As a recent Hub essay set out, the recent federal election revealed a stark divide in the electorate: those with secure incomes and financial futures versus those with much shakier finances.
The first group may represent what we’ve come to call the professional class. They earn good incomes or benefit from retirement funds and pensions tied to the stock market. These are also the folks who can often work comfortably in their homes, which they likely bought before the spike in prices at the start of the pandemic.
The second group includes much of Canada’s working class. They rent and foresee no change to their status. And they do not have the luxury of working from home, because their jobs are tied to a specific workplace.
Given their different life situations, it’s not surprising that the financially secure and insecure vote differently. For the financially stressed working class, cost-of-living and the promise of upward mobility would resonate a lot more than any nationalist reaction to Donald Trump’s “51st state” threat. Conversely, older voters with indexed pensions and paid-off mortgages aren’t so worried about cost-of-living issues. But if you’re under 35 and can’t save up for a down payment, Trump rhetoric might seem less pressing than figuring out how to pay rent and buy groceries.
Our own research at Cardus has explored the characteristics and experiences of Canada’s working class, including who they are, what they do, and how they’re doing. The results are interesting: they help us better understand who’s most likely to experience financial vulnerability in Canadian society.
The working class is all the workers in the economy whose jobs require at most a high-school diploma or even simply on-the-job training. They don’t, in other words, need university degrees, college diplomas, or trade school certifications for their jobs.
According to the research, that represents about one-third of the Canadian workforce—nearly 7 million people. And contrary to the stereotype of a white male factory worker in the auto sector, the working class tends to be made up of women, recent immigrants, and service-industry or gig-economy workers. Think less GM assembly line worker, and more Uber driver or hair stylist.
Many of them are young, but there’s a persistent group of working-class Canadians across all age ranges. There’s also a surprisingly high number of older workers in working-class jobs, likely because they tend to retire later than the professional class. This suggests that the divide between those who thrive in our economy and those who struggle is less about age and more about the kind of job they have.
In financial terms, the working class is struggling. Their average wage is about $24 per hour, compared to $50 per hour for the professional class. Some of that gap is to be expected, of course, but these wage differences put the struggles of the working class into perspective. If those in the professional class think it’s hard to make ends meet, consider the challenges for those whose average wages are less than half their own.
It’s not a huge surprise, therefore, that these people are disproportionately likely to have relatively high household debt or low personal savings. Many are actually in a position of dis-savings. This can lead to missed credit payments and even loan defaults. According to Equifax, there’s been an 8.9 percent year-over-year increase in non-mortgage loan defaults alone. The financial data company notes debt troubles are especially acute for younger and lower-income Canadians.
Monty Noyes, a retired photographer who is supplementing his Canadian pension income by working for the food delivery service Skip The Dishes, is photographed in Winnipeg. Wednesday, March 13, 2019. John Woods/The Canadian Press.
The consequences are not merely financial, either. Earning $24 per hour makes it exceedingly difficult for people to save up for a home. This may cause some people to delay starting a family. There are many reasons why Canadians report having fewer children than they would like, but financial concerns and a “desire to save money” rank as number two. For those with families, the cost of housing can push them further into the suburbs (and beyond), involving longer commutes between work and home and less time to spend with their spouses and kids. Working-class challenges, in other words, can extend to many non-financial facets of their lives.
Some might say that these experiences are rooted in people’s educational choices. There is some truth to this, but it’s not the whole story. In fact, many of those in working-class jobs actually have post-secondary credentials, which is to say, they have educational credentials that their jobs do not require.
According to our research, more than half of working-class Canadians have at least a college diploma. One-fifth even have a university degree. These numbers have been steadily rising for 20 years. In the case of university graduates in working-class jobs, this number has more than doubled in that time period. This suggests there’s a structural problem in our education system that’s not preparing these students for the workforce.
There are things that governments can do to help. Provincial governments must reform education systems to draw a closer link to the labour market. And the federal government can nudge them in the right direction through the billions of dollars that it already sends to provinces for education and workforce development.
Education isn’t just about developing skills for a job, but most people go into post-secondary education expecting it will set them up well for the workforce. They can also promote other forms of education as early as high school by introducing co-op programs that expose students to other career paths, such as the skilled trades, that offer honourable—and lucrative—work without necessarily requiring a four-year university degree.
Boosting economic growth is also important. Higher levels of employment and strong earnings would be a major help for Canada’s working class. The Carney government’s focus on boosting natural resource employment in general and energy sector jobs in particular could put upward pressure on working-class wages.
Labour unions can still play a positive role. As Brian Dijkema and Sean Speer have argued, unions could gain new relevance for the working class and its unique experiences and challenges in the modern economy. Not only could they make real progress for workers through a new, more collaborative way of bargaining, but unions could also play a greater role in helping to secure their members’ financial futures. The moment could be ripe to strengthen workers’ participation in the fruits of our economy.
There are no doubt other good ideas for policymakers to lessen the financial vulnerability facing Canada’s working class and strengthen their household resilience. The key, though, is for policymakers to commit themselves to a policy agenda focused on financial resilience and to understand that the financial vulnerabilities of working-class Canadians deserve particular attention.
