Canadians’ incomes may be rising, but their wealth is not. New research co-authored by Carleton University’s Jennifer Robson, assistant professor of Political Management indicates that the story of household wealth in Canada has been one of a long, slow march toward a two-tier system. The research recently published in Policy Options suggests that close to half of Canadian households surveyed by Statistics Canada between 1999-2012 do not have enough financial assets to cover three months of living costs.
Robson and McGill’s David Rothwell looked at data gathered in the Statistics Canada Survey of Financial Security which suggest that:
- 49 per cent of all Canadians are asset poor. Asset poverty means that people don’t have enough financial assets to cover their basic needs and keep themselves from poverty for at least three months.
- 22 per cent of Canadian children aged 0-4 are growing up in households with no financial cushion at all. More than 420,000 children are growing up in families that can be described as living in extreme asset poverty, going from month to month and struggling to cover even a modest unexpected cost.
- Wealth inequality continues to increase. The net wealth of the lowest fifth of Canadian households dropped by six per cent from $692 in 1999 to $650 in 2012. During the same period, the net wealth of the richest fifth of Canadian households increased by 83 per cent from after-debt assets of $715,567 on average in 1999 to $1,307,000 in 2012.
- Canadians who have seen the biggest gains in wealth are not the very rich (the top 20 per cent), but the 20 per cent of Canadian households just below them. Their average net household worth has increased by over 88 per cent from $268,631 in 1999 to $506,074 in 2012.
Savings policies in Canada don`t do much for small savers.
“We do have savings policies in Canada, just not policies that do much of anything for small savers,” says Robson. “Worse, program rules on student loans, provincial welfare payments and seniors’ benefits actively discourage low-income Canadians from saving by clawing back or cutting off the benefits they depend on.”
“We have a policy to redistribute income to the poorest,“ says Prof. Rothwell from McGill’s School of Social Work. “But our policy on assets is to encourage the already well-off to get wealthier without much regard for those at the bottom of the wealth ladder.”
The researchers can discuss:
- Why there is such a difference between Canadian incomes and wealth and what this means;
- Why measures of wealth are key for understanding long-term trends in poverty, and;
- How public policies like RRSPs and welfare impact household savings.
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