Young Workers Poorer Than Their Parents
Feb 19, 2009
economy,, jobs, labour,, study,, worker,, young,
A series currently running in Maclean’s magazine is looking at “The New Middle Class Reality” and painting a rather bleak picture of the economic and job prospects of middle-class Canadians facing the recession.
The current issue addresses younger Canadian workers and their understandable expectations that they (as with previous ones) will do better than the generation that preceded them. We all believe this, and so far it’s always turned out to be true. But this time it might not turn out that way.
As we now slide into a potentially lengthy recession, it looks like this generation will be the first to fall short. Today’s 18-to-40 year olds are struggling to keep up with the lifestyles their parents once enjoyed, much less dreaming of surpassing them.
By looking at the most crucial indicator of our financial situation – wages – it becomes apparent that young workers really are falling behind. In 1976 the median income for families in the 25-to-34 age group was $56,300 (after adjusting for inflation, in 2006 dollars). Barely 30 years later that figure has dropped to $50,100. And with the economy in turmoil, it looks like incomes could decline even further.
Combined with dwindling financial prospects, this generation is also burdened with far-greater student debts than those before it. In 2006, the average graduate left school with about $24,000 in debt, up from $8,300 in 1999. And with students staying in school longer and trying to gain additional degrees to increase their job prospects in these trying times, one can only expect that these debt loads will continue to increase.
But there are so many people with multiple degrees out there competing for the same jobs that the value of the degree itself has diminished over time. Many studies have shown that to earn what a university graduate earned some 30 years ago, a student now must obtain an additional Master’s or PhD, which means an additional five to nine years of schooling. And many more students are now in debt than before. Furthermore, Canadians now don’t just have to compete with fellow countrymen for jobs – they’re competing with people from all over the world.
This all means that people under the age of 40 are having a very difficult time settling down and achieving anything close to the lifestyle their parents had at the same age.
Things had actually been looking up for younger workers. Between 1997 and 2007, hourly wages for those under 35 outpaced those of other age groups according to a Statistics Canada report. Unemployment was at a 30-year low and companies were looking to younger workers to fill the gap. And younger workers were led to believe that employment options would only increase as Canada’s 10 million baby boomers began to retire.
But then we ran into a recession that has cost Canada some 274,000 jobs in the last four months and could easily claim another 200,000 by the end of 2009. And Boomers are holding onto their jobs longer as their retirement savings look less and less like they will be enough.
The good news is that there was a labour shortage not that long ago and there will again be one when the recession ends. But that could spell a lot of trouble for younger Canadians before this is all over.
Comments
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Part of the problem is how many employers are allowing the boomers to return back to work AFTER retirement. It was anticipated that at one time there would be a huge vacancy rate as the boomers started to retire. We are not seeing this for many reason – some are not choosing not to retire as early due to the economic state BUT most importantly is the practise of allowing the double dipping. This does not allow for the development of NEW VACANT full time positions.
Nite Owl - -0001-11-30 00:00
I agree with the Entrepreneur in that the standards for today's young workers is much higher than their parents. But when it comes down to it, today's 18 - 40 year olds are making less money than their parents were and are paying much more for housing. If you want a starter home in Winnipeg, you'll be looking at paying around $100,000 today (probably closer to $150,000 in a better neighbourhood). Twenty years ago, those houses were selling for half of that. And if you want to get a condo as an alternative, most I've seen are between $100,000 to $140,000. And that's in Winnipeg, a relatively affordable market. If you're a young professional in Vancouver, good luck in finding a decent home under $500,000.
Jerry - -0001-11-30 00:00
I disagree entirely with the Entrepreneur just because you and your friends are alright doesn't mean most youth are. As a 23 year old and all my friends are around that age also I know that youth are struggling. With our parents and grandparents there were jobs that were available that were unionized and good paying with good benefits, for example my dad got a job with the city of winnipeg and my grandpa got a job with CN rail even though my dad only had a high school education and my grandpa didn't even finished grade 9. Whereas for the youth nowadays the only jobs available are crappy minimum wage jobs that are mostly always non-unionized and have no benefits. Youth are mostly in those jobs while they go to university and after they graduate they are still stuck in those jobs, going nowhere not saving any money. Youth today are in the long term worse off then their parents/grandparents, whereas with me my dad and grandpa were able to retire when they were 50 years old with a good pension I will be working long past that just to barely get by.
kyle mytruk - -0001-11-30 00:00
I would agree that the younger generation is being paid less than their parents relative to cost of living. This is bad news for the boomers in the sense that their children are not going to have enough to take care of them in their old age. Definitely something to think about
Ross - -0001-11-30 00:00
I disagree. My peers (all mid-30s) are enjoying tremendous success in their careers. In fact as a business owner, I'm one of the underachievers in the group. That might say something about my friends more than 18-40 year olds in general however. While I won't disagree that there maybe a shortage of positions for many people 18-40. What positions are they looking for? What lifestyle are we comparing? Leave it Beaver thrifty or Orange County decadent? And then throw in the fact that most 18-40 year olds aren't following the same path as their parents, who bought small starter houses in less desirable areas and then slowly progressed. Most people I talk to who are starting to look at moving out are looking first to the McMansions before they consider a lower alternative, like a condo or small square foot house in a slightly less desirable area. Perspective is needed.
The Entrepreneur - -0001-11-30 00:00
Canada’s economy is built on a simple but deeply entrenched belief: that every new generation will do better than the one before it. But now, as we slide into what is expected to be a long and painful recession, there’s a very real feeling the cycle of generational one-upmanship has come to an end. Mounting evidence suggests today’s 18- to 40-year-olds are struggling just to keep up with the lifestyle their parents once enjoyed, let alone pull ahead. It’s all the more frustrating because before the recession hit, workers such as Martin were just starting to gain some traction—for the first time in their lives, they really felt like they were getting ahead. Then they slammed into the recession. It’s left experts asking some uncomfortable questions. Will younger workers ever dig themselves out of the hole they’re in? And could this be the first generation in decades to do worse than their parents? I believe that once the recession has subsided and many boomers leave the workforce (retire) things will get better for the younger generation. But sometimes things have to get worse before they get better.
The Boomer - -0001-11-30 00:00
With so-called trade agreements constantly being forged with developing nations, the kids today and the kids tomorrow will be struggling with lower standards of living. We are witnessing the great equalization of the world right now. Standards of living in countries where we've signed "trade agreements" (like with China) will start to eat away at wages and prices. There will eventually be some sort of great levelling of prices and wages in the next 10-20 years. Nobody knows what kind of standard of living we're going to have in 20 years, I can tell you that. We could all be living in sardine cans like the Chinese and Asians are by then and living with our whole family.
Ricardo - 2009-02-26 23:20