According to a Canada Department of Finance study, “the current generation of young Canadians is, on average, wealthier than previous generations of young Canadians.”
The report, published last year, was recently released in accordance with the Access to Information Act following a request by the CBC and was heavily redacted, being dubbed the “secret study.”
The study compared wealth surveys of households with a reference person aged 28-34 from 1977, 1984, 1999, 2005 and 2012, and found that those in the most recent group had the highest net worth. The study also states that “robust increases in average net worth of today’s generation of young Canadians is observed for all major income groups, but the lowest income groups [and that] a number of factors have benefitted younger cohorts.”
These findings have drawn heavy criticism from UBC professor Paul Kershaw, who said that the study does not tell the whole story. Kershaw, a policy professor in the UBC School of Population and Public Health, is the founder of Generation Squeeze, a lobby group for Canadians in their 40s and younger which focuses on highlighting the inequality between older and younger generations in Canada.
“The average home costs over $400,000. [In order] to gain this wealth, young adults [have] had to tolerate an extra $90,000 in mortgage debt. In other words, for every dollar of net housing wealth they accrued, young adults accepted $1.35 in additional mortgage,” explained Kershaw in an opinion piece he wrote for the Toronto Star.
The department of finance study itself may actually acknowledge this point as it features the phrase, “They have both higher debts and higher assets.” It is unclear to which generation this phrase is referring, however, as it is located in the middle of an otherwise completely redacted paragraph.
When asked, UBC students also had doubts about the study.
“It requires more financial capital to be ‘wealthy’ in today’s generation,” said Rachel Simpson, a second-year kinesiology major, citing increased costs of living and the added expectation of attending university.
“I do know a lot of people who have quite a bit of debt and can barely afford to pay for school and such,” said Michaela St. Cyr, also a second-year kinesiology major. “I haven’t really heard of this [study] and don’t necessarily think it’s true because I do find a lot of young people do not have a lot of money.”
According to Kershaw, the study failed to take a number of other factors into account, such as the lack of employee assisted pension plans, lower incomes for those who are university educated and the wealth gap’s effect on the findings.
Although whether these factors were addressed in the study is also unclear due to the heavy redactions, which included two of the eight key findings of the study.
Whatever the department of finance’s results though, it is clear that the issue is not as simple as one generation being wealthier than another.