“WEALTHIEST”
An interesting study came out the other day. It was an internal government research report comparing wealth accumulation trends by generation. Even more interesting than the document itself was the reporting of it. The title and opening of the main news story, and the only thing most people likely read, stated: “Current generation of young Canadians wealthiest ever: federal study.” The subtitle added, “Internal government study finds Canadians 28 to 34 better off than any previous such generation.” Now, to my mind there isn’t a scintilla of equivocation or subjectivity in these opening remarks. The title makes no suggestion there’s more to the story. As a result I was very surprised to find that much of the piece was essentially an extended caveat, and ultimately a correction, to the title – explaining that to interpret data as the title does would be grossly misleading.
The author, with the help of experts, explains how the average drastically distorts the real population picture. They share with us how most of the asset accumulation within this age cohort has actually gone to the already-wealthy, the richest 10% – who have doubled their net worth to an average of $500,000 – while the middle class has, on average, added virtually nothing when compared to the previous generation. The author writes, “as with other inequality trends, it’s the high end that’s driving up net worth for those in their 20s or 30s. The dramatic increase in net worth across almost all age groups since 1999 has been incredible for the top 10 per cent in those groups but a disaster for wealth inequality compared to say middle-class youth.” And that, for example, “of all the wealth held by those in their 20s, 70 per cent is held by the top 10 per cent and the bottom 70 per cent hold one per cent of that wealth.” Reading further you learn this difference actually represents the largest ever intra-generational wealth gap. And this revelation leads to a discussion of how, as a result, our economy can be seen as far less a generator of wealth and opportunity and much more a producer and exacerbator of both debt and inequality. (How sobering is that?)
Even noting all this distortion, absent and obscured still is the fact that living expenses are much higher today than for the previous generation. For example, in 1986 a family of five could get by with one $25 phone and a line that cost them $10 or $20 per month; whereas today each family member has their own $300 phone (with a life expectancy of three to five years) that each cost an additional $50-$100 per month to operate. Similarly, nobody had an internet connection before 1993, while today most folks do and their annual bill is around $500-$1,000. (And of course there are countless other unavoidable expenses: the doubling of gas prices and transportation costs; the newly created transaction fees and the exponential increase of existing ones; tuition and school fees that are orders of magnitude higher compared to minimum wage; housing price averages eight or ten times that of household incomes, compared to just four or five times just decades ago...) With the cost inflation of these services and utilities, saving anything at all is, quite obviously, much more difficult than in the past.
Further, the article also ignores other important facts we all know: that for this age group reliable employment, wages, and conditions, the likelihood of home ownership, and of people having children are all down dramatically over previous generations. So a thirty year old in 1986 with a salary and a stable job, a home and a pair of kids, with $10,000 in the bank is extraordinarily different than the same aged person today who is working longer hours for less pay and at a precarious job, who went to school twice as long and at four times the cost, who’s renting or living at home with their parents, still and has no kids, but has managed to put away the same $10,000, adjusted for inflation.
As an interesting anecdote, I know a number of teachers and real estate agents and folks with graduate degrees in this cohort, who all work multiple jobs on their weekends – as grocery store clerks, movers, gardeners, baristas, waitresses, and bartenders – because they can’t feed themselves or plan for the future on their day job alone. These are not people even dreaming of owning a home. Many of these folks don’t even own a car and can’t imagine ever being able to justify such a wild extravagance. And, on this trajectory, these people will probably never retire. This is a scenario, folks in their fifties and sixties tell me, was inconceivable a generation ago.
What's more, these same savings numbers are further distorted by the fact that some predict people in their twenties and thirties today will live on average five or ten years longer than their parents; and, therefore, need to work much more (maybe an additional ten years) and save significantly more than those in the past – if they aren’t prepared to live a profoundly diminished lifestyle.
Given all of this, how is it possible that the person who titled the article even read the piece? The article should have been titled “Current generation in trouble, federal study.” With a subtitle reading something like, “Internal government study suggests Canadians 28 to 34 worse off than any previous cohort.”
(And no, I do not belong to the age group in this study.)
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