Baby boomers living good life while their children hit blockade
EDMONTON - We’ve heard it so often. In this wealthy province, there’s prosperity for all. Right?
Take another look, says Paul Kershaw. Alberta has a bad case of “generation squeeze,” just like every other province, even though the years of oil booms have given higher incomes to Albertans.
The growing gap between rich and poor in Canada gained recent attention with the Occupy Movement and, last week, an Organization for Economic Co-operation and Development study that confirmed inequality is rising in Canada.
But Kershaw, an associate professor in the Human Early Learning Partnership at the University of British Columbia, has a different take. While most analysts talk about a wage gap, Kershaw, who spoke recently in Edmonton, sees a generation gap. Aging boomers are facing retirement on the best incomes ever seen while their children are raising families on incomes that stalled in the 1970s.
It’s an approach critics say plays one generation against another. Kershaw is not blaming boomers.
“I’m just shining light on these trends so Canadians can see whether they like them,” says Kershaw, a professor of public policy in UBC’s College for Interdisciplinary studies, and expert on family policy.
He examined household incomes in 1976 and compared them with incomes of young couples today, and adjusted for inflation. In Canada, young couples today have household incomes only slightly higher — five per cent — than young couples in 1976. Median household income in 2010 was $68,580 up $3,000 from $65,360 in 1976.
Even that small increase isn’t because wages went up, but because women went into the workforce, he says. Wages actually stalled.
Meanwhile, housing costs rose an average 76 per cent and daycare costs these days are like a second mortgage — when you can find it.
Now, look at the baby boomers who are about to retire, Kershaw says.
At ages 55-64 in Alberta, they have incomes 33-per-cent higher than those in the same age group facing retirement in 1976. (Across Canada, that increase is 18 per cent over those facing retirement in 1970s).
In addition, boomers’ houses today are worth much more than houses in the 1970s, a factor that adds to the generational imbalance.
“This is about an entire generation raising children and falling behind. Basically, your standard of living depends on when you were born, and the boomers won the lottery on that front,” he says. “They were working when real wages were higher and housing was cheaper.”
“While the boomers retire richer than any generation before, their grandchildren are growing up in families that are poorer than they were.”
It’s not just about income, the younger generation is poorer also because it has less time at home with the family, he says. That time squeeze undermines a basic Canadian value – that time with family is fundamental, he says.
People age 24-45 work longer hours than any other age group “so you can’t blame a lazy generation” for the income decline, he says.
What Canada needs is to do is give time back to these parents, and Kershaw has a plan for that.
Wendy Armstrong, a health policy analyst with expertise in elder care, agrees that work and life stress has grown as two-income families became a requirement to maintain a middle-class lifestyle. These families also take on more debt, adding to stress, she notes.
But it’s not all roses for boomers when they move on to take their pensions, she says.
“While the pre-retirement income of many Albertans may be high, fewer retirees have private pensions in Alberta and investment income is limited,” says Armstrong.
Also, elder care is growing more costly, in fact many young families have to help provide for their aging parents, she says. “There’s no real trade off here. The real culprit is the dramatic drop in revenue to fund programs originally designed to support citizens through all stages of life,” Armstrong.
“We’re all going to be young parents and then get old. We need policy that works for everyone.”
That’s true, says Kershaw, but social policy needs some tweaking to level the generational playing field.
That might not be easy to accomplish.
Baby boomers living good life while their children hit blockade (external - login to view)