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The article has a link to the Statistics Canada Report
Toronto Star
Mar. 16, 2001
Rich, poor are even wider apart
Half of families hold 94 per cent of all the wealth
Elaine Carey - DEMOGRAPHICS REPORTER
The gap between the richest and poorest in Canada has grown at a
staggering rate in the past 15 years, according to a new study.
The richest families saw their net worth grow by 39 per cent or some
$110,000 between 1984 and 1999, while the poorest saw no increase at all,
leaving them in debt or with no net assets, Statistics Canada said in the most
comprehensive portrait yet of Canadian wealth and debt.
Half of all families held 94 per cent of all the wealth in the country, leaving
the other half with only 6 per cent, according to the first survey of financial
security in 15 years.
``There's a huge accumulation of wealth at the top end and nothing at all at
the bottom,'' said John Anderson, senior researcher for the Centre for
Social Justice, a liberal think-tank.
`We're in a very divided society, a very polarized society.''
While Canada is not as polarized as the United States, where the richest 10
per cent have more than two-thirds of all the wealth, ``the trend is going in the
wrong direction,'' he said.
The median net worth of Canada's 12.2 million family units was estimated at
$81,000 but that ``masked huge wealth disparities,'' the centre said.
The richest 10 per cent have a net worth of $703,500 while the poorest 10
per cent have a negative worth of minus $2,100.
``These figures are even more dramatic when we realize that being without
wealth in 1999 is worse than in 1984 as the social infrastructure is being
hacked to pieces,'' said Anderson. ``Social housing, health and education
have all been cut back.''
`There's a huge accumulation of wealth at
the top end and nothing at all at the
bottom. We're in a very divided society, a
very polarized society.'
- John Anderson, senior researcher for the Centre
for Social Justice
The over-all median net worth of families increased by only 11 per cent from
$58,400 in 1984 to $64,600 in constant 1999 dollars, or less than 1 per cent a
year, says the survey of 16,000 families and individuals. Their after-tax
incomes remained virtually unchanged.
Incomes have stalled, ``but the cost of living goes up, so there's less
money to put away for a rainy day,'' said Bob Glossop, program director of
the Vanier Institute of the Family. ``If you happen to be in the bottom 50 per
cent, you're more and more pinched to make ends meet.''
Young families with children are increasingly in debt, yet those families are
expected to put money away for their retirement and their children's
post-secondary education, he said. ``The dilemma is that the point at which
they start to save is going to be later and later in life.''
That save-in-the-future theory is well known to Allen Malloy, 37, who has
three loans on credit cards and a couple of lines of credit of about $10,000.
He lives with his wife Yoko, their children, Elana, 3, and Daniel, 6, in a
rented apartment above their jewelry store on Queen St. E.
``I am still in a position where I don't have any money. I've invested all my
money back into my store. So I have money in the bush but not in the hand,''
noted Malloy, who doesn't have a registered retirement savings plan. ``I
don't worry about saving for tomorrow.''
The huge disparities between rich and poor also show the failure of
government programs that were supposed to benefit everyone, Anderson
said.
``These policies haven't worked in terms of getting people to any kind of
Canadian dream like owning their own home. We've been fed a line.''
Canadians are becoming more and dominated by the American model
because of the global economy and concerns that Canada is becoming less
competitive because of high taxes, said Glossop.
Over-all, Canadians had debts estimated at $458 billion, three-quarters of it
in mortgages. Car loans accounted for about $29 billion or 6 per cent of the
total, while student loans and credit card debt each exceeded $14 billion or 3
per cent.
Canadians average $16 in debt for every $100 in assets but, like wealth,
that debt burden varies widely among families and individuals.
Single mothers had debts that were almost twice the national average, about
$29 for every $100 in assets. Two-parent families with children owed $23 for
every $100 in assets.
To pay off an $84,000 mortgage on her Greenwood Ave.-Gerrard St. E.
house, single mother Diane Dyson works two part-time jobs as an office
administrator.
``I feel stressed and guilty when I begin to think what else my kids can
have. I live in a neighbourhood where most of us are struggling the same
way. If kids can go to day camp, that's exciting,'' said the 36-year-old mother
of Kay, 9, and David, 5.
``If you sat down and do the math, you can't have your own place and feed
children on a minimum wage job. It is hard to have much more than a
subsistence living on the wages that most jobs are (paying), especially in an
expensive city like Toronto.''
Seniors had the lowest debts, owing just $3 for every $100 in assets,
suggesting they have paid off their homes and other debts, the study says.
At 61, Edythe Gerrard not only owns a house in the Beaches, but also bought
a home for her son and his young family.
``I've got a very healthy retirement plan. The future is great,'' said the
contract financial planner, who makes more than $70,000 a year.
``In the old days, you got married in your 20s, your kids left home by the
time you're 45 and you have till 65 to build (savings for retirement).''
But young families under 25 have the biggest debts, owing $31 for every
$100 in assets. If they didn't own a home, that debt soared to $53 for every
$100 in assets, largely because of the rapidly rising burden of student loans.
Student loan debt was more than six times higher in 1999 than 15 years
earlier, and more than 1.4 million families were struggling to pay them off,
almost triple the 490,000 in 1984.
The average student loan has soared to $10,400 because of rising tuition
fees and an end to the government bursary program.
``Young people are a long-term concern,'' said Glossop. ``They're carrying
much higher debt burdens. They can't get summer jobs and part-time jobs to
pay that debt and their parents can't afford to pay that cost fully.''
Paul Miazga will be graduating from Ryerson University's journalism school
this summer but is already $40,000 in debt for student loans.
``I'm going to university. I'm amassing debts and and I'm not sure if I'll
have a job,'' said the 27-year-old Saskatoon native.
``It is very daunting to a person. It looms over my head every day. It
certainly will loom once my repayment plan starts.''
The full-time student also works 20 hours a week as a waiter at a bar on
campus to pay off his daily expenses and a debt of some $3,700 on his
credit cards. ``I'd love to buy mutual funds and put aside money for my
RRSP, but I just don't have the resources and extra cash to do that at all.''
On the asset side, real estate, cars and home furnishings accounted for 58
per cent of Canadians' wealth, while RRSPs, stocks, bonds and mutual funds
made up 29 per cent. The remaining 12 per cent was business equity.
An estimated 60 per cent of families owned their own home, but that rose to
three-quarters of those aged 55 to 64 and dropped to 36 per cent of those
under 35.
RRSPs now make up 40 per cent of family assets and the amount held in
them was 6.4 times larger in 1999 than in 1984, the survey found, although
only 55 per cent of families had one. Those that did had a median RRSP of
$20,000, but that soared to $50,000 for those 55 to 64.
Across the country, Ontario had the highest median family net worth in 1999
at $101,400 while Newfoundland families had the lowest at $53,000.
Ironically, 73 per cent of families in Newfoundland owned their own home,
the highest proportion of any province. But the median value of those homes
was just $60,000, less than half the national median of $125,000.
Ontario also boasted the highest number of truly rich, with 138,000 or 3.1
per cent of families having assets over $1 million. Together, they held 27 per
cent of all the wealth in the province.
Quebec and British Columbia each had more than 55,000 millionaires,
Alberta had 36,500 and all the other provinces together had 25,100.
Canada's millionaires control 29 per cent of the country's total family wealth.
The survey shows the growing disparity between East and West in the
country, said Anderson, with all provinces east of Ontario, except Prince
Edward Island, having a far lower net worth than Ontario and provinces to the
west.
Education and occupation were the two major keys to the income divide.
Families where the main wage earner did not have a high school diploma
had a median net worth of $62,500; with a bachelor's degree that net worth
soared to $117,500; and with a professional degree in law, medicine,
dentistry, veterinary medicine or optometry, it almost tripled to $323,000.
Families with workers in management had the highest net worth while those
in sales and service had the lowest. The poorest were child-care workers,
retail clerks, cashiers, chefs, cooks, food and beverage workers, and those
in protective services, and travel and accommodation services.
Many racial groups are concentrated in those low-end occupations, the
Centre for Social Justice said.
``Some families, yes, are doing better. But the families we are seeing in the
food bank lines, their situations are actually getting worse,'' said Aynsley
Morris, acting executive director for the Canadian Association of Food Banks.
The agency estimates that one in seven people who use food banks is
working.
``It's not getting better for the people who need it most,'' she said.
With files from Nicholas Keung
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