Current generation of young Canadians wealthiest ever: federal study

A "secret" study carried out by the federal Finance Department says that contrary to popular belief, young Canadians aren't struggling financially and have more wealth than any previous generation.

Internal government study finds Canadians 28 to 34 better off than any previous such generation

Far from being financially strapped, young Canadians are the wealthiest such generation ever, says a federal finance department report. (Shutterstock)

Canada's young adults are struggling financially, stuck in crappy McJobs, saddled with student debt and living in their parents' basements, right?

Wrong, says a new analysis from the federal Finance Department: 28- to 34-year-olds are actually the wealthiest such generation in Canadian history.

"The current generation of young Canadians is, on average, wealthier than previous generations of young Canadians," says the confidential report, though with some cautionary notes.

"Young Canadians … born in the first half of the 1980s had an average net worth of close to $93,000 per adult. In contrast, previous generations of young Canadians had an average net worth of about $60,000 per adult — 35 per cent less once adjusted for inflation."

The report says burgeoning real-estate is not by itself driving the increase in wealth. Canada's younger generations are saving just as much or more than their parents did.

Economist David Macdonald, with the Canadian Centre for Policy Alternatives, says the federal report is misleading, because wealth among youth is concentrated at the top and is creating a growing equality gap.
And these well-to-do, youthful Canadians are prospering far more than their counterparts in the United States, Britain and Australia, where "younger generations are no longer successively wealthier."

A heavily censored version of the Sept. 15, 2015, report, marked "SECRET," was obtained by CBC News under the Access to Information Act. The findings raise questions about the Liberal government's focus on helping young Canadians through difficult times, with Prime Minister Justin Trudeau himself taking on the youth portfolio in cabinet.

At least one critic, however, says the rosy findings mask a growing wealth inequality between the rich and everyone else. 

The authors do add a cautionary note, saying that because people will likely continue to live longer, the lifetime savings required for retirement may be larger than for previous generations.

Marked secret

The study is based on five publicly available wealth surveys carried out from 1977 to 2012. Finance Canada researchers say they carried out the work last summer on their own initiative, rather than responding to a request from then-finance minister Joe Oliver, because of a gap in existing research. The report was delivered to the deputy minister in the middle of the election campaign, they say, only because it was ready.

Another perhaps unexpected finding was that, unlike previous economic downturns, "the 2008 recession did not seem to affect much the wealth holdings and earning potential of today's generation of young middle-income Canadians." And income levels have been higher for these young people than for the youth of a previous generation.

[The economy is] a disaster for wealth inequality.- David Macdonald, Canadian Centre for Policy Alternatives

"The wealth of today's generation of young Canadians has increased at a much faster pace than their income in the 2000s." The study also says average student debt, often cited as a financial albatross, plays a "minor role" in wealth outcomes.

David Macdonald, a think-tank economist with the Canadian Centre for Policy Alternatives, says the finding of greater wealth among all youth is accurate — but much of that asset accumulation is happening only among the already wealthy.

"You need to be very careful of which youth are driving this trend," he said after reviewing the Finance Department report and comparing it with his own study from last June.

"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."

"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."

The Finance Canada report does acknowledge that younger wealth appears to be distributed unequally, with "stronger wealth gains at the top of the income distribution."

Youth still struggling?

Department officials didn't respond to questions about why the research was kept secret.

A 31-year-old online entrepreneur in Toronto, Alyssa Furtado, is an example of a successful young Canadian.

The founder of RateHub.ca, which since 2010 has helped consumers compare rates for mortgages, investments, savings, etc., Furtado graduated from university without debt, thanks to her parents, and saved for two years while first working in the corporate world.

"I'm definitely doing well, and I'm really happy where I'm at," she said in an interview. "But I'm always looking at the future."

Online entrepreneur Alyssa Furtado, 31, is a successful Toronto businesswoman but says she sees many in her generation struggling financially. (RateHub.ca)
She bought a house in downtown Toronto in 2014, and has retirement savings, but most of her wealth is tied up in RateHub.ca. Furtado acknowledges, however, that not all of her generation are doing as well, and she worries about a "growing gap" in wealth.

"I know a lot of young people that are still struggling, and that can be for a number of reasons — they've graduated with a lot of student debt, they're not able to find income that's high enough for their expectations."

Earlier this month, Trudeau marked his 100th day in office by announcing a Canada Summer Jobs Initiative, designed for students ages 15 to 30.

"The needs that our young people are facing in terms of unemployment, in terms of the need to develop work experience, the need to get good summer jobs is massive right now," Trudeau said.

"We needed to take seriously our responsibility to give young people the tools and the capacity to succeed."

Follow @DeanBeeby on Twitter


Dean Beeby

Senior reporter, Parliamentary Bureau

Dean Beeby is a CBC journalist, author and specialist in freedom-of-information laws. Follow him on Twitter: @DeanBeeby

With files from Susan Lunn and Jennifer Choi