Updated on January 11, 2012
Young families work harder, earn less in The Best Place on Earth
Increasing housing costs and stagnant earnings are putting young families on an economic treadmill, according to new research by UBC professor Paul Kerhsaw. They can’t get ahead no matter how hard they work.
The problem is nation-wide, but the worst right here in BC, Kershaw says, which until recently was proclaimed The Best Place on Earth. His solution: provincial childcare programs to reduce the cost of raising a family. Will business leaders heed his call? In this recent column for Business in Vancouver, I express my doubts.
Hard-pressed BC families, whose income stagnated during the boom years no matter how hard they worked, are about to get a brutal wake-up call.
With living costs rising sharply, their wages seem certain to decline in real terms.
This stark reality poses a direct challenge to business leaders who championed low wage strategies to stimulate the economy — including reductions in employment standards and union rights — as the Gordon Campbell Liberals took power a decade ago.
“We have a hamster-wheel problem,” says UBC professor Paul Kershaw, “where the wheel is turning and turning but we’re not going anywhere.”
No wonder the Occupy Vancouver protesters found surprising support in public opinion polls taken as the movement gained momentum. The gap between the rich and the rest is widening, no matter how hard the rest are working.
Young BC families in the under 45-age bracket have seen their wages flatline since the 1970s, Kershaw says, with household incomes in this group actually declining six percent since 1976.
This despite the massive increase of women in the job market holding down a second job to help the family make ends meet.
It was no use.
Housing costs rose 149 percent during the same period. Without childcare or decent parental leave programs, young parents shelled out the equivalent of a second mortgage to cover babysitting and other parenting costs.
And don’t tell them hard work will help them get ahead: Canadian workers typically work 300 hours a year – almost eight full weeks annually – more than their Dutch or German equals and have nothing to show for it.
It’s a different story for the over-45 generation, Kershaw found, whose pension earnings and real estate equity will shelter them in their twilight years.
Across Canada, average household income actually increased $35,000 since 1976, Kershaw says, but none of it went to young families.
This “generational tension” uncovered by Kershaw is a Canada-wide phenomenon, but by far the worst right here in The Best Place On Earth.
“No other province in Canada reports a decrease in the average young couples’
household income,” Kershaw wrote in a September report.
“Nor does any other province report as large an increase in the cost of housing as does B.C. Together, these trends reveal that the standard of living for the generation raising kids has deteriorated more in B.C. than any other part of the country.”
Now things are about to get worse.
Average weekly earning in BC declined .1 percent in September after nine months of relative stagnation, according to Statistics Canada.
With wages declining .3 percent on a national basis, labour economists expect the situation to worsen, not improve.
Numbers this bad will set the scene for a rough round of collective bargaining during the coming year.
But Kershaw warns that even massive breakthroughs by unions – an unlikely prospect – would not be sufficient to give hard-pressed young families a breather.
He’s championing a New Deal for Families to redress the imbalance by focusing national and provincial policy changes at the root of the problem.
He wants to help young families avoid the huge costs they are bearing to raise their children. (Action on housing costs is another area he believes will take federal and provincial action.)
A national child care program and dramatic expansion of parental leave provisions would provide immediate relief, he says.
Flextime programs would ease the pressure as well, giving parents more time at home. He pegs the cost of his ideas at $22 billion on a national basis.
The benefits for employers?
Kershaw has calculated that the economy is already paying $4 billion a year in lost productivity as beleaguered parents phone in sick or simply drop out of the workforce to juggle economic and family pressures.
Are business leaders ready to look at Kershaw’s solutions? Don’t hold your breath.