The Globe & Mail: Merit, luck or extraction? Revisiting the stories we tell about our financial status
Originally published in The Globe & Mail on November 11, 2023
Did I earn what I have because I worked hard and invested wisely?
Did I get lucky, because hard work was rewarded more when I was young than it is now?
Has some of what I’ve gained been extracted at the expense of those who follow, because they inherit little housing affordability and too much pollution?
As a 49-year-old homeowner in B.C., for me the answer is “yes” to all three questions.
When I tell my story, I unsettle some older people who resist answering “yes” to the second or third questions. Nobody likes to be challenged about whether they earned all that they have. Some get defensive when I talk about winning the “lottery of timing” by becoming a homeowner years ago, or when I raise concerns that younger Canadians inherit unaffordability and climate problems in which I’m partly implicated. Breaking through this defensiveness is necessary if Canada is to work once again for young and old alike.
For example, during a recent radio interview, I shared that I’ve gained $1.5-million in equity from the increased value of my home over the last 19 years. I described this as an “easy” wealth windfall by comparison with the long hours I put in at my day job.
One listener wrote a frustrated reply. “Easily acquired wealth? … Allow me to outline how we (married seniors) acquired our current financial status.”
I share his note, along with my reactions, because we need more intergenerational empathy – especially this week, which marks the inaugural worldwide day for generational fairness.
The listener’s note begins: “We both worked and paid taxes for 40 years+.”
Great, I say. I admire hard work. But the data are clear. Younger people today often need to work harder than those who started in the 1970s. They go to postsecondary institutions more in search of jobs that pay less, after adjusting for inflation. Plus, they pay more in tuition for the privilege.
“We NEVER applied for or received welfare or any government subsidies.”
While they never needed employment insurance or similar programs, publicly funded medical care and old-age security systems are Canada’s biggest “government subsidies.” As I’ve published in the Canadian Tax Journal, any retiree today should be thanking younger generations for contributing 14- to 27-per-cent more to those programs now than today’s retirees contributed when they were younger.
“We purchased our house with hard-earned after-tax dollars and ongoing sweat equity to maintain that house.”
Millions of younger Canadians wish they could apply their sweat equity to maintain a home of their own. Instead, they start out a time when home ownership is further out of reach. It now takes the typical young Canadian 17 years of full-time work to save a 20-per-cent down payment on an average priced home. In the mid-1970s through the 80s, it took five to six years.
“We made modest savings contributions over the decades.”
Well done. But please acknowledge that surging home values make it much harder for younger people to save today because the costs of rent or home ownership consume so much more of their paycheque. All the while, rising home values, especially in B.C .and Ontario, deliver wealth windfalls to older homeowners like us.
“We raised three children who are all employed and paying taxes.”
I applaud his parenting. I also wonder how he feels when Statistics Canada reports that one in three Canadians in their twenties judge they can’t afford to start a family because housing costs have left their wages behind?
“We generously give to charity annually.”
Such generosity is admirable. Now is the time to channel some of that goodwill in service of being a good ancestor by revisiting the role that merit, luck and extraction played in our current finances. Because Canada desperately needs securely housed, older residents to join in a quest to redeem our country’s legacy.
A quest to restore what’s been lost in our economy for many younger residents – the prospect that a good home is in reach for what hard work can earn.
Repair what’s been broken – our housing system.
And build anew what has never been good enough – our stewardship of the environment.
You can join this quest by calling for a federal rapid response task force on generational fairness. One that fixes the policy mistakes of past administrations so that hard work pays off again for younger Canadians as it did for previous generations.
Dr. Paul Kershaw is Founder, Lead Researcher & Executive Chair of Generation Squeeze. He is a policy professor in the UBC School of Population and Public Health, and Director of the UBC Masters of Public Health program.