Don’t think about this in terms of a grand economy. Boil it down.
Say your business compensated its employees the same way this economy has for 30 years now – consistently widening the gap between what it paid in salary and offered in benefits to older employees vs. younger ones. There would be a mass exodus of that young talent to a more equitable business. If that opportunity was not found around the corner or across town, they would find it across the country or around the world. Your place of employment would be crippled and its future hollowed out, unable to support its pension and benefit commitments.
Our young alumni face that reality right now. Our country faces that reality in the near future.
That might be cause to talk about it as a nation.
Issued Tuesday, a Conference Board of Canada report, The Bucks Stop Here: Trends in Income Inequality between Generations, spelled out the issue clearly.
The income gap between older and younger workers has exploded over the past three decades across all demographics – women and men, individuals and couples, before and after tax. The average disposable income of Canadians between ages 50-54 is now 64 per cent higher than that of 25-29 year olds. That’s up from 47 per cent in the mid-1980s. In essence, companies are creating “two-tier workplaces” where they offer new hires lower pay and reduced benefits for the same job.
Based on 27 years of income tax data, the report shows a system full of unprecedented challenges for the nation’s younger generation of workers.
The current reality is one of historically high debt loads on youth, historically low interest rates and historically high home prices. Combine these with the tilt from the employer-supported retirement packages of the past, and the future doesn’t look much brighter.
No question, this generation of young Canadians will be the first in the nation’s history to find themselves worse off than their parents.
The report acknowledged what few leaders are willing to do:
“Younger workers will not be in a healthy financial position at retirement, even if their incomes do increase rapidly over time. And if they are stretching out the earlier periods of their adult lives by delaying entry into the workforce and having children, it also implies that they should be expecting to work longer and retire at an older age.”
Or, as my Generation X came to grips with long ago: There will be no retirement for most of us.
The report further warned “if today’s younger workers continue to see their earnings lag as their experience grows, social stability … could be severely challenged.”
You know, I wouldn’t blame this generation one bit for taking the first plane out bound for better opportunities.
Reading this report, I’m struck by the fact there was never any nebulous ‘skills gap’ created by universities educating too many students in the wrong subjects. That strawman has burned to the ground. The problem is a generational blockade, shortsighted and unwilling to yield. Because of that, Canada faces a potential talent drain as the economic system, so stacked against young workers, eventually chases them away.
Today, we are graduating the best and brightest minds we ever have. And if this generation can let go of mom and dad (a big ‘if,’ granted), they have the most globally transferable skill sets of any generation ever. They are smart, clever, plugged-in and mobile. Any country would be glad to have them.
And the only price would be a fair compensation environment.
That doesn’t seem like a high price. But it is one this report shows Canada has been unwilling to pay for a long time.