Income inequality: riches ripen with age

Study shows gap between older working Canadians and younger workers wider than three decades ago

The Conference Board of Canada
A chart from The Conference Board of Canada’s report “The Buck Stops Here.” The data, collected from Canada Revenue Agency, shows the difference in income (in per cent) between older and younger age cohorts. (Source: The Conference Board of Canada)

According to a study, the new income divide in our society is age, not gender. Reports by the Conference Board of Canada say that an earnings gap has been steadily expanding over the past three decades between younger and older workers.

The report, titled The Bucks Stop Here: Trends in Income Inequality between Generations, used 27 years of tax return data collected by the Canada Revenue Agency (CRA) between 1984 and 2010. The study finds that Canadians aged 50 to 54 have a disposable income 64 per cent higher than that of 25-to-29 year olds, an increase of 17 per cent since the mid-1980s.

“Our children now face lower wages and reduced pension benefits even for the same work at the same employer,” said David Stewart-Patterson, Vice President of the Conference Board and a co-author of the report. “That could be a big problem for our economy. As boomers retire, Canada is going to be depending on a smaller share of the population to earn money and to pay the taxes to support public services like healthcare.”

While it is normal that a higher salary comes with more experience in the field, the starting wage for young workers is low, even as couples. An average young couple still earned less income compared to older working couples than they would have 20 years ago. As of now, inequality in income distribution in Canada is greater than many peer countries.

“This is a trend that can have serious consequences, for employers, for labour unions, for governments and for communities,” Stewart-Patterson said. “If the earnings of younger workers continue to lag, we could also see growing conflict within our society. A new divide between the older-haves, and the younger have-nots.”

The report can be downloaded for free at www.conferenceboard.ca/e-library/default.aspx.