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The “graph of the survey,” according to the person who oversaw the OECD’s new 133-page survey of Canada’s economic prospects and policies, is the one that shows the impossible chasm in the country between household formation and housing starts.
“It’s a huge gap,” said Álvaro Pereira, the Organization for Economic Co-operation and Development’s chief economist. “For me, that’s the most striking graph we have.”
You might have seen the graph before. It’s the one Bank of Canada deputy governor Toni Gravelle included in a December 2023 speech that crystalized the unsustainability of the country’s runaway population growth. There’s a reason the throne speech said Prime Minister Mark Carney’s Liberal government will “undertake a series of measures to help double the rate of homebuilding” and restrict the total number of international students and temporary foreign workers to five per cent of the population.
“The most important policy is supply, supply, supply,” said Pereira. “The prime minister talked about ‘Build, baby, build.’ Nothing is more pressing.”
No argument here. Still, I was struck by a different figure. The report’s authors assembled various recommendations in a table alongside estimates of how much additional economic output each would generate over the next 10 years, and then over the longer term.
There are measures that the OECD thinks would move the needle, such as spending more on research and development and aligning a relatively heavy regulatory burden with the OECD average. But none come close to matching the economic impact of leveling gender imbalances in the workforce. By doubling down on subsidized daycare—and thereby increasing the average number of hours women work away from home—governments could increase gross domestic product by around four per cent over the next decade. Other measures topped out at adding 0.8 per cent.
“The ‘child penalty’ in Canada is fairly high,” said Pereira. “Continue to invest in child care and kindergarten and so on. It’s absolutely essential.”
Estimates of this sort come from a fantasy world where politics, psychology and biology bend the knee to math. Still, the OECD’s estimates are a timely reminder that former prime minister Justin Trudeau’s national child care program will make the economy stronger, provided governments stick with it. The throne speech endorsed the program, but that can’t be taken as a lifetime guarantee at a time when highly polarized politics lead to schizophrenic policymaking. The consumer carbon tax was an excellent way to confront climate change—until it wasn’t.
The “child penalty” is the career sacrifice women make when they decide to have children. Women join the labour force even with their male peers, then take a hit when they opt out to start families. Men get some free laps in terms of experience and earning power, and women tend never to catch up. Some quit the race altogether, as there’s a gap of about five percentage points between male and female labour participation rates.
Motherhood is a choice and some women would rather devote their energy to their children. But those decisions are made in a societal context that favours men, skewing the incentive structure in a way that sidelines talent that could otherwise help the productivity crisis by making existing companies better or starting new ones.
The OECD survey cites research by Marie Connolly, Marie Mélanie Fontaine and Catherine Haeck, who found that the earnings of Canadian mothers plunged 49 per cent at the year of birth and, on average, were still about 34 per cent lower ten years later, according to their assessment of information in a Statistics Canada database that tracks individuals over time. The career trajectory of Canadian fathers was little changed by adding children to their households, tracking studies in other countries.
“It thus appears that women pay a majority of the direct and indirect child care costs, resulting in a deterioration of their economic situation,” Connolly, Fontaine and Haeck wrote.
A decade of feminist government under Trudeau didn’t turn Canada into an egalitarian paradise. If not for patriarchal South Korea, Japan and Israel, Canada’s gender wage gap would be on the higher end of the spectrum. What’s more, women hold only about 35 per cent of managerial positions in Canada, somewhat better than the OECD average, but nothing special—nine countries rank higher, including places that make little fuss about the virtues of feminism, among them the U.S. and Mexico. Top of the table is Poland, where almost 45 per cent of managers are women.
The newest generation of workers might be the one that puts women on the same plane as men. The labour participation rates of Gen Z women in their mid-20s exceeds that of older generations at the same age, and the wage gap with men the same age has narrowed to less than five per cent, according to research by CPP Investments Insights Institute. An aging talent pool could increase demand for workers and managers as boomers retire, eliminating the “child penalty” because employers will be forced to work to attract and retain young mothers. The authors of the Insights report advise employers to try harder to keep younger women from bolting by introducing flexible work schedules and pay transparency, among other things.
What Cenovus chief executive Jon McKenzie calls “political stamina” also will matter. It’s not difficult to imagine non-feminist leaders losing interest in child care, not to mention programs aimed at encouraging women to start companies, join the trades or become scientists.
The pendulum is swinging away from 2015. Even as Trudeau was introducing gender budgeting and other such measures, the “trad wife” trend, celebrating women who chose to drop out of the work force to keep house and raise children in service of their husbands, was becoming a social media phenomenon.