Counting the ways Canada is changing
Shifts in Canadian family structure have direct consequences for policymakers and business leaders
A national census is very like a family snapshot: it freezes a moment in time and the purity of the image reveals a great deal about each individual as well as the group dynamic. If you can't stand your cousin George or if you're packing a few extra pounds - it will all be captured and revealed.
That's certainly the case with the most recent census portrait of the extended Canadian family. It confirms many things we already innately understand about the changing composition of domestic society and how we're re-organizing ourselves. And it's insight that has particular resonance for the domestic economy - even if it's not immediately apparent. (Crucial data on income will be released next year and that will refine the picture further.)
So what has changed?
- There are fewer married couples and more people are living in common-law arrangements. There are more single-parent families while the number of same-sex couples tripled between 2006 and 2011, now accounting for almost one per cent of couple families.
- The number of couples without children continues to grow faster than the number with children - a trend that's been accelerating since 2006.
- About 42 per cent of adult children live with their parents - a stat that's been holding since 2006.
- Canadian seniors are living together as couples (up to 56 per cent) - and living independently - longer.
- The parallel trend - although not one covered by the latest census data - is that Canada's population growth is increasingly dependent on immigration.
The proliferation of split and single-parent families is a real issue in terms of the way social resources are currently structured and delivered. For all that politicians tend to evoke "family values," the nature of both the family and its values is radically shifting.
It may take some time to fully manifest, but there is mounting economic evidence that the gap between traditional and single-parent families is contributing to the creation of a dual-class of have and have-nots.
In the U.S., where 41 per cent of births now take place outside marriage, economists variously attribute 25 to 40 per cent of widening income gaps to the realities of single parenthood. While top and middle income families had virtually identical patterns 40 years ago, 88 per cent of the top now have two parents compared with 71 per cent in the middle. And the economic impact of that is increasingly apparent - particularly when it comes to opportunities around education and job choices.
In Canada, as families get smaller and more fragmented there are clear implications for the residential real estate market as well as for the big-ticket consumer items that are pegged to home ownership. Split or single-parent families tend to live in smaller spaces, with fewer furnishing and smaller vehicles. That has implications both for the pattern of future housing developments and for the valuations of pre-existing homes, which remain geared to traditional, nuclear families.
To that point, the average net new household formation rate between 2006 and 2011 in this country was 189,000 annually. That's well below the 218,000 annualized housing starts in 2012, suggesting that demographic trends and housing demand are increasingly disconnected.
When it comes to seniors - who are living longer and healthier lives - the trend to independent living also has an impact on long-term public policy issues from healthcare spending to pension reform. The longer that robust Canadian seniors live (and live on their own), the fewer the demands for geriatric care and medical treatment, but the greater the demand for pensions and related financial benefits.
This area requires urgent focus given that household debt runs at around 150 per cent and personal savings are correspondingly meager. According to the most recent figures available (2010), Canadians are saving less than four per cent of their disposable income. Just under six million contribute to an RRSP and there's $632.9 billion of total unused RRSP contribution room.
By way of further context, if an individual begins saving $2,000 annually at 25, it grows to $330,000 by age 65. But that's predicated on a compound growth rate of six per cent - which these days of low interest rates and relatively flat economic growth is an aggressive assumption.
Another consideration is that unlike today's elderly, who reflect a time when divorce rates and single-parent households were less likely to be the norm, those in the future will be more entrenched in have and have-not family scenarios.
Changing mortality profiles, in turn, affect everything from the framework for RRSPs and other retirement savings plans to the elaborate calculations upon which life insurers have based their policies. That's well worth considering for investors and policyholders alike.
The new picture of Canada may not yet be fully focused, but there's no question that it's consquences are increasingly black and white.
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