National Post (National Edition)
Liberals’ tax plan ignores growing but marginalized population.
LIBERALS IGNORE MARGINALIZED SECTOR OF THE POPULATION
We’re almost two years into his government’s first mandate, but I keep thinking back to Prime Minister Justin Trudeau’s speech at the Liberal Party of Canada’s 2014 party conference, the one in which he set out the theme of a government focused on the middle class.
Trudeau spoke of the concerns of “Nathalie,” an imaginary member of the middle class, earning what was at the time the median income of roughly $40,000 a year. As an economist, the fact that Nathalie wasn’t a real person doesn’t bother me: we use stylized fictions to make a point all the time. To be sure, parts of Nathalie’s story didn’t ring true — for example, her concerns about stagnant incomes didn’t square with the fact that her real purchasing power had been increasing for the past decade or so — but it was a compelling narrative all the same.
We didn’t hear any more about Nathalie during the election campaign, possibly because she doesn’t make enough money to benefit from the Liberals’ headline “Middle-Class Tax Cut.” But since Nathalie has children, she does benefit from the Canada Child Benefit (CCB). But what about her equally fictitious co-worker — let’s call her Nancy — who is paid the same as Nathalie, but is childless? (The story also works if Nancy’s children are grown to adulthood and living on their own.)
Nancy’s situation is worth spending some time thinking about. For one thing, there are more and more people like her. In 1976, what Statistics Canada calls “non-elderly persons not in an economic family” accounted for 6.4 per cent of the population; by 2015, that ratio had increased to 11.4 per cent. (I’m setting aside retirees because they pose a different set of policy challenges, and are addressed by a different set of policy instruments.) More broadly, nonelderly couples and individuals without children living at home were one-sixth of the population in 1976; now, one Canadian in four falls into that category. Put another way, 30 per cent of Canadian adults are not elderly and are not living with children at home. (The data source is Statistics Canada’s Cansim Table 206-0011.)
The fact that there is no simple expression for people like Nancy — not elderly, not a parent of children under 18, may or may not have a partner — illustrates just how easy it is to overlook her. Nancy may in fact prefer to be overlooked, if the alternative is to be reminded once again that she’s probably missing out on something. And her male co-worker earning the same income — let’s call him Nathan — has certainly grown weary of earnest commentaries telling him that he’s somehow failed at life.
There are many stories we can tell about why there are more people like Nancy and Nathan, involving the changing nature of marriage, trends in education attainment rates, and how technical change has affected the relative demand for certain types of skills in the labour market. I’m not going to try to put the pieces together into a coherent narrative, partly because I’m not sure I’d get it right — I’m an economist, not a sociologist. What matters for this discussion is that there are more and more Nancys and Nathans in Canada.
I pointed out earlier here and a few other times in this space that the Liberals’ so-called “Middle Class Tax Cut” is in fact no such thing; it’s better described as the “Upper Middle Class Tax Cut.” People like Nathalie, Nancy and Nathan are in the middle of the income distribution, but they don’t make enough money to be affected by the Liberals’ tax cut. The maximum benefit falls on those around the 90th percentile, with incomes roughly twice what Nathalie et al. earn.
In Nathalie’s case, there’s a partial rebuttal handy, in the form of the CCB. She has children, and since her income is not relatively high, she does benefit from the redistribution and expansion of child benefits towards the lower part of the income distribution. But what about Nancy and Nathan? Their middle-class credentials are as solid as Nathalie’s, but they don’t benefit from either of the Liberals’ signature measures to help the middle class. Neither do their less well-off cousins Nicole and Neil, who are childless and — as the Liberal messaging’s euphemism puts it — “working hard to join the middle class.”
Nancy, Nathan, Nicole and Neil have probably long since resigned themselves to being overlooked by political strategists. As we’ve seen, they aren’t an easy group to define: “We will fight for nonelderly persons not in an economic family” is not a slogan that will appear on campaign literature anytime soon. And even though their numbers are growing, they still don’t have the demographic weight of families and seniors. But someone should start paying attention to this marginalized sector of the population, if only to give some meaning to that other expression the Liberals are fond of using: “inclusive growth.”