Work more to maintain your standard of living

Contrary to popular belief, the disposable income of the middle class has risen sharply (+50%) since the early 2000s, even when inflation is taken into account. 

This is partly due to an increase in work effort. In fact, more people in each household need to work to maintain middle-class living standards. Although the number of people per household is falling (the average has gone from 4 people in 1976 to 3.3 in 2022), the number of people with employment income is rising. Among couples with children, the average has risen from 2.1 in 1976 to 2.6 in 2022. This may be explained by the increasing participation of women in the workforce, as well as by the rising proportion of young adults living with their parents.

Access to the middle class becomes more difficult for renters

Home ownership continues to be a defining feature of the middle class. In Quebec, the proportion of home-owning households in the middle class has even increased, rising from 66.1% in 1976 to 74.4% in 2022.

Proportionally fewer renter households belong to the middle class today than 50 years ago. They also face a number of challenges, particularly in terms of health. 

According to another OQI study³, more renters than homeowners perceive their health as poor or fair. Owning assets, particularly real estate assets, could act as a protective resource against various health problems.

The middle class is increasingly in debt

If the proportion of middle-class homeowners has risen despite an increasingly unaffordable housing market, it is largely because the middle class has taken on more debt.

Indeed, debt levels rose sharply between 1999 and 2019: the proportion of debt to disposable income for middle-class households increased from 82% to 120%. This means that in 2019, for every dollar of after-tax income, middle-class Quebecers owed $1.20. The proportion of middle-class people with a mortgage has also risen, from 36% in 1999 to 41% in 2019. 

While the level of debt among the middle class may seem worrying, it's important to remember that debt isn't necessarily a problem if it's not associated with repayment difficulties. In fact, mortgages are the main source of wealth accumulation for Quebec families⁴.

Redistribution essential to maintaining the middle class

In the absence of external intervention, market dynamics would have caused the Quebec middle class to shrink over the last fifty years. If we consider market income (e.g., income from employment, investments and private pension plans), the proportion of households belonging to the middle class would have fallen from 54% in 1976 to 48% in 2022. 

Instead, government transfers and taxation have enabled the middle class to grow in Quebec. Redistribution mechanisms have therefore favored its expansion, enabling many people who would otherwise have belonged to the underprivileged class to gain access to it. In return, the tax contribution of the middle class has increased slightly, with income tax rising from 15.6% of total adjusted income in 1976 to 17.6% in 2022.

Access to financial advice as a lever for strengthening the middle class

Quebec's middle class has undergone major transformations in recent decades. While it remains vigorous, its survival depends on a delicate balance between market dynamics, redistribution policies and changing lifestyles. 

In this context, access to financial advice can be an essential lever for strengthening the financial security of the middle class. A study by CIRANO's Claude Montmarquette and Alexandre Prud'homme reveals that people who use a financial services professional accumulate more assets on average than those who don't⁵. In 2018, households receiving financial advice for 15 years or more held assets worth, on average, 131% more than comparable households without an advisor. 

This positive effect is all the more pronounced among households with lower incomes. Yet it is precisely these households that are proportionally the least likely to have access to an advisor: only 36.1% of households earning less than $35,000 a year consult one, compared with 48.2% of those with annual incomes of $90,000 or more.