The Vanishing Urban Middle

A little while ago I read an article from the Globe and Mail about trends in urban demographics in Toronto. You can read the article for yourself here. The gist of the article is as follows: Toronto is increasingly being separated into two distinct groups – the very wealthy and the poor. As the article puts it, Toronto is becoming a place of extremes.

Toronto is actually late to this particular party. It is a pattern that is occurring in virtually every major city in the world, and for all I know there are no examples of where it is not occurring. Cities were once a place where a comfortable middle class could exist. Changes in the global economy has led to a greater polarization in the population. The mega-rich, or even extravagantly wealthy, are encroaching in on more and more neighbourhoods. Part of the reason for this is population pressures, and policy.

First, Toronto has reached its boundaries. There are no great stretches of undeveloped city left. The only solution, logically, for Toronto is to increase densities. More people are competing for the same resource – space. Housing is largely left to the free market which results in rising prices as supply is relatively fixed while demand increases. It takes time to build new apartment buildings and skyscrapers and to convert suburbs into more urban environments.

The result is that a typical middle income Canadian family cannot afford to buy a home, or similar accommodation in Toronto. The house I live in is worth about $200,000 in St. Catharines. The same house in Brampton, in the neighbourhood I grew up in would be worth probably about $350,000. I can assume that a home like this would cost something like double that in inner Toronto. Therefore, middle class people move out of the cities and into the suburbs, where schools are better, crime is lower, traffic is better and there is more space for less cost. I should also add that taxes are lower and regulations are less for the more conservative reader.

That explains why the cities are becoming richer in some neighbourhoods, but why is Toronto becoming poorer in others. The people with lower incomes cannot afford to leave the city. In the city they are provided with a great deal of government subsidization in the forms of public transit, rent controls, and plentiful services. Social housing projects and programs allow these people access to the shelter they need. It also puts them nearby sources of work, since, after all, they may not be wealthy enough to commute in other forms.

The political, economic and social impacts of these trends on our cities are difficult to understand. A city is only as healthy as its populace, and I have a hard time understanding how having a city divided into two starkly different groups, with radically different interests and socio-economic statuses is beneficial. Increasingly businesses, individuals, property owners will be taxed harder and harder to fend off poverty and provide services. Simultaneously the inner core will be dedicated to the luxury and pleasure of the upper echelons of society.

I believe cities need a vibrant middle class to succeed. I do not know what kind of policies can be put in place to maintain the middle class in the core of cities, not just Toronto. In the future I will talk about social housing policy, which is probably the only feasible way to confront this issue.