They live in their parents’ basement, they work part-time or are underemployed, and they’re paying off student loans well into their 30s.

All those stories about the younger generation are often true, says a report from the Conference Board of Canada. For the first time, the generation now aged 25 to 29 risks being poorer than their parents.

The Bucks Stop Here focuses on the income gaps between older and younger generations based on an analysis of Canada Revenue Agency tax data from 1984 to 2010.

Researchers found the average disposable income of Canadians between the ages of 50 and 54 is now 64 per cent higher than that of 25- to 29-year-olds, up from 47 per cent in the mid-1980s.

While the income gap between men and women was narrowing over the last 30 years, the gap between older and younger generations has widened significantly.

'We all know the stories — all our kids getting really good educations but too many of them are still stuck living in their parents' basements, still in low-end service jobs that don't really take advantage of all the education that we've paid for.' — David Stewart-Patterson, Conference Board of Canada

"Age rather than gender is becoming the new divide in our society," said David Stewart-Patterson, Conference Board vice-president.

"The Canadian generation at the top of the income heap today fought long and hard for principles like equal pay for work of equal value, but their children now face lower wages and reduced pension benefits even for the same work at the same employer," said Stewart-Patterson, who co-authored the report.

The income gap for women expanded more quickly than for men, from just nine per cent in 1984 to 43 per cent in 2010. That difference is complicated by the enormous increase of women in the workplace in the same period and the gains in income for women as they moved into higher paying fields.  

For men, the gap between younger and older generations expanded from 53 per cent to 71 per cent. That difference reflects the poor work prospects for younger men.

"We all know the stories — all our kids getting really good educations but too many of them are still stuck living in their parents' basements, still in low-end service jobs that don't really take advantage of all the education that we've paid for," Stewart-Patterson said.

Fewer workers as boomers retire

"Our report provides some pretty persuasive, quantitative evidence that, yeah, there really is a systemic pattern here."

As the baby boom generation moves into retirement, Canadians will be relying on a smaller share of the population to sustain the tax base that supports public services such as health care.

Canada therefore needs average employment incomes to rise, not fall behind, Stewart-Patterson said.

"We are moving into an era where people of working age are going to be increasingly scarce; that should put upward pressure on wages going forward," he said.

"And yet, if we look at the past 30 years ... the real incomes that are being earned in the workplace by younger workers have barely budged after inflation. That creates an issue in how much governments can raise in tax revenues, how much can our economy grow?"

The report also discovered:

  • Incomes have become more unevenly distributed over the past 20 years.
  • Canada’s income gap is wider than some comparable countries.
  • There is a growing gap within age cohorts.

With files from The Canadian Press