rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

Wealth inequality: Going from bad to (net) worth

Please chip in to support more articles like this. Support rabble.ca for as little as $5 per month!

Photo: ptooey/flickr

This week, Statistics Canada released its 2012 wealth survey (Survey of Financial Security). Two previous wealth surveys were published in 2005 and 1999 with a similar methodology.

We often talk about income inequality, which examines what middle-class and rich Canadians make in a year. However, wealth inequality examines middle-class and rich Canadians' net worth, including their house, RRSPs, savings, car, etc. If income inequality -- where the top 20 per cent of families get 43 per cent of the income -- is concerning, then wealth inequality should be downright shocking. The top 20 per cent of families in Canada own 67 per cent of all net wealth (although this is down slightly from the high of 69 per cent of all wealth in 2005).

Put another way, the top 20 per cent of families have twice as much wealth as the bottom 80 per cent of families combined. Even if the bottom 80 per cent of families doubled their net worth tomorrow, they still wouldn't have as much as the top 20 per cent presently do.

Inequality is not only about the wealthy, it's also about the middle class. Looking at the middle 20 per cent of families, while they represent 20 per cent of the population, they only receive 15 per cent of all income. However, the middle 20 per cent of families only have 8 per cent of all net wealth and this has remained fairly constant since 1999.

All the above examines the share of net worth, not its dollar value change over time. In fact, net wealth has increased for all quintiles since 1999.  For instance, middle class net wealth has increased by almost 80 per cent since 1999 in inflation-adjusted terms. The upper class has increased their net worth by a little over 80 per cent since 1999. That seems fairly equal until you realize that the wealth they were starting from in 1999 was already incredibly unequal: 80 per cent of $760,000 is a lot more than 80 per cent of $137,000 (the 1999 median wealth values for the upper and middle classes, respectively).

In fact, of every new dollar of Canadian wealth created since 1999, $0.66 went to the richest, $0.23 went to the upper middle class and the bottom 60 per cent fought it out for the remaining dime.

The reasons why wealth increased for the middle class in contrast to the rich are also quite different. If we look at the distribution of debt instead of net wealth, we find that the middle class actually holds the most debt of any quintile, certainly more than the poor, but interestingly also more than the rich.  The middle class has managed to increase their net wealth in large part due to increased leveraging, not asset price appreciation. The richest families have less debt and substantially more assets. Their increased wealth is largely due to asset accumulation, not leveraging.

Upon examination of the types of debt for the middle class, we find 80 per cent of it comes from mortgage debt. In fact, the majority of the middle class' assets are also related to real estate (which is not the case for the upper class). For the middle class, increased net wealth has been related to much more expensive houses being purchased with much larger mortgages. That is to say, the middle class is leveraging up in order to keep up (with the Jones').

As the Americans learned, leveraging up is only a successful strategy if housing prices continue to appreciate. When a house goes down in value, the mortgage payments do not. Asset prices fluctuate while debt levels do not, which is why over-leveraging is generally a bad idea, particularly when mortgage rates in Canada are at all-time lows.

David Macdonald is a Senior Economist with the Canadian Centre for Policy Alternatives. You can follow him on Twitter @DavidMacCdn.

Photo: ptooey/flickr

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.