The economic downturn that followed the arrival of the coronavirus pandemic and resultant efforts to curb the spread of the virus have had an unequal impact on Canadians.

Those with precarious service-sector jobs, already among the most vulnerable, have been unemployed or underemployed for much of the past year. Those who’ve kept their jobs have in many ways been better off – studies show those working from home saved a collective $200 billion due to cutting expenses on travel, commuting, child care and the like.

And then there was the boom in the stock market and real estate, both somewhat tempered now due to international events and rising interest rates. By most standards, the shifts disproportionately benefitted those already better off.

In that regard, what’s going on today is emblematic of longstanding inequities in the economy.

Those disparities are also reflected in the latest MNP Consumer Debt Index released last week.

The survey finds this year’s consecutive interest rate hikes and persistent inflation are hitting Canadians in their wallets. Conducted quarterly by Ipsos on behalf of insolvency firm MNP Ltd., the latest report finds that, with the cost of living soaring, more Canadians say life’s necessities are becoming less affordable. Compared to December 2021, significantly more say it is becoming less affordable to feed themselves and their family (52 per cent, up five points), put money aside for savings (49 per cent, up give points), pay for transportation (45 per cent, up nine points), pay for clothing or other household necessities (45 per cent, up  five points) and pay for housing (37 per cent, up two percentage points).

“Canadians are putting more of their paycheques towards paying for basic necessities as the cost of living rises, which in turn is leaving less of a financial buffer to manage the impacts of current and potential future interest rate hikes,” says Grant Bazian, president of MNP Ltd.

While fewer Canadians find themselves closer to insolvency than last quarter (down six percentage points to 46 per cent) – meaning they are $200 away or less from not being able to meet all of their financial obligations – the average Canadian has less money overall to spend at month-end as they pay more for life’s necessities.

The amount the average Canadian has left over at month-end continues to drop, decreasing $37 from the previous quarter to $654. Younger Canadians are being hit particularly hard; those aged 18-34 noticed the largest decrease in their average month-end finances, which dropped by $273 to $606.

“We are seeing a modest improvement in the number of Canadians who are at risk of insolvency since last quarter, however, it is important to note that nearly half of Canadians are still just $200 away from not being able to cover their bills and debt obligations. With less overall room in their budgets, any future increases to interest rates or the prices of everyday items could push individuals closer to insolvency,” says Bazian. “Younger Canadians are feeling the squeeze of inflation more than the rest, and will be more vulnerable to economic changes as a result.”

The mounting debt is nothing new, albeit more focused just now. In decline for decades, our standard of living has been propped up by massive amounts of borrowing – i.e. smoke and mirrors. Long gone are the days when rising productivity in the economy was shared among pretty much everyone – that was when the “rising tide lifts all boats” arguments still held water – replaced by most of the benefits going to the few.

While it’s true we have much more stuff than was the case in the more-prosperous postwar years, that’s an illusion brought on by there simply being more stuff to have. And readily available credit to buy it, and buy it now, patience no longer being a collective virtue.

That it’s an illusion is clear in the numbers. Average incomes have been more or less stagnant for some 40 years. Debt levels, however, have exploded. Quarter after quarter, we hit new levels of indebtedness, both total household debt (which includes mortgages on increasingly out-of-reach homes) and consumer debt (i.e. credit cards, lines of credit

Pandemic times notwithstanding, borrowing up, savings down – the trend isn’t new. Most alarmingly, we’re borrowing for everyday expenses – unable to pay the bills – not just for big-ticket items or even trinkets. Likewise, we’re raiding what savings we do have to cover day-to-day expenses.

Fuelled by more than our consumer society’s lust for trinkets, the debt load is increasingly tied to everyday purchases as we try to deal with our sinking standard of living.

Studies have repeatedly indicated a trend, with more than half of indebted Canadians are borrowing just to afford daily expenses like food, housing and transportation. For these people, there is little hope for improved financial condition. Single-parent families, retired Canadians, and those with annual household income of less than $50,000 face a bleak financial situation.

This is no accident, however, as the middle class has been under assault for ages.

Studies in Canada and the US show parents today are increasingly convinced their children will be less well off than they were. The figures back up that sentiment, as the great prosperity that flowed out of the postwar years in particular succumbs to constant attack.

The majority of us have seen real incomes decline. The gap between rich and poor is growing, even during the best of economic conditions. Canada’s richest one per cent are taking more of the gains from economic growth than ever before in recorded history.

The 1%ers have become the rallying point for a renewed look at inequalities and inequities in our economic system. Little wonder, as from the beginning of the Second World War to 1977, the income share of the richest one per cent  dropped from 14 per cent to 7.7 per cent; by 2007 they’d made a comeback, as the richest one per cent held 13.8 per cent of incomes; since the late 1970s, the richest one per cent has almost doubled its share of total income; the richest 0.1 per cent has almost tripled its share of total income; and the richest 0.01 per cent has more than quintupled its share of income.

The average earnings of the richest 10 per cent of Canada’s families raising children are now 82 times that earned by the poorest 10 per cent of families. That is approaching triple the ratio of 1976, when the ratio was around 31 times. The after-tax income gap has never been this high in at least 30 years, and it has been growing faster than ever since the late 1990s.

That trend has continued in earnest, as little was done to curb the excesses and outright criminality of the deregulation that spawned the 2008 global economic meltdown. The financial sector resumed business as usual, as seen by the large increase in the derivatives market – aka speculation. Instead of regulating the industry, eliminating some of the most egregious practices, governments in effect handed a blank cheque to those who caused the meltdown.

As with drops in corporate taxes and the  growth of consumer taxes, the goal is to shift the burden to you. This will continue transferring wealth to those already making the biggest gains while contributing to the debt loads of middle-class Canadians trying to maintain their position as real incomes – both pre- and after-tax – continue to fall.

Short of countering that trend, talk of helping the middle class is just so much lip service. Perhaps the pandemic-fuelled debt crisis – which includes massive amounts of government borrowing – will spark a real change, but that’s not something worth betting on, especially with borrowed money.