Something to be thankful for

As we move into the most materialist week of the year, celebrating the birth of the least materialist man in history, it’s well to pause amid the usual hurly-burly, clash-and-clang, cash-and-carry to take account of our manifold blessings. That is a highly personal matter, the individualists who populate this page believe, with loved ones and their health, achievements, hopes and plans top of ledger.

But some way down the ledger, probably not at the very bottom, comes financial health. On this, Statistics Canada has just very helpfully closed the books for 2016. You can scroll through them yourself at CANSIM Tables 378-0150 to 378-0155. (One thing we can certainly be thankful for — though perhaps not all Canadians will be equally joyful about it — is that to see numbers such as these, it’s no longer necessary to trudge off to the Government Documents section of the Local Large Library, if one is nearby, and track down the relevant publication, once it’s finally put on the shelves. You can do it now from anywhere there is an internet connection. It’s not pasteurization or central heating but, as innovation goes, it’s at least slightly miraculous.)

The table below, shows the percentage change in Canadians’ net worth by income quintile (or fifth). It also lists each quintile’s 2016 net worth. On average (though this isn’t shown) household net worth rose from $505,336 in 2010 to $712,704 — more than $200,000 — or 41 per cent.

What’s especially interesting is that despite the current frenzy about inequality it was a better half-decade for those Canadians lower down the income distribution than those up top. Both bottom quintiles saw their net worth grow by more than 50 per cent (if barely), while in the top quintile, average net worth grew only 38 per cent. The middle quintile, the most literal possible definition of the Liberals’ treasured “middle class,” did only a little better than that. The second quintile from the top did see 44-per-cent growth, outdoing both top and middle. But the bottom two quintiles led the pack.

The dollar values quoted are in “nominal dollars,” i.e., the dollars of the day in each year. The Bank of Canada Inflation Calculator tells us there was almost exactly a 10-per-cent increase in prices from 2010 to 2016, so to judge the growth of real net worth you should knock off 10 percentage points. Still, it was a good half-decade for all five income classes.

To be sure, this was coming off 2009, which was a big disaster in terms of net worth, so a recovery should have been expected. Unfortunately, these data only go back to 2010.

There’s also no question that it’s better to be in the top quintile than the bottom. Average net worth up top was $1.7 million, versus only $208,000 down below. As always with inequality calculations, however, it’s best to keep things in perspective. Some people at the bottom are just starting out — my own kids, for instance — and actually have negative net worth: no assets to speak of but thousands of dollars of student debt. On the other hand, some people at the top are in their peak years for wealth, just finishing their saving years and moving into their “dissaving” years, when they’ll consume down their net worth.

Finally, nothing’s guaranteed about net worth. The average Canadian household’s net worth of $854,000 in 2016 was about equally split between financial ($445,000) and non-financial assets ($410,000). Most of the non-financial assets were in real estate: an owner-occupied home, in most cases. And the financial assets were in pensions or other investment vehicles. In sum, very little of people’s net worth is guaranteed. That doesn’t mean it’s bound to decline. In the year just finishing, it may well have gone up: Many financial markets did well and real estate didn’t tank. But as the prospectuses really shouldn’t have to remind us, the future is unknown.

So, while it’s best to be grateful for rising net worth, it’s better still to build your life on a foundation of those personal things mentioned at the outset — to build on rock instead of sand — so that, to paraphrase Matthew via King James, when the rains descend, and the flood comes and the winds blow and beat upon your house, it will not fall.

IT WAS A BETTER HALF-DECADE FOR CANADIANS LOWER DOWN THE INCOME DISTRIBUTION.