The Vanier Institute of the Family has issued its Current State of Canadian Family Finances for 2005. According to the latest Current State of Canadian Family Finances, families are now “cash-strapped”. If you take out inflation, the typical worker now earns only 10 cents more per hour than they did in 1991. In addition, the time worked per week declined by about an hour and a half over the period.
The result was predictable. On average, families have seen their incomes stagnate at about $55,500 during the first half of the decade. For the first time since the depression, households now have negative annual savings and they continue to build up larger and larger debt-loads. For many, this is not a pretty picture. More families are now “cash-strapped” and are struggling to make ends meet. The report suggests that many households are now house rich but cash-poor.
With the booming real-estate market and interest rates at historically low levels, Canadians have reduced their savings and taken on more debt, it notes. The days of cheap debt, however, are coming to an end, it says, predicting interest rates will continue to rise over the short-term at least. Total debt per household is now equal to 125 per cent of disposable incomes, up from 91 per cent in 1990, an increase which has helped push insolvencies to record levels and will continue to do so.
Several other key findings are included in the latest Vanier Institute of the Family report:
• Over one-quarter of wives with children now earn more than their husbands.
• Poverty has been virtually eliminated (1.7%) among married seniors.
• Most of the household asset growth has come from rising house prices and stock market gains.
• A special section on the “middle class” family found that this family is now contributing (income taxes less government transfers) about $1,500 on a net basis to other income groups. This is down sharply from a net contribution of $4,500 in 1990. About seven-out-of-ten middle-class households are homeowners with over half of these homeowners still carrying a mortgage.
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