There’s been a lot of handwringing about labour shortages, typically amplified by the just-you-wait-until-the-Boomers-retire angst.
But there is actually some cause for optimism when looking at the trends in workforce participation over the last three decades, assuming that one likes the idea of older Canadians extending their careers.
In 1987, Canadians aged 60 to 64 had a workforce participation rate of 37.2 per cent. By 2021, that figure had risen to 57.9 per cent. There was a similar increase even for those past the traditional retirement age of 65; their participation rates more than doubled from 11.8 per cent in 1987 to 27.5 per cent in 2021. And even those over 70 years of age, participation rates edged up, from 3.8 per cent in 1987 to 7.5 per cent in 2021.
Rising life expectancies certainly are part of the reason. In 1987, the average 65-year-old Canadian could expect to live to the age of about 82; by 2020, that life expectancy had risen to about 86 years.
The narrowing of the gender gap is another part of the puzzle, particularly for younger seniors. In the 60 to 64-year-old age group, participation rates for men rose from 51.4 per cent in 1987 to 64.7 per cent in 2021. For women, however, the increase was much bigger, with rates rising from 24.5 per cent in 1987 to 51.2 per cent in 2021. That meant that the gender gap for that age group fell nearly by half over those 34 years, from 26.9 percentage points in 1987 to 13.5 points in 2021.
Another factor could be changes to CPP rules made in 2012 that allow beneficiaries to receive payments even if they kept working.
Kevin Page, president and chief executive of the Institute of Fiscal Studies and Democracy at the University of Ottawa, and a former parliamentary budget officer, says the changing nature of work is a possible explanation. The service sector accounts for a bigger proportion of the economy than three decades ago. Many, although not all, of those jobs are less physically demanding.
The ranks of the self-employed have also grown, increasing the number of workers with greater flexibility to continue their careers past the traditional retirement age, Mr. Page adds.
Taxing questions
In response to last week’s Tax and Spend on the small number of Canadians who opt to defer Canada Pension Plan and Old Age Security benefits, one reader contended that everyone should opt for early CPP payments because the amount passed on to a surviving spouse is not very generous.
Whether it’s generous or not is a matter of opinion, but the choice to defer does matter – although only for one part of a couple. The rules are as follows: A surviving spouse can receive up to 60 per cent of their deceased spouse’s CPP benefits, on top of any CPP payments they directly receive. But the sum of the survivor benefit and existing CPP benefits cannot exceed the maximum retirement pension at age 65 in the year that those benefits begin. So, it doesn’t matter what the deceased spouse decided on deferral.
But that is not so for the surviving spouse. If that person did defer benefits, the ceiling for the combined benefits is higher.
Line Item
Back in black: Excited about Alberta’s deficit disappearing? Please, that is so last fiscal cycle. More enticing is the growing possibility of the province (once again) retiring its net debt as soon as the end of this decade, as University of Calgary economist Trevor Tombe writes in The Hub. Modest restraint that keeps spending growing no faster than inflation plus population growth, combined with an extra $5.5-billion in revenue starting next year would do the trick, he writes. That could come from (what seems increasingly likely) a surge in oil prices or (what is perennially unlikely) a major tax hike.
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