Jordan: I guess the main thing to start with is just this. It’s not supposed to be this way, even if it always kind of has been. The concept that your success in life is determined by who your parents are is one we might like to think we’ve left in the past. And look, maybe, for just a brief while there, we might have been headed that way.
Towards a society defined by upward mobility. The chance, the likelihood even, that you’ll do better than your parents did. Now, today, as income and wealth inequality leave most of the younger generations wondering how they’ll ever afford even a modest house, let alone build generational financial security, There are still a couple of questions that can determine how easily they’ll afford that home and everything else that comes with it.
How many homes do your parents own? How much money are you inheriting? And if the answer to those is none or not much, well, you’re out of luck. Welcome to Life in the City. As a member of the Jackpot Generation,
I’m Jordan Heath Rawlings. This is the big story. Katrina Ostad is a writer and journalist who chronicled the rise of the jackpot generation. Hello, Katrina.
Katrina Onstad:Hi.
Jordan: This is a fascinating story. I think a lot of people are really going to identify with either one side or the other of it, sadly.
Katrina Onstad: Yeah, unfortunately, that’s probably true.
Jordan: I want to start by asking you about something that you wrote in the piece. a little ways down that kind of provided some historical context and caught my eye. You wrote, an inheritance based economy sounds like something out of the 19th century in many Victorian novels. Can you maybe unpack that just a little bit?
Like explain the importance of inheritance to the economy if we go way back historically.
Katrina Onstad: Yeah, yeah. I mean, you know, if you’re a Jane Austen fan, as I might be, you know, you see in a lot of, uh, reflected in literature, but it was also the reality in a lot of 19th century economic systems and, you know, Britain, France, Russia, that the land owning gentry passed down wealth to their children and one station in life hinged on that inheritance, right?
Either you had it or you didn’t. And people would marry for inheritance. murder for inheritance. And now we’re at this strange moment in Canada where the baby boomers are about to, and in the, and currently doing so, passing down their inheritances to their children. And it’s really, you know, has the potential to, to very much upend what we think of as a kind of the Canadian dream and the stability of the Canadian economy.
So I thought there was a really interesting link, you know, kind of this idea of ancestral wealth really That we saw in the 19th century really rubs up against our conception of ourselves today in the 21st century, I think, is a meritocracy, right? Like it’s not, we don’t think of Jane Austen when we think of what we think of as opportunity in the new world.
You know, many of our ancestors came to Canada. to escape that idea of landowning gentry.
Jordan: We’re the, uh, pull yourself up by your bootstraps generation, or at least previous generations were. But when we talk about that, that, and I think everybody probably feels this, this, um, you know, work hard, do right, and you can achieve your dream in this economy.
Is that even still a reality as much as we might like to imagine it?
Katrina Onstad: Yeah, I think a lot of younger people don’t feel it is, which is a pretty sad state of affairs, right? That disenchantment with this quote unquote Canadian dream. That obviously hasn’t been accessible to everybody throughout time. Uh, but you know, economists and sociologists look at intergenerational mobility as the foundation of this, this idea of the Canadian dream, right?
As you just said, work hard, do better than your parents. And historically Canadians have. been really good at this. Actually, we’re a little bit better than Americans, uh, at the, at the dream when you look at, at the data, like higher income, higher quality of life than our parents, usually generation to generation.
But, um, now what we’ve seen is like a real widening of the inequality gap, right? Like a lot of money concentrated at the top kind of shrinking of the middle class. Right now, what the top 1 percent in Canada controls a quarter of the country’s wealth. This is, this is relatively new. Um, and it, Poses a real challenge to this idea that if you work hard, you will just get ahead when it seems like, well, the rich are getting richer and the rest of us are getting poorer.
That declining sense of opportunity, I think, is the kind of where the air comes out of this Canadian dream.
Jordan: And the thing I found fascinating that you explained so well is that we’re now almost at A tipping point for this. You mentioned that, you know, we’re starting to see the boomers pass on. We’re going to see a lot more of that over the next decade plus.
What is going to happen as that occurs?
Katrina Onstad: Inheritance has always been a reality for, for many fortunate people in Canada. But what’s different about this moment is the The sheer number of boomers, they’re just such a big cohort, right? Like nine million people were born in that space. Um, so that’s a major shift in Canada because those people are going to get sick.
They’re going to, you know, get older, they’re going to need a lot of care, which is going to be expensive and it’s going to, you know, drain the public purse. And then they’re going to those who were fortunate enough to have real estate in their pocket are going to pass down some of that good fortune to their heirs.
But if your parents didn’t have a house because housing is That’s the real key here. Housing is where most equity has been built over the last couple of decades and definitely for baby boomers are the ones of the corner on on housing and in our country and they own most of it. Those people whose parents got into the market earlier are going to benefit hugely, but that’s not going to help, you know, the people who are already facing a housing crisis and housing shortage.
Jordan: When we say a tremendous amount, what kind of scale are we talking about in terms of wealth that is about to be passed on? And as you point out, not to everybody.
Katrina Onstad: Yes, not to everybody is key too. It’s, it’s to be remembered throughout this conversation, but
Jordan: Hence the jackpot.
Katrina Onstad: Yeah, hence the jackpot. So, well, one estimate holds that one trillion dollars is moving from baby boomers to heirs.
As we speak, um, and those heirs are mostly millennials, but it also includes some Gen X and some Gen Z ers. According to one survey, among the Canadian boomers who are planning to leave 100 percent of their estates to their children, the average inheritance In that cohort will be about 940, 000. So that, you know, that can be life changing money for many people.
It certainly can be enough to get into the housing market that might have been close to them. So it is going to create a real ripple effect.
Jordan: What does that do to our economy?
Katrina Onstad: Yeah, well, I think it, it, it takes what is a gully and turns it into a gulf, right? Like it just underscores the have have not ness of the current economy and kind of deepens those impressions.
I think one thing that’s going to happen is, um, and Paul Kershaw from Generation Squeeze said this to me and it really struck me was that, you know, it’s not going to be this intergenerational tension between like the millennials who might be kind of, you know, Vaguely resentful of baby boomers landing in that sweet spot of history with, you know, good wages, pensions and real estate that it’s not going to be intergenerational tension between millennials and boomers.
It’s going to be intra generational tension because now we’re really going to see who is going to be able to get a firm footing on the ladder, the mobility ladder, right? And it’s not going to be. Your place on that ladder is not going to be secured by how hard you work or how talented you are, but it’s going to be by how much money your parents left you when they died.
And that, I think, can foment a sense of injustice, right? Like envy, no matter what I do, I can’t get ahead. This guy over there gets a house because his parents had a house. That doesn’t really seem fair, right? And I think the sense of a rigged system is never good for anyone personally, but it’s really bad for like a national psyche, right?
Right. Foments dissent, division, populism. I think we’re going to see, I think we are seeing some of that already right now.
Jordan: You spoke to people for your piece from both sides of this Golf that’s just going to keep widening, um, maybe let’s start with the people that stand to inherit a million dollars or more through no enterprising bootstrappy work of their own.
How do they navigate that within their own generational peer group?
Katrina Onstad: Well, actually, it was really interesting because. It’s hard to imagine a downside to inheriting money. And yet some of the people I spoke to who were anticipating or already in the process of receiving some of this money felt a lot of shame and guilt about this, right?
I think because we equate financial success with work, inheritance kind of rubs up against that, right? Like it, it, it, It makes us feel like we maybe didn’t earn, and we didn’t, right? My inheritance isn’t, is kind of unearned success. And so there’s, there can be a lot of fear of squandering this money, of not deserving this money.
I spoke to several financial analysts who talked about their clients who are facing inheritances being really overwhelmed by this, even though, of course, they acknowledge the privilege of that. Um, and I spoke with a, there’s a, an American financial analyst named James Grubman, who has. I think an interesting analogy for this, he describes wealth as a new country.
And when people receive an inheritance, they can often feel like immigrants to this new world. Uh, and they can feel kind of uncomfortable there and actually sort of self sabotage and burn through that money to get back to the country where they’re comfortable. I thought that was really interesting.
Jordan: And what about the other side of it? When you talk to people who know that there’s no house coming their way in a few years, how do they navigate the fact that so many of their peers are going to make that gigantic leap?
Katrina Onstad: And that’s a lot of people, right? I think there’s bitterness. There’s a sense of being left behind.
I think there’s a sense that the social safety net is weakening and that. They’re now living in a time where we’re kind of left to our own devices to survive, right? And I, I mean, we’ve seen this kind of erosion of, of taxation and I think people are, are, are feeling sort of abandoned, especially younger people who are working really hard for wages that might not be meeting the extraordinary cost of living and no matter how hard they work, can’t enter this.
Insane housing market. So, you know, you can see that if you go online, you know, if you’re following any kind of election, uh, electioneering, this is, this is the vein that politicians are trying to tap that discontent.
Jordan: You mentioned that social safety net. Now that we know that this inequality is only going to widen.
What ideas are out there, uh, to mitigate the impact on that gap and, and try to keep it from turning into a chasm?
Katrina Onstad: Well, if one of the causes of this inequality gap is, around housing, then one of the solutions might lie in housing too, right? Canada is one of the only G7 countries with, that lacks, uh, taxation on inheritance.
And we also don’t tax primary homes, right? Like we, Now, we’ve all been following the kerfuffle around the capital gains tax for secondary properties, but we have a primary home exemption that’s been around since the 70s, and that is in large part the money that we’re talking about that’s being transferred down.
Jordan: The people that bought their houses for, uh, like a couple hundred thousand dollars, and it’s now worth 1. 5 million.
Katrina Onstad: Yeah, these like lucky boomers, right? I interviewed a family, they bought their house in suburban Vancouver for 188, 000 in the 80s, and now it’s worth 1. is just an extraordinary bump. Very, you know, historically as usual.
And that money is being protected from taxation at the exact same moment when we need a lot of public funding. To support those boomers through their aging process, right? And when we are facing increasing national debt and scarcity of public resources. So one solution that’s been put forward, and I think it’s extremely unpopular, I guess it feels like political suicide, even say this out loud, is like, should there be some taxation on it?
On primary homes when they’re sold or when they’re, uh, when heirs inherit those, the proceeds from the sales of those homes, certainly in the UK, they have explored a much more targeted inheritance tax. The concept of inheritance tax as a whole is something. being discussed and I think in a way that it wasn’t even 10 years ago as we face this reality of a lack of of public funding for resources that we need.
So, you know, that’s part of it. That’s a plank of the NDP platform, a progressive inheritance tax that targets the top 10 percent of the states. And then there are some more radical solutions than that out there. Uh, in my article, I talk about, Tomáak Pikkety, who’s a European economist whose book Capital sold like two million copies.
And he has proposed this idea of inheritance for all. Sort of an inheritance version of a universal basic income, where every citizen turns 25 and receives a slight inheritance and kind of dissipates this idea of a like rentier class, like a, a, a, Gentry, where the money is consolidated family to family and kind of breaks that chain.
I don’t know how popular that’s going to be, what politician would dare to suggest such a thing. I know exactly how popular that’s going to be. Yeah, exactly, it’s radical. But you know, I also spoke to this group called Resource Movement, which is a very interesting group of younger Canadians, mostly, who come from wealthy families and are interested in taxation as one solution.
To what they recognize as mass income inequality, and they invite higher taxation to spread their wealth, uh, and to to break it out of the confines of the family and share it with the, with the greater good. You know, share it with the collective. So there are, there are people out there with proposals.
We’ll see how much traction to gain in this next election.
Jordan: It will be interesting to see, but as you mentioned, you know, I think back to the Fuhrer over the relatively slight change to the capital gains tax, like
Katrina Onstad: the cottage tax, like this is not a radical
Jordan: thing we’re talking about. And people went crazy about it.
And so I understand that those ideas will be unpopular, certainly with the people that stand to gain from them. I do also, and I would ask kind of in a devil’s advocate sort of way. When you’re looking at maybe not the people obviously set to inherit millions and millions of dollars, but you know, the average, I think you said is 900, 000 for a millennial who’s never had much money, who’s, you know, scraped by in school and is working in the gig economy like that is Not life changing money if it sounds strange to say it like that is like just maybe scraped back up to the middle of the pack type money so I could see why even they would push back against a tax on it.
Katrina Onstad: Yeah, and fair enough, right? I mean, I think it’s, um. It feels very personal in that in that way, like this is the only thing I have and you’re going to try and take it from me, right? I guess would be that would be that feeling. But you know, I guess I would hope that we can figure out a way to invest in our public programs while people can still grow.
maintain that sense of, you know, their own kind of personal good fortune, because I don’t think we can continue on this path where we’re kind of starving the public infrastructure. So, you know, it might be a tough ask, but at the same time, it, it. There is, um, an appetite for higher taxes on the wealthy, right?
Poll after poll has shown this, that Canadians are very open to taxing the super rich. The super rich, yeah. Yeah, and so you’re saying, well, what happens when what looks like not super rich, just, just barely rich enough gets taxed. And I don’t know, I think that this, you know, millennials have, have had a rough run, right?
Like this is the generation that was born, uh, into the financial crisis. They have had higher student debt. Tuition has been higher for the generation proportionally than for generations that came before. It would be fantastic for some politicians to, to figure out how to harness that discontent in a way that serves the greater good and kind of, you know, shifts that emphasis from individual gain into something that reflects a kind of big picture Canadian success story.
Jordan: I mean, that would be the best thing for all. And I think it’s really fascinating to dig into some of the ideas You’ve got here. But the last thing I’ll ask you then is just after doing all this reporting and talking to experts and economists, but also people in the thick of it, what do you think that gap will look like in 10 or 20 years?
You know, are we headed back to the days of Jane Austen where you know who your parents are defines your economic level in life?
Katrina Onstad: I worry.
Jordan: Yeah.
Katrina Onstad: I’m worried. You know, I think it would be a little nuts not to be worried about, I have children and I think about their futures in this, you know, if they’re going to be able to get onto that ladder and what we can offer them to get onto that ladder.
Jordan: Pass down all that lucrative journalism money.
Katrina Onstad: Yeah, no, it’s the big money, right? But yeah, I do. I think that my fear is the erosion of the middle class is that. We don’t do enough to ensure that wealth isn’t concentrated at the top, and we’re not looking out for the people at the bottom. And in the meantime, I don’t know who’s going to be left in the middle.
That’s something one of the people I interviewed said to me, like, who, who, who’s going to be left in the middle if we continue on this way? So I hope we’re ready for this hard conversations about how to share some of this great good fortune that’s about to be bestowed on a few very lucky people.
Jordan: Katrina, thank you again for this. It’s fascinating.
Katrina Onstad: Thanks so much for having me,
Jordan: Katrina Onstad writing in Maclean’s. That was the big story. For more from us, you can head to the big story podcast.ca. You can, of course, always shoot us some feedback on this episode or any other by emailing us at hello at the big story podcast.ca, or by leaving a voicemail when you call 4 1 6 9 3 5 5 9 3 5.
We’re on all your favorite podcast players and. On your smart speaker if you ask it to play the big story podcast. Thanks for listening. I’m Jordan Heath Rawlings. We’ll talk tomorrow.
Back to top of page
