looking at its worst
year in a decade. So far, middle-class Canada has coped by entering more of its members in the incomes sweepstakes: the enlisting of more than one million wives in the work force in the past decade is one of those major sopial changes which, though not totally attributable to housing hunger, is certainly not unrelated to it. McRoberts, recalls: “Twenty-five years ago the rule of thumb used to be a man could afford a house if he had a one-third down payment and could spare a quarter of his wages. Now the down payment’s only 10 per cent, but it takes two to carry the debt load.”
As mums have become mortgage bearers, society has had to adjust. There’s tighter competition for jobs.
Unattached individuals and single parents face increasing difficulty in keeping their households above the poverty line. The average Canadian family has shrunk noticeably in the past decade. Regina accountant Bob King and his wife, Linda, are lucky. They can afford to be both home owners and parents. But they have jokingly nicknamed their three-year-old “the $40,000 kid”; that’s what she has cost them in terms of income forfeited so far by Linda, once a government clerk, now a stay-at-home mother.
And still there are two-income families who can’t afford to own a home. Pierre D’Amour, a Canadian Labor
Congress public relations representative, and his journalist wife, France, gave up house-hunting in the OttawaHull area last March. “We’re renting for the foreseeable future,” states D’Amour flatly. “I get kind of emotional knowing I’ll never be able to own a piece of land. Somebody is cheating me out of my own. If we have a child, he’ll never have a backyard with a rubber tire hanging from a tree. He’ll never have a sense of what’s his.”
By definition, the middle class needs a sense of what is theirs. So, where they are resigned to renting, they must pursue the bourgeois bitch goddess, ownership, in other pastures. More Canadians own luxury items than ever before. Seventy-two per cent of households have color TV, 78 per cent record players, 79 per cent cars. “It’s an investment” is the
common man’s cliché defence for spending uncommonly large amounts on indulgences and collectibles—antiquarian maps, 1960s sports cars, gold jewelry, early Superman comics. “At parties,” comments Regina’s Linda King, “conversation is one big consumers’ guide. Minor acquisitions, groceries, house renovations, coats seem to have taken on major significance.”
What is fuelling feverish appetites is credit—seven million VISA cards, 2xk million Master Charge cards and a giddily high $37.9-billion outstanding consumer credit bill. Yet in spite of interest charges soon to rise as high as 21 per cent, some sophisticates are even borrowing in order to save. Les Tendier, manager with Regina’s Sherwood Credit Union, reports clients borrowing to buy gold or to build up RRSPs before the end of the February deduction deadline. The thriftless new middle-class money sense is summed up by Nova Scotia teacher Bob Pembrook: “Why save for a rainy day when what we’re experiencing is a constant drizzle?”
Out of the stampede of anxieties and cheated feelings, a sharpened cynicism is taking the lead. As economist Dian Cohen puts it, “The rules we learned as kids, about getting on in life, seem fraudulent.” A startling casualty is the Protestant work ethic. “I was working half the year for the government,” complains Vancouver’s Dietram Zell, “paying 50 per cent of my income in taxes.” So, five years ago, aged 47, he quit his job as a skilled electrical estimator for construction firms and now lives off investments. “Why bother?” he asks.
The institutions that used to be but-
tressed by bourgeois faith are also endangered. The public-school system is under the heaviest fire. Once public education was the middle class’s assurance of social progress, of advancement for their children. But these days the starting salary of an honors BA graduate is 15 per cent below the average industrial wage; universities are contemplating a bleak future of dwindling enrolments, while elementary and high schools are challenged by middle-class defections—between 1971 and 1976, more than 50,000 Canadian schoolchildren enrolled in private schools. The confidence crisis includes the perception that academic standards are declining (in spite of reports from Ontario, Saskatchewan and Alberta that
students are reading and comprehending as well as ever), and the burden of carrying the brunt of education taxes. What it all boils down to is the familiar middle-class concern for money’s worth, and the growing conviction that they are not getting theirs.
Another casualty is respect for the law; the “moderate honesty” of Shaw’s middle-class man is metamorphosing into a pliant new morality. One small but disquieting symptom is the increase in petty crime. Paul Shotlander, chairman of the Retail Council of Canada’s Loss Prevention Committee, observes that shoplifters “nine times out of 10 have cash in their pockets. Many are middle-class people and above—lawyers, doctors, 747 pilots.” They are the people who once felt protected by the law but now feel exploited.
Mr. Justice Samuel Grange of the On-
tario Supreme Court says that merely to complain that the rich and the legalaid-subsidized poor have more access to the courts than the middle-income groups is to state a truism; what troubles Grange even more is the exclusion of middle-income groups from appeal. “Appealing a legal decision has become a dangerous gamble,” he says. “If the case is contentious, and you lose and are told to pay costs—well, few people can afford $80,000. It worries me.”
Politically, too, the middle class has become far more cynical. Sharon Smith, another Hamilton anti-tax activist, used to take her 11-year-old to rallies and meetings where local municipal officials were openly criticized. “Next thing I knew,” says Smith, shocked, “my daughter was organizing a walkout from her Grade 5 class because the teacher had upset her. A politician at 11!” Worse came when a well-wisher asked Smith’s daughter, “Little girl, do you know what mayors do?” “Sure,” said the child, “they rip people off.”
The middle-class political mood is also more self-interested, volatile, impatient-offering some disturbing implications for Canadian politics. Political scientist John Meisel once suggested that middleand upper-income groups tended to hold a pan-Canadian as opposed to a narrowly regional perspective; now that’s shouldered out by immediate concerns. As Saskatoon’s Sylvia Atkinson, an activist with the Consumer’s Association of Canada, admits, “I used to worry about national unity; now I worry about inflation. The other is a luxury.” In the same way, the demands of self-preservation are draining the energies of middle-class goodwill. Amelia Beneteau, a Windsor, Ontario, school-board official whose husband has been temporarily laid off by the Ford Motor Co., expresses her dilemma: “I used to be a charitable person, supporting kids’ marathons, giving to mission work and the [Canadian] Cancer Society, but now I can’t, I just can’t. I felt guilty about it for a while. Now I’m hardened to the guilt.”
One inevitable result of the middleclass squeeze has been growing complaints about their share of the tax burden—an institutional loss of faith which also reflects a deeper shift in values. Says Bob Pembrook, the Nova Scotia teacher, “The middle class gets none of the benefits of subsidies for the poor, and we can’t take advantage of the tax shelters of the rich. Yet in a sense we’re paying for both.”
Vancouver’s Fraser Institute has developed a Consumer Tax Index, which includes federal, provincial, municipal and hidden taxes; this indicator, it claims, has risen more sharply than any other burden facing the average Canadian family. Admittedly, there has been
a decline in taxation’s growth rate since 1975. But if the long-term impact of government borrowing is taken into account—i.e., if deficit financing is counted as deferred taxation—this relief is revealed to be, according to the Fraser Institute, a “massive fiscal illusion.”
Frantically seeking fiscal solidity, workers are slipping out of the office to form queues (“middle-class breadlines” as they wryly describe themselves) to buy and sell gold. Meanwhile, the phenomenal popularity of RRSPs and RHOSPs has been spawned by the anything’s - better - than - the - taxman -getting-it motive. They add up to survival tactics, and they can take subversive forms too, such as tax evasion, unrecorded cash transactions and barter. The Fraser Institute’s director, Michael Walker, estimates that in Canada this unrecorded underground economy is worth in excess of $19 billion in lost revenue and lost faith.
It is the psychology of expectations that is causing in large part the frustrations of the middle class. Once one accepts the well-being of one’s children, the comforts of one’s own home and an inside track on future felicity as desirable and attainable goals, there’s no dropping out of the race. Eight years ago, Ellis O’Brien and his wife, Evey,
left the security of their government and teaching jobs in northern Alberta and went back to the land. They built a two-storey house overlooking Lesser Slave Lake and raised vegetables, ponies and children. “We thought we’d avoid the middle-class rat race,” smiles Ellis, as a wind from the high Arctic teases his still-long hair and flowerchild beard. “But there’s no escape.” So they have bought a small trucking business and expect to net between $15,000 and $20,000 this year. The O’Briens used to live happily on $5,000 a year. But now, says Ellis, “three times that much, and if you have kids to raise and a truck to repair and fuel, it still slips through your hands.”
Though the middle class is falling behind on the treadmill—“We used to live from payday to payday,” laughs housewife Sharon Smith. “Now we live from overdraft to overdraft”—surprisingly few of them are dropping out. What’s crucial to their very existence is a belief that growth and progress are occurring—whatever innovative or illusory channels these compelling drives find. “The middle class is tired of hearing how bad things are,” says pollster Allan Gregg, president of Decima Research Ltd. “They know. But they have a high believability in solvability.” And so “Cope!” has become the dictatorial
imperative, and “Can-do” the current chic.
In Toronto, 15,000 determined “copers” register each year with the Skills Exchange, whose most popular shortrun evening and weekend classes include home renovating, auto repairs for the “compleat” beginner and do-ityourself divorce. In Cape Breton, the household of teacher Michael Milburn has installed a wood-burning stove, which he estimates cuts between $200 and $300 off the yearly heating bill. In New Brunswick, free-lance journalist Shirley Bourque and her trucker husband, Raymond, carefully budget their $22,000 gross income. “We’re on a tight five-year plan, just like Russia,” laughs Bourque. They have practically cut beef from their diet and eat potatoes, beans and peas from their garden, shaving several hundred dollars off their annual food bill. They keep the thermostat at 19°C, are putting in a wood stove and sew their children’s clothes. Still, Bourque believes, “We haven’t compromised on our quality of life.” Their savings in food and fuel have enabled them to offer their daughter music and swimming lessons, and to treat themselves to the occasional concert.
An illuminating insight into what’s happening to the copers of the struggling middle class is provided by
pollster Allan Gregg. He observes: “If people can feel they are making improvements—‘moral’ perhaps, in that they are conserving more energy, or improving themselves at night school— these are status surrogates. Quality of life is being substituted for standard of living.” As teacher Bob Pembrook muses, “We seem to be rediscovering that a walk in the park with your family is more satisfying than McDonald’s and a movie; that life isn’t based on goods alone.” If the problem is psychological—a squeeze between aspirations, expectations, personal values and realworld limitations—then psychology must be applied to creating a solution. In times of diminishing buying power, prohibitive housing prices, soaring food costs and wavering faith, the tenacious middle-class hope, deluded perhaps, but necessary, is that if life isn’t getting easier, it still could, just possibly, be getting richer.