May 15th, 2007
Blurb: Beyond well-known pluses such as love and companionship, finding a mate is increasingly good for your wallet too.
The financial benefits of coupling up
The arguments for finding a life partner have been well-made over the years. Poets, priests, singers and our mothers have all had their say. Increasingly though, it looks like our accountants should get in the picture too.
There have always been financial advantages to getting married. Historians now speculate that the intense division of labour among human couples, in which men did much of the hunting and women took care of households, was a key reason that humans outlasted the Neanderthals. Even today, it doesn’t take a genius to recognize that if two people share an apartment, instead of each having their own, they only have to pay rent once a month instead of twice.
However during the past few years, a variety of trends, ranging from rising housing prices to the increasing income inequality are making the financial premiums for getting married more attractive than ever.
Rising income inequality: married couples big winners
According to a study released by Statistics Canada earlier this week, the increasing share of families with two highly educated earners is one of the main reasons driving family market income inequality. The study claims that between 1989 and 2004, average after-tax family income in the top 10 percent bracket rose by a stunning 24 percent, but for the bottom 10 percent, after tax incomes fell by 8 percent. Furthermore, during 2004 the top 10 percent of families had after-tax incomes that were 8.9 times as large as the bottom 10 percent, compared to just 6.6 times in 1989.
The Statistics Canada study also dramatically illustrates the shrinking of Canada’s middle class. The researchers defined “middle class” as families whose incomes were between 75 percent and 150 percent of median incomes during the periods measured. Using that definition, the number of Canadians who could rightfully call themselves middle class slipped from 52.1 percent of the population during 1989 to 47.3 percent by 2004.
Of those who left the middle class, the 2.6 percentage points were comprised of those who moved into the upper income group. The other group, comprising 2.0 percentage points of the total population slipped into the lower income category. Although researchers are not sure of the precise reasons for the trend, there is a good deal of evidence that the increasing flow of highly educated and thus highly-paid women into the workforce is sharply boosting the earning powers of couples in the higher income groups.
Want a home? Try a singles’ bar.
If you want to own your own home, these days, coupling up is often no longer an option. It is becoming a downright must. During the past decade, residential real estate prices have skyrocketed. Canadian house prices have risen by a stunning 69 percent during the period between 1997 and 2006. The average Canadian home sold during the past few months traded at close to $300,000, a level that is increasingly out of the range of ordinary families.
In some markets, the burden for first time home buyers is even higher. For example, according to the Canadian Real Estate Association, the average home sold via its MLS system in the Vancouver market during March of this year sold for a breathtaking $554,000.
While handling payments on the kind of mortgage required to buy one of those properties may be challenging for couples, for many individuals it’s downright impossible. If you are unmarried and live in one of Canada’s hotter real estate markets and want to buy a home, forget about going to a real estate agent’s office. You’d be better off heading to a singles’ bar instead.
Family incomes up, but for singles they stagnated
While the Statistics Canada income distribution study only tracks trends up until 2004, other data recently released by the organization indicate that the trend may well have continue into 2005. According to Statscan, median after tax income for families with two or more people rose by 1.6 percent during 2005 to $56,000 after adjusting for inflation, but stagnated for unattached individuals.
That said, coupling up is no panacea. Divorce rates remain extremely high in Canada. Furthermore those statistics do not include the break-ups of couples that never walked down the aisle top begin with.
That said, if putting up with a little complaining from a nagging partner, means you get to watch a flat screen TV in downtown Toronto, rather than a tube-TV in a dump an hour’s drive out of town, the yelling just might not seem so bad. If it does, you can just turn up the volume.
Peter Diekmeyer (email@example.com) is a Montreal-based business and economics writer.
|© 2007 Peter Diekmeyer Communications Inc.|