Generation Squeeze Campaign: A Better Generational Deal?
By Alex Atamanenko
CBC Radio recently aired an interesting interview on with Dr. Paul Kershaw, an associate professor in the College for Interdisciplinary Studies at UBC, who has started an initiative called Generation Squeeze. We’ve all either heard of or personally experienced the Boomerang Generation, where children we thought we had successfully launched into the world return to our family homes, usually for economic reasons. Limited job prospects and crippling student loan or other personal debt, coupled with the high cost of living, have made this option all too common among young people, and even young families.
The Generation Squeeze campaign expands the Boomerang phenomenon to include Canadians under age 45, and proposes three specific policy changes that governments can make to address the root causes of the income and time squeeze in young families’ lives.
What are some of the factors that have created Generation Squeeze in the first place? Dr. Kershaw points out that as a result of rising house prices since the 1970s, homeowners who are getting ready to retire have substantially increased their personal wealth. At the same time, real wages have not increased at a rate to keep pace with the cost of housing, so that the 20 percent house down payment that once took 5 years to save, now takes 15 years, on average. “What’s been good for our retiring parents is generally bad for us,” writes Kershaw. “Work and postponement are our coping mechanisms.”
Longer work hours and deferred home buying are not the only generational inequities. On a national level, federal and provincial governments spend just $12,000 on benefits and services for each Canadian under age 45, while spending nearly $45,000 on each retiree. Dr. Kershaw suggests that a better balance between generations could be achieved by shifting annual government spending on the under 45 cohort. The Generation Squeeze campaign proposes adjusting that spending from around $12,000 to $13,000, while maintaining spending for retirees at around $45,000.
The campaign advocates two specific policy areas that could benefit from the spending adjustment: making it more affordable for parents to spend time at home with a newborn; and building $10-a-day childcare. (As a side note, the creation of a national childcare strategy has been a key part of NDP policy for many years.)
Kershaw believes that these two policies could save the typical family around $50,000 over their children’s first five years, and support a third change: making 70-hour work weeks (down from 80 hours for two breadwinners) affordable for households.
“Saving young families $50,000 means they can also pay off student debt and reduce the time it takes to save a down payment on a home,” Kershaw writes. Or, if they choose to invest, $50,000 could net a substantial nest egg by the time Generation Squeeze is ready to retire.
Dr. Kershaw’s proposals are thought-provoking and challenge the current status quo on many levels. Food for thought.
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