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Demographic headwinds blowing the Yukon’s way

The goods may still be odd, but the odds are more even

The demographics of the Yukon used to be very different from the rest of Canada: younger, more male, and more likely to migrate.

The preponderance of men was summed up by the observation said to have been made by a Yukon woman to a younger friend thinking of moving here: “The odds are good, but the goods are odd.”

The Yukon Bureau of Statistics recently put out a report comparing 1966 and 2016 census data, which shows how much this has changed.

Demographers often use a chart called the age pyramid to show how an area’s population breaks down by age and gender. A century or two ago, barring a plague or major war, it was generally shaped like a pyramid with more young people at the base and then tapering off with few centenarians at the top, and roughly equal numbers of men and women.

The Yukon in 1966 looked much different; more like the onion dome of an Orthodox cathedral. It had a small base of toddlers, then fewer pre-teens as young families left the Yukon to raise kids near grandparents, and then a big bulge of 20- and 30-somethings in the workforce. There were fewer seniors, and about 127 men for every 100 women (that figure is from the 1961 census).

In 2016, there were only 102 men for every 100 women. The goods may still be odd, but the odds are more even. The absolute number of children under the age of 14 is only slightly higher than in 1966, but the working age cohorts all the way up to age 65 are bigger. In particular, the mix of 45 to 65 year olds is much higher. The number of seniors has skyrocketed.

While the Yukon remains one of the younger places in Canada, it is catching up fast to the national average. In 1966, the average age in the Yukon was around 26, versus a national average of about 30. Fifty years later, the Yukon’s average age is 39 and the national figure is 41. Seniors are the fastest growing demographic in the Yukon, up a striking 38 per cent since 2011.

Economists like to look at the dependency ratio, which is the number of people younger than 14 and older than 65 per hundred people in the typical working years in between. This is up from 36 in 2011 to 42 in 2016. This is a large and rapid shift in demographic terms, where changes are often measured in fractions of a percentage point. It has big implications for tax revenues and government healthcare budgets.

Of particular interest is the old-age dependency ratio, ignoring children and focusing on seniors. The OECD, an organization of mostly rich and industrialized countries, uses a definition of those aged 65 and over per 100 people aged 20-64. We remain relative youngsters when compared against the OECD this way. Our old-age dependency ratio is 18. Only Chile, Turkey and Mexico have lower figures. Canada’s nationwide figure is 26, and we are nowhere close to the countries most worried about declining numbers of workers supporting ever more retirees. Japan’s figure is 47, and Germany, France and Italy are all over 30.

By 2025, the OECD estimates Japan’s old-age dependency ratio will be 78. We’ve never seen a major economy where each worker has to, in effect, support herself and almost an entire other person. The implications for tax rates and government budgets could be catastrophic.

The Yukon has less to worry about. This is not just because our population is younger, but also because our economy is already so dependent on others to support it. No one gives Japan transfer payments. In effect, over time the transfer payments we receive from Ottawa will just shift from supporting Yukon working people to also paying for their retirement and healthcare.

This assumes, of course, that our fiscal arrangement with Ottawa keeps on going in the long run even as the Canadian population paying our transfer payment ages. The old-age dependency ratio for Ontario will, in effect, include an extra decimal representing retired Yukoners supported by Ontario workers through their taxes.

Nonetheless, you can expect demographics to become an increasingly routine topic in Yukon officialdom. The costs of government pensions and extended health benefits for retired government staff will keep rising as the ratio of retired officials to working officials goes up. In addition, the total number of elderly Yukoners and their healthcare costs will do the same.

We could be talking big bucks here. The 2014 Canadian National Health Expenditure Trends Report said that in 2012 the average health-care cost for those aged 15 to 64 was $2,607. For those aged 70 to 74, it was $8,545.

Younger readers at this point may be wondering if they will be facing higher tax rates and retirement ages when they get to middle age. It’s a good question. A lot depends on the choices our government leaders make, and how soon they act. All we know for sure is that demographic headwinds are blowing this way whether we like it or not.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.