Work & Career: Grey Nation
| March 30th, 2009
Canadians love Florida. The long, sandy beaches, the efficient interstate highways, the vast shopping centres and the bustling streets of ?multi-ethnic Miami are just a few of the Sunshine State’s prime attractions. But, obviously, most important to winter-weary Canadians is the reliably warm weather, in itself a draw that has made ?Florida one of our favourite foreign destinations.
Irrespective of how many Canadians visit or live temporarily in Florida
every year, familiarity with America’s most southern state is useful in discerning what lies ahead for Canada. No, I don’t think Canada’s near-term future includes hurricanes and rising sea levels, rampant illegal immigration or a meltdown ?in housing prices. Rather, Florida can serve as a snapshot of a fast-aging society; that is what makes ?it instructive — and alarming.
We all know or can easily imagine what it is like pulling off Florida’s Interstate 95 into a Denny’s restaurant to catch the early-bird special. The first thing one notices is not the oversized food portions or the occasional Confederate flag on a baseball cap; it is the advanced age of one’s fellow diners. One in five Floridians today is over the age of 65, and this greying of the state has already had a major impact on the quality of life of Florida’s poor and needy as well as on the future spending capacity of federal and state governments.
Florida has the ?third-highest per capita Medicare costs (Medicare being the U.S. health insurance program primarily for people over 65 years of age) in all of America. Prescription drug sales in Florida are also among the highest in the United States on a per capita basis, totaling some $10 billion annually. The endless ?health-themed malls, each chockablock with private clinics for cataract surgery or cancer treatments alongside supersized pharmacies, are the hallmarks of a society where advanced age is not just a demographic reality — but a very big business.
But the real challenge posed to policy-makers ?by Florida’s greying population is not spiralling health-care budgets. It is the lost revenue that results from a shrinking workforce. Most, perhaps all, of the elderly patrons at the Denny’s I’ve frequented were enjoying not only the meatloaf and coffee but?permanent retirement, too. Florida has the fewest people of working age of any state in the U.S. In other words, it has the least number of full-time workers whose taxes can be used to pay for the social entitlements and benefits of those aged 65 and over, ?or 18 and under. Even with access to federal Medicare funding and direct transfers for various social programs, public education and city infrastructure, even with cheap and primarily illegal immigrant labour, Florida’s diminishing workforce and declining tax revenues have forced its legislators to claw back health-care benefits and long-established social programs.
What does the greying of Florida today have to do with Canada’s future? Isn’t Canada, as our politicians always tell us, a “young country”? Isn’t one of the many benefits of our policy of sustained high immigration levels a youthful population that can pay the taxes that will be required to take care of the country’s fast-retiring baby boomers?
In 2020 — 11 short years from now — the average age of Canadians will be that of Floridians today. In addition to the Tim Hortons outlets filled with retirees enjoying soup-and-sandwich combos and the malls catering to a full range of goods and services for the elderly, Canada, like Florida, will face ballooning government budgets driven by the costs of health care, social services and pensions for senior citizens. To quote University du Quebec economist Pierre Fortin, “The passage of baby boomers to old age is not weather forecasting. It is for certain. And the amount of the tab that they are going to leave us with is both large and unavoidable.”
Like Florida, Canada will soon confront the financial consequences of a shrinking workforce. On Jan. 1, 2012, the first baby boomer born in Canada — part of one of the biggest postwar baby booms of any developed country — will retire. In subsequent years, the exodus of boomers from the workforce will accelerate. Unfortunately for many modern industrial nations, Canada included, population growth flattened after the last baby boomer was born in 1966 and then declined precipitously.
Today, Canadian women are giving birth, on average, to 1.5 babies each — half a child short of population replacement. By 2020, the whipsaw of ever more retirees and ever fewer people entering the workforce will begin to bite. Taking into account the fact that some seniors are working past the age of 65, conservative estimates project a four per cent drop in the overall employment level and an annual loss in tax revenues of $20 billion. Add the estimated increase of $30 billion in new spending on health care and social services for seniors to $20 billion in lost taxes, and you are close to $50 billion a year in new government spending. To put this amount in context, if governments had to plug an equivalent hole in their budgets today, they would have to levy $2,300 in new taxes annually on every adult Canadian.
If we cast our minds ahead to the year 2035, just ?as I am reaching the age of retirement and starting to look forward to spending some of my winters on a beach in Florida (climate change and sea levels permitting), it is all but inevitable that most, if not all, of the entitlements that make retirement possible today for the vast majority of 65-year-old Canadians will have disappeared. More precisely, they will have been consumed by the growing disparity between the number of full-time tax-paying employees and those too aged or infirm to work as the country tries to get by with having only two workers for every retiree, as compared with four workers today.
The one surefire way to increase the size of Canada’s workforce is immigration. Thanks to increased numbers of new arrivals, the country’s population growth — a blistering 5.4 per cent over the past five years — is currently the highest among the G8 industrialized countries. By bringing in some quarter million immigrants, or 0.8 per cent of Canada’s entire adult population, each year, we are more than making up for the population deficit created by our flaccid national birth rate.
According to the 2006 census data, only 400,000 Canadians were born in Canada between 2001 and 2006, compared with 1.2 million immigrants settling in the country during the same period. So we seem to have found the silver bullet. As more Canadians reach the age of 65 and jet off to Florida or Arizona for the winter, we simply adjust immigration rates to ensure we continue to have four workers for every one retiree. To some extent, this is already happening. By 2010, newcomers will account for ?all of the country’s net workforce growth.
But is immigration really the cure-all for Canada’s demographic woes and the answer to driving down the average age of our population? Probably not. It turns out that newcomers are on average only slightly younger than the resident population.
Research shows conclusively that there is no significant difference between the age structure of the quarter million immigrants who came to Canada in 2008 and the population as a whole. Moreover, the trend is for the average age of newcomers to increase as the populations of those countries that send immigrants to Canada, such as China, Korea and the nations of Eastern Europe, also age. By virtue of their similar age and cultural attitudes about reproduction, women who immigrate to Canada have fertility rates that are not so different from the national average.
This is not to criticize immigration as a strategy for coping with an aging population. Welcoming large numbers of people to Canada is the most effective way of sustaining a national workforce and a tax base capable of supporting the various benefits that make the country a fair and humane place to live. But we do have to bear in mind the implications of the average age and the birth rates of recent newcomers and resident Canadians being similar. The fact is that if Canada wants to use immigration to maintain its current ratio of four workers for every one retiree from now through to 2030, then we should immediately increase our annual intake of newcomers from the current 260,000 individuals to approximately one million.
Economists calculate we would need to keep immigration levels at or above 3.5 per cent of the total Canadian population every year in order to continue to have four workers paying taxes for every one retiree by 2030. In other words, to keep the age structure of our population constant and our much-loved entitlements flowing, we as a country would have to increase our population from 33 million to some 57 million people — almost all through immigration — by 2020, a mere 11 years hence.
Mass immigration on this scale would transform the country. Remember that Montreal, Toronto and Vancouver together already absorb 70 per cent of Canada’s total annual immigration. Canada’s urban population numbers would soar into the stratosphere or, more precisely, the country’s suburbs would explode while growth in city cores stalled or reversed itself. This trend is already evident in cities such as Surrey and Kelowna, which have enjoyed growth rates twice that of Vancouver in recent years. In Ontario, the shift is even more pronounced, with the old city ?of Toronto registering a one per cent population growth between 2001 and 2006 while outlying suburban centres such as the once-rural town of Milton have experienced booming growth rates ?of more than 70 per cent.
In addition to the overwhelming social impact of mass immigration to the edge cities surrounding the country’s largest urban centres, consider the very different economic circumstances newcomers to Canada will face, compared with earlier arrivals. Recent studies show that despite a decade of strong economic growth, fully one in three recent immigrants experiences a state of chronic low income, circumstances defined as a family of four living on $26,800 or less annually. Thanks to pervasive barriers to skills accreditation and an immigration system out of sync with labour markets, we are failing to create the kinds of economic opportunities afforded to previous generations of newcomers.
If we look ahead to a future where the country takes in a million or more souls a year and plunks them down in sprawling urban centres, it is not hard to imagine megacities such as Toronto and Vancouver transforming themselves, within a generation, into what journalist and author Daniel Stoffman has described as “So Paolos of the North.” In vast suburb-ringed cities, growing numbers of economically dispossessed newcomers will have to fend as best they can while the country’s public institutions, including its once-prized health-care and social services systems, are strained as never before.
Despite being provocative here with an extreme scenario of a million-plus immigrants a year, I want to emphasize the point that Canada’s demographic die was cast in 1966 when the last boomer was born and birth rates started to decline. The most politically palatable and effective short-term solution to the country’s shrinking workforce and tax base is dramatically higher immigration levels. They could well become a reality at the very time that the country is in thrall to the post-national vision of a Canada that has declared a strong sense of national identity and widely shared civic values as pass.
The relentless greying of Canada will pit the young against the old and newcomers against the long-settled; it will place many of the country’s cherished institutions and social conventions in jeopardy and endanger our long-term prosperity. Add mass immigration to the mix of intercultural and intergenerational tensions coursing through ?the body politic, and it quickly becomes apparent ?how vital it is that Canadians maintain high levels of social cohesion. Far from being anachronistic or impeding the country’s development, assuming substantive civic obligations, adopting shared ?values and mastering a body of common cultural knowledge will be essential to achieving the consensus and solidarity required to survive the divisive ?debates and hard choices that lie ahead.
Rudyard Griffiths is the co-founder of the Dominion Institute and the author of Who We Are: A Citizen’s Manifesto (Douglas & McIntyre, 2009), from which this article is excerpted.