More Canadians feeling financially stable in 2020

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December 7, 2020 – In the 6th and latest wave of In Search of the Middle Class: Class Identity and Financial Stability among Canadians, Pollara has found notable improvement in Canadians’ sentiments and perceptions of their class identity and, especially, financial stability compared to 2019. There is a more positive perspective emerging amongst the public, nearly aligning with the positivity seen in 2017.

Most (76%) Canadians continue to feel Middle Class on a “gut” level. Moreover, belief in social mobility is strong and notably improved. Two-in-three (66%) Canadians are confident that they can be Middle Class or higher through hard work, but parents are much more optimistic about their children’s future (79%). Although only half (53%) of the public are optimistic about the future of the Middle Class, this is the highest level of optimism we have recorded since we began this study in 2014.

A positive trend is also seen among Canadians’ personal financial situation -more are feeling financially secure (12%; +4) or report that they are getting ahead with some savings (41%; +10), while fewer say they are falling behind on their monthly expenses (8%; -7) or are just getting by with no savings (39%; -7). Indeed, compared to 2019, fewer Canadians feel their financial situation (43%; -7) and quality of life (38%; -9) have declined, or that they are having trouble making ends meet (35%; -14). Nevertheless, a slight majority of Canadians continue to feel their income has not kept pace with their cost of living – although again, far fewer are feeling this way compared to previous years (56%; -11 from 2019; -22 from 2018). 

  • Canadians’ improved sense of personal financial stability may initially appear counterintuitive, given the difficulties presented by the COVID-19 pandemic. However, pandemic-related factors may have contributed to this improved public sentiment among many Canadians. Specifically, COVID-19 restrictions have forced many Canadians to reduce consumer spending on luxuries, recreation and leisure, vacations, and more, resulting in higher savings rates for many (but not all) households. Indeed, BMO Capital Markets recently announced that Canadian households are currently sitting on more than $150 billion in savings. Additionally, the federal government has provided unprecedented income support to Canadians via programs such as the CERB and CRB. 

However, many Canadians have also face increased income and job instability due to COVID-19. Since the outbreak, one-in-ten have seen either themselves (13%) or a family member (10%) lose work hours/pay, and about one-in-sixteen report job losses for themselves (6%) or someone else in the household (6%). An additional two-in-ten Canadians feel it is likely that they or someone in their household will lose work hours/ pay or get laid off due to the pandemic.

Half (48%) say their personal financial situation and quality of life have declined since the outbreak, and a quarter (26%) say their household now carries new or more debt because of the pandemic. Among those who feel their financial situation has worsened, just one-in-ten (11%) expect it to return to pre-COVID levels or better in less than a year, while most feel it will take between 1 and 4 years. These findings align with recently-released Bank of Canada data which show that Canada’s years-long trend of household debt growth outpacing gross domestic product (GDP) made a sharp increase in the first half of 2020. Yet, recent Statistics Canada data demonstrates that the debt Canadians are carrying has shrunk relative to their disposable income compared to 2019, even as borrowing increased in the second quarter of 2020. However, as we see in our data, the pandemic-related increase in savings and disposable income which has helped to partially offset debtload is not found across all socioeconomic brackets. 

  • Indeed, lower income households (less than $50K) continue to feel financial strain, with two-thirds (67%) reporting that they are just getting by (53%) or are falling behind (14%). On the other hand, those earning $50K-75K annually are more likely to say they are getting ahead (43-46%) or feeling financially secure (12-14%). The $100K+ income households are feeling much more financially secure (20%) and getting ahead with some savings (55%), while none say they are falling behind.

Thus, the pandemic may be leading to increased polarization of Canada’s socioeconomic brackets, raising significant challenges for federal and provincial policymakers.

For more details and analysis, please download our report.   

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