According to a new Statistics Canada analysis, recent increases in living expenses are having “unprecedented impacts” on the savings and wealth of Canada’s most disadvantaged citizens. The first-quarter trends, according to the analysis, would probably have the most effects on those with lower incomes, less wealth, and younger age groups. The wealth gap between the richest and poorest Canadians is widening as a result of all of this.
The wealthiest 20% of Canadians currently own two-thirds of the nation’s net worth, while the 40% of the population who are the least wealthy own only 2.7% of the nation’s wealth. Over the previous year, that difference widened by 1.1%. Government assistance now accounts for about 40% of low-income individuals’ total income, up 4.6% from a year before.
Average earnings and salaries for low-income earners increased significantly more slowly, despite the fact that the top earners in the nation had their discretionary income grow on average at a faster-than-average rate.
The net worth of Canada’s lowest individuals decreased by 13.8% between early 2022 and early 2023 as a result of recent economic challenges. The rate of decline among the wealthiest Canadians is more than treble that.
While this was the case, middle-class families were severely hurt by inflation in the last year. They had $521 in net savings at the start of 2022. However, the survey revealed that a year later, they spent $1,306 on average more than they made.
Due to a downturn in real estate values during the prior year, all household types had a decrease in net worth, with the least wealthy and those under 35 suffering the greatest financial losses.
How could this happen in Canada?
While Canada is one of the richest nations on this planet, how is is possible that citizens who have build this country struggle with paying for their living in Canada? How is it possible that the wealth of this nation is distributed increasingly to the rich?
The debt-to-income ratios for both younger and core working-age groups were the highest since records have been kept beginning in 2010. The study indicated that by early 2023, they had significantly risen above pre-pandemic levels. In the first quarter of 2023, both categories had debt-to-income ratios of well over 200 percent, a double-digit rise from the previous year.
Have Canadians been programmed to be in high dept? Are rich exploiting the poor?
Canadians see articles like these on daily basis, even if there are no studies and no articles to read, people notice how money they earn buys less goods. Canadians fave filled vacationing spots all over the world, now, few can afford to take vacation at all.
According to a study, which polled 2,300 people, the recession and economic uncertainty are having an influence on vacation plans. 20% of respondents said they won’t be able to take time off in 2023. Due to understaffing and firm layoffs, 37% of the participants said they are taking less vacation time, while a startling 20% said they are not taking any vacations at all. The survey also found that 68% of employees reported working on their holidays, with 37% of them blaming a lack of delegation alternatives and 8% citing fear of losing their employment as reasons.
Is Canadian Government doing enough?
If we take all the aspects and affordability issue Canadians face, the answer is self explanatory. But what immediate actions can be taken by the government to assist Canadians in finding housing, helping Canadians paying bills and even helping Canadians to prosper in country they love so much?
Canadians generally agree that headline-grabbing measures like foreign buyer restrictions and vacancy charges are little more than retail politics that ignore the core problems when it comes to housing affordability. Many obvious decisions that could turn the affordability crisis around have not been implemented not talked about, but why?
The federal government may reinstate 30-year amortization periods for insured mortgages to help make homeownership more accessible and level the playing field for all homebuyers.
Government could release more crown land for general public to purchase at lower cost for instance, this would help Canadians to use saved money to build homes instead using that money to buy expansive mortgages.
Or perhaps, the government could mandate building homes for living instead of investors making money off of it. Now, investors have enough money for down payment for second, third and forth mortgage, they have enough money to give to their spouses and their children to purchase first or second mortgage. But what will Canadians do who don’t have enough money to put for a downpayment?
It is not a big brain exercise to realize that Canada is a big country with 50% of it’s population living in southern Ontario, between Muskoka to Niagara Falls! Why is it so hard for governments to release more land and build more homes? Why is any land released just to big builders?
Perhaps, the focus is on total different agendas, otherwise this situation would get better instead of getting worse.
How about existing homes and neighbourhoods?
If more Canadians are struggling with paying off their mortgages, paying for renting and paying for general living in Canada, how will Canada’s existing homes and neighbourhoods look like in five or ten years if no one has money to spend for maintenance and upkeep? Are we heading for a more deeper problem?
The psychologists could sing a song about this! Perhaps you have heard of theory of shattered windows, if not, it is a theory that has been studied on many occasions and proven to be true.
Criminologists James Q. Wilson and George L. Kelling first proposed this hypothesis in the 1980s, and it has since been hotly debated and discussed. The shattered windows argument contends that when people observe evidence of chaos in their surroundings, they automatically conclude that no one is concerned about the neighbourhood and that law enforcement is ineffectual. People may feel more confident to conduct crimes in the region without worrying about repercussions as a result of this view, which can result in an increase in criminal activity. The community may continue to degrade as a result of this cycle of neglect and criminality, with more residents leaving and less investment in the area.
The findings of numerous studies and real-world events testing the shattered windows theory have generally been in favour of the idea. For instance, a study carried out by experts in California discovered that the crime rate in the area considerably fell when abandoned buildings were cleaned up and graffiti was removed.
For decision-makers, civic leaders, and citizens alike, the shattered windows idea has significant ramifications. It implies that neighbourhoods can become safer and friendlier by removing outward indications of disorder and neglect, such graffiti, litter and broken things. This can be done by making focused efforts to improve community policing, invest in public areas, and clean up neighbourhoods.
Which means, if people don’t have enough money to beautify their neighbourhoods and maintain their homes, and leave their property to decay and fall apart, other neighbours will be tempted to do the same. Reversible, we all heard the term “keeping up with the Joneses”, same idea, just in more competitive way instead of downward spiral.
Are we heading for a broken society?
Let’s hope the entire situation is not to complex and that policy makers will choose a more positive approach that will benefit everyone. Canadians deserve to live in prosperity instead of living in fear of financial catastrophe.