Age, not gender, the new income divide in Canada: Conference Board

Age, not gender, the new income divide in Canada

By Special to MoneySense on September 23, 2014
Estimated reading time: 3 minutes

Conference Board urges companies to pay better wages

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OTTAWA – Age, not gender, is increasingly at the heart of income inequality in Canada, says a new study that warns economic growth and social stability will be at risk if companies don’t start paying better wages. The Conference Board of Canada findings suggest younger workers in Canada are making less money relative to their elders regardless of whether they’re male or female, individuals or couples, and both before and after tax. The average disposable income of Canadians between the ages of 50 and 54 is now 64 per cent higher than that of 25- to 29-year-olds, the report found. That’s up from 47 per cent in the mid-1980s. Conference Board vice-president David Stewart-Patterson, one of the study’s co-authors, said the economic think-tank was motivated to undertake the study due to a wealth of “anecdotal evidence” that suggests Canadian youth are falling behind economically. “We all know the stories — all our kids getting really good educations but too many of them are still stuck living in their parents’ basements, still in low-end service jobs that don’t really take advantage of all the education that we’ve paid for,” Stewart-Patterson said in an interview. “Our report provides some pretty persuasive, quantitative evidence that yeah, there really is a systemic pattern here. These aren’t just stories of individuals — there really is a pattern that’s unfolded over a prolonged period, a pattern which has some disturbing implications going forward.” He pointed out that top Canadian earners fought for principles of equal work for equal value, yet their children now face lower wages and reduced pension benefits even if they’re doing the same work at the same employer. The trend is particularly troubling, he added, because as the baby-boom generation moves into retirement, Canadians will be relying on a smaller share of the population to drive economic growth and sustain the tax base that supports public services. Canada therefore needs average employment incomes to rise, not fall behind, in order to pay for the increasing health-care costs of the baby-boomer generation, among a host of other expenses, Stewart-Patterson said. “We are moving into an era where people of working age are going to be increasingly scarce; that should put upward pressure on wages going forward,” he said. “And yet, if we look at the past 30 years … the real incomes that are being earned in the workplace by younger workers have barely budged after inflation. That creates an issue in how much governments can raise in tax revenues, how much can our economy grow?” He also warned that before long, the younger generation is going to “get fed up.” Andrew Langille, a Toronto-based labour lawyer and youth employment advocate, said the Conference Board study confirms what’s already known: Canada’s young people are falling behind. “Increasingly it’s clear that Canada doesn’t have a problem with a declining middle-class; rather it’s a problem of income and wealth inequality for younger generations,” he said. “From skyrocketing tuition to the increasing cost of home ownership to the prospect of stagnating wages and precarious work — young Canadians are increasingly on shaky financial footing and not able to get ahead.” Few politicians seem ready to tackle the problem, he added. “Unless politicians get serious about intergenerational equity, this issue has the potential to cause damaging social and economic consequences,” he said in an interview. “I really wonder who the boomers expect are going to buy their pretty houses.”