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Todd: Population growth squeezing Canada’s young like never before

Opinion: “We have never seen the young adult population growing anywhere nearly this fast before,” says bank economist Douglas Porter. Many are feeling pressure on housing, jobs and family.

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Wondering why rents in Canada are breaking records?

The Bank of Montreal’s chief economist, Douglas Porter, says there is “zero mystery.”

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The population of people 20-to-29-years-old in Canada has suddenly shot up 6.2 per cent in a year. That’s nearly double Canada’s recent overall population jump, which is also breaking records.

“We have never seen the young adult population growing anywhere nearly this fast before,” Porter says. “In the near term, this puts pressure on rents. In the medium term, it will put pressure on home prices. No blame, just fact.”

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Young adults in Canada are being squeezed, perhaps like never before. And not only in regard to rent and housing, but also sometimes in the workplace. Their cohort has experienced an unprecedented population boom.

It’s fuelled almost entirely by Ottawa’s immigration policy, which welcomed a record 1.3 million permanent residents, international students and guest workers in the one-year period up to September of last year. The largest group among the newcomers are young adults.

Statistics Canada put this generation in the spotlight a week ago when it reported that for the first time millennials, people between ages 28 and 43, now outnumber baby boomers, the postwar generation now in their 60s and 70s.

“Generally speaking, the age structure of a population changes little year-over-year,” StatCan said. “It is therefore rare for immigration to cause a sudden change in the age structure of a population. However, from July 1, 2022, to July 1, 2023, the country welcomed a sufficiently large number of immigrants to have a significant impact.

“This change may benefit Canadian society by increasing the size of the working-age population. However, the high number of new working-age Canadians may also put pressure on the delivery of services to the population, housing, transportation and infrastructure.”

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BMO chief economist Douglas Porter says the sudden extreme jump in the number of people in their 20s in Canada explains the rental crisis. It also impacts housing prices.

Indeed, that pressure is particularly striking younger generations, says Don Wright, former head of B.C.’s civil service. Last year Wright produced a paper titled: “Isn’t it time we stopped squeezing Canadians under the age of 40?”

His research detailed how Canada’s millennial generation has been “struggling to get launched onto the pathway to something approximating the middle-class life — leaving the nest, partnering, acquiring family suitable housing and having children.”

An economist who was president of the B.C. Institute of Technology before becoming deputy minister to former NDP premier John Horgan, Wright provided data showing more Canadian young adults are living with a parent. Fewer own homes. And the birthrate has dropped to 1.3 children per woman.

In light of this month’s StatCan report on millennials, Wright questioned politicians’ decades-long push to offset baby boomers leaving the workforce by bringing in more working-age people through international migration, at a rate now five times higher than other Western democracies.

Indeed, Wright says the StatCan report, which received wide media attention, actually plays down the size of the country’s millennium generation. It misses, he says, how Canada’s baby boom contingent was surpassed by millennials long ago.

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Wright was taken aback by how the StatCan study arithmetically “stacked the deck.” It defined the baby boom generation as those born in a 20-year span (from 1946 to 1965). But it compared that with a shorter 15-year span for millennials (those born between 1981 and 1996).

“If you actually compare apples to apples (equal 20-year spans), millennials exceeded the baby boom generation some time ago — in 2013,” Wright said.

But that hasn’t stopped politicians and business people from constantly raising the spectre of aging baby boomers, with Ottawa making it the primary rationale for “supercharged levels of immigration,” Wright said.

“Sometimes I talk about the ‘baby boom derangement syndrome.’ So much of public policy has been driven by this apprehended catastrophe of the baby boom retiring and then putting great demands on the public purse,” he said. The trouble is it’s creating a population bubble of people under 40.

“We should not be at all surprised that all of a sudden housing markets are under great stress now. It’s absurd that politicians pretend to be surprised by it,” Wright said, pointing to a February report revealing then-Immigration Minister Sean Fraser had been warned that Canada was accepting newcomers at a far higher rate than houses could be built. Early last year Wright predicted this would affect public opinion about immigration, and that has been borne out.

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“What Ottawa is doing is making it damn difficult for young people to get a proper start in life,” Wright said. “That’s primarily in the housing market, but in the labour market as well, because you’re competing with a lot of people your age.”

Chart shows that the number of Gen Z and millennials in Canada is bolstered by a large volume of new permanent residents (blue). (Source: Don Wright)
Chart shows that the number of Gen Z and millennials in Canada is bolstered by a large volume of new permanent residents (blue). (Source: Don Wright)

Ontario’s University of Waterloo labour economist, Mikal Skuterud, has been among those tracking how the federal Liberals have drastically hiked the number of guest workers and study-visa-holders, most of whom work while in Canada and intend to apply for permanent resident status.

Last year more than one million foreign students were in Canada, three times the number when Prime Minister Justin Trudeau was first elected. (B.C. had 176,000 in post-secondary schools). While wages in some sectors are up, gross domestic product per capita has been flat for six years. Skuterud suggested low-skill workers, whose wages are actually declining, could be the most impacted by the surge of new residents.

In regard to life choices, Wright also wonders how much the country’s housing crunch — including the prospect of “living in a 700-square-foot hamster cage” — might be a significant factor behind why some young Canadians aren’t having larger families.

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Cardus, a think-tank, commissioned the Angus Reid Institute to conduct a poll last year of 2,700 women in Canada ages 18 to 44. It found nearly half have fewer children than they desire. Canadian women intend to have, on average, 1.85 children per woman, but desire 2.2 children.

Given such personal strains, especially for millennials and Gen Z, the National Bank’s economists have declared Canada is caught in a “population trap” in which the population is growing faster than can be absorbed by the economy, society and infrastructure.

With so many facing stagnant wages and housing distress, National Bank economists Stéfane Marion and Alexandra Ducharme said: “At this point we believe that our country’s annual total population growth should not exceed 300,000 to 500,000.”

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