The trouble with turning inequality into a generational war
I read the Maclean’s essay on generational inequality – the Generation that got it all -with mixed feelings, not least because I am quoted in it.
There is a great deal in it that I agree with.
A 37-year-old Toronto renter paying more than $1,000 for half of a small apartment while watching the price of food rise has every reason to wonder what happened. Housing costs have become absurd. Younger people who do not already own housing face barriers that many of us did not face at the same age. Statistics Canada confirms the basic divide: among families under 35, median net worth in 2023 was $457,100 for homeowners and just $44,000 for those without a principal residence.
That is a huge problem. Where I part company with the article is in deciding what kind of problem it is.
The essay begins with the author’s circumstances and then gradually enlarges the lens until the culprit becomes a generation. Boomers bought houses cheaply. Their houses appreciated. Governments spend heavily on seniors. OAS goes to some people who do not need it. Younger Canadians struggle. Therefore, the political bargain is transferring resources from young people who need them to older people who don’t.
There are truths in every step of that argument. I am less convinced by what those steps represent and what is left out.
Age the new proxy for class?
The first problem is that age has become a proxy for class.
It is certainly true that wealth is concentrated among older Canadians. It would be rather extraordinary if it weren’t. A 75-year-old has had fifty more years than a 25-year-old to accumulate assets, pay down a mortgage, contribute to a pension and receive investment returns. Statistics Canada reports that 61 per cent of net wealth is held by people 55 and older. But Statistics Canada also warns that the coming transfer of that wealth within families may worsen inequality.
That last point is crucial.
The child of the $2-million Toronto homeowner and the child of the 75-year-old renter may both be 35. They are not in the same economic generation in any useful sense.
One may eventually inherit a house, a cottage and an investment portfolio. The other may eventually inherit the cost of a funeral. Similarly, two 75-year-olds may have nothing economically in common except their birthdays.
This is why I become uncomfortable when a debate about inequality turns into a debate about generations. We begin with a very real inequality of assets and somehow end up taxing birth certificates.
OAS is not the problem
The second problem is the treatment of OAS.
The article correctly points out that spending on elderly benefits is large and growing. It is. In 2024-25, Ottawa paid $80.2 billion in OAS-program benefits to 7.5 million people, including $18.9 billion in GIS for 2.2 million.
But a large program is not necessarily an extravagant program.
We should remember why these programs became large while remembering that OAS is taxable and GIS is tax reportable.
Canada once had widespread poverty among older people. We built OAS, GIS and CPP, and poverty among seniors fell dramatically. Statistics Canada finds that the median after-tax income of older Canadians rose 65 per cent between 1976 and 1995, driven importantly by government transfers.
That is normally what we call successful social policy.
The success of the policy becomes evidence against it
The article acknowledges this history, but then something curious happens. The success of the policy becomes evidence against it. Seniors have lower poverty rates than younger Canadians, therefore perhaps we are spending too much on seniors.
I draw almost the opposite lesson.
If we know how to reduce poverty among old people, perhaps we should ask why we have become so bad at preventing it among younger people.
The latest Statistics Canada figures put the official poverty rate for seniors at 5.4 per cent in 2024. That is an achievement. It isn’t evidence that the money has gone to the wrong generation.
And averages conceal a great deal. In 2023, the poverty rate among unattached seniors was 11.5 per cent. The senior who owns a $2-million house in Toronto and the 78-year-old widow renting an apartment on OAS and GIS disappear into the same category called “seniors.”
That is precisely the sort of averaging that social policy should resist.
I have no objection to asking wealthy Canadians to pay more. In fact, I think they should.
I would look seriously at inheritances, very large capital gains and extreme concentrations of wealth. I have suggested a modest tax on net wealth above $20 million. I would also look at the tax treatment of very large gains on principal residences.
But notice what those measures do. They tax wealth. They do not tax income.
That distinction is important because the great Canadian wealth transfer now approaching will not be from old Canadians to young Canadians collectively. It will be from particular parents to particular children.
A young Canadian who inherits a million dollars does not become economically disadvantaged because she is 35. A senior living entirely on OAS and GIS does not become affluent because he is 75.
The generational frame has difficulty seeing either of them.
OAS is in plain sight
There is another problem with comparing government spending by age. We count OAS as spending on old people because the cheque has an age attached to it. But much of government does not arrive with an age label.
Public schools overwhelmingly benefit children and their families. Universities disproportionately benefit younger adults. Child benefits go to families raising children. Child care spending benefits young families. None of this is objectionable. It is what societies do.
Nor do I believe that grandchildren are subsidizing grandparents every time they go to a doctor.
Health spending rises steeply with age because illness rises steeply with age. We could certainly reduce public spending on seniors by spending less on cancer treatment, hip replacements, home care and long-term care. I doubt many Canadians would regard that as a triumph of generational fairness.
This gets us to what I think is the central mistake.
Confusing life cycles with inequality
People require different things from the public purse at different points in their lives.
Children require schools. Young families may require child care. Workers need Employment Insurance when work disappears. People with disabilities may require income and other supports. Old people require pensions and more health care.
A welfare state is not supposed to ensure that every age group receives precisely the same number of dollars every year.
It is supposed to pool risks across a lifetime.
I paid taxes that supported other people’s children. Other people are paying taxes while I am older. That isn’t evidence that one generation has defeated another. It is largely how social insurance works.
There is, however, a profound inequality running through all of this, and here I think the Maclean’s article is pointing toward something important. It is housing.
But again, I would describe the divide differently.
The great divide increasingly isn’t old versus young. It is inside generations: owner versus renter, inherited wealth versus no inherited wealth, secure employment versus precarious employment, substantial pension versus no pension, parents who can help versus parents who cannot.
Statistics Canada’s wealth data make this almost painfully clear. Among younger families, homeowners experienced enormous increases in net worth between 2019 and 2023 while renters gained very little by comparison.
That is not primarily a story about a 75-year-old taking something from a 35-year-old.
The real story is about assets
And unless we address it as an asset problem, today’s generational inequality will simply become tomorrow’s inherited inequality.
The wealthy boomer will eventually die. The house will not. It will pass to somebody younger.
Then what becomes of the generational analysis?
This is also why I am wary of proposals to claw OAS back aggressively based on income. Generation Squeeze currently proposes reducing OAS for retired couples once household income reaches $100,000, estimating savings of about $7 billion annually.
A $100,000 or $105,000 household income sounds affluent when placed beside the income of a struggling 30-year-old renter. But retirement is not simply working life with every Friday turned into Saturday.
Older people have stopped accumulating human capital. Many cannot return to work if their circumstances change. Savings have to last an unknowable number of years. A surviving spouse may suddenly lose part of the household income. Home care and long-term care can consume sums that would once have looked like considerable wealth.
And government already recovers OAS from higher-income individuals.
We can debate where that recovery should begin and how steep it should be. That is a perfectly legitimate tax-policy discussion.
But it should be a discussion about ability to pay, not a morality play in which an older Canadian receiving OAS has somehow taken the money from a young Canadian trying to buy a house.
Because that brings me back to the grocery store where the Maclean’s article begins.
The writer is standing there looking at an $11 carton of milk and a $14 package of chicken breasts.
I understand the anger.
But somewhere else in that same store may be a 78-year-old woman living on OAS and GIS looking at exactly the same chicken breasts and deciding that she cannot afford them either.
She did not cause the housing crisis. Taking money away from her will not build an apartment nor make it affordable.
And the 35-year-old standing beside her may someday inherit a $2-million house.
That is why I resist the language of generational warfare even while agreeing that younger Canadians have been badly served.
Their problem is real. Unaffordable housing is real. Student debt is real. Precarious work is real. Delayed family formation is real. The extraordinary appreciation of assets held disproportionately by older Canadians is real.
Let’s align solutions with the problems we face
But the remedy should follow the problem.
Tax wealth where wealth is the problem. Build housing where housing is the problem. Improve wages where wages are the problem. Help families where the costs of raising children are the problem. And maintain a decent income floor in old age because poverty in old age remains a problem too.
We don’t make Canada fairer to a struggling 35-year-old by making it less secure for a struggling 75-year-old.
The more interesting task — and admittedly the harder one — is to make it more secure for both.
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