Grappling with The Issue
SENIORS POPULATION AGING EVER FASTER IN CANADA, AND ACTION IS NEEDED
The aging of Canada’s labour force — and the aging of pretty much every fully industrialized country’s labour force, in an awkwardly synchronized way — is The Issue. Most of the arguing that goes on in a newspaper is necessarily going to be about smaller things, things that are a per cent of a per cent as important as our adaptation to the unique historical problem of the Baby Boomers. ( That is the accepted name for an alien horde that colonized our planet in a burst of fertility and found the Pill waiting for them like a progenystealing trap when they reached marriage age.)
A newspaper t hat al - located column- inches to arguments and data according to their true importance would mostly be a Journal of Ideas About Paying For Baby Boomer Retirements, with occasional sidebars on geopolitics, climate change, housing, and possibly avocado prices.
Nobody, of course, would touch such a newspaper. It is not just that a newspaper is entertainment above all else, and that getting shouty about the problematic food ingredient of the week makes a nice change for the reader. It is that we do not have a lot of good conscious ideas for addressing the Boomer problem. One would hope to hear it at least mentioned when we are talking about public pensions or pharmacare or ambitious defence-spending plans; everything fiscal is connected to The Issue. But we are largely leaving The Issue to work itself out.
We are, as a society, growing richer and healthier and abandoning tough physical labour, and we are praying that these incremental gains in collective welfare will blunt the worst torments of the demographic storm. This is not an unreasonable expectation, and, in fact, a new Statistics Canada study of labour- force aging suggests that it is partly panning out — so far.
We are already past the leading edge of Baby Boomer retirements, and StatCan researchers have taken a detailed look at the components of labour- force participation — the fraction of workers and would-be workers among those aged 15 and up. The overall participation rate is down 1.7 points over the past decade, from 67.4 per cent (in 2007) to 65.7 per cent ( 2016). It’s a fairly simple exercise to find out how much of this decline is due to population aging alone, merely by disaggregating the overall rate into rates for smaller age groups.
The answer to this question is not too surprising, even though it is technically “more than 100 per cent.” StatCan estimates that if the age distribution of Canada had held constant over the 2007-2016 period, the overall participation rate would have gone up almost a full point, to 68.3 per cent, and not down by 1.7 per cent. The particular age cohorts can be thought of as “working harder” or at least as hard as they did in 2007, but more of us have graduated into the softer- living age ranges, and our aging has more than counteracted our greater propensity to work, or to be looking for work.
This much comes as no surprise. The meat of the study comes in the use of Labour Force Survey micro- data to look at factors beyond simple aging, and at factors that interact with aging in complex ways. Another big thing that appears to influence labour force participation, for example, is education. People with more of it stay in the workforce longer, and the oldest part of the population is getting better-educated fast. In 1996, 68 per cent of Canadians aged 55 or more had nothing but a high school diploma. The figure now is 45 per cent and still dwindling.
That factor, by itself, is contributing to the demographic cushion. Obviously people with physically hard or repetitive jobs are in a bigger hurry to retire than people at desks and in off i ces. But what StatCan found was that labour- force participation in the 55- plus age range has also been increasing within the education brackets. Over the past decade the gains are actually greater for the less educated: participation rose by 12 percentage points among those with college certificates and trades tickets, and by 10 points for those with no more than a high school diploma.
For those with university degrees the increase was just five points. This is a hint that “non- compositional” effects on labour force participation are still sizable, whether it is a matter of people getting generally healthier and more satisfied in their careers, or just having longer, bigger mortgages to pay off ( StatCan’s boffins do not shy away from speculating about that, too). It may also be a warning that the labour- market benefits of more extensive education have limits: the low-hanging fruit will be gone soon.
We are going to need these “non- compositional effects” to keep paying off. Remember, the overall labour- force participation rate is already declining just because of age- composition effects. In the 2016 census there were 25 senior citizens aged 65+ for every 100 Canadians of working age ( 15- 64). That number captures The Issue in a nutshell: it is now rising at its fastest, with continued Baby Boomer retirements, and is expected to shoot past 40 about a decade from now. Then it will probably glide upward toward 50 in the 2050s. Let’s hope age is really just a number.