Winnipeg Free Press - PRINT EDITION
Are young better or worse off than parents?
I'm not sure why, but there's a pervading school of thought that millennials are finding life much tougher than their parents, are having trouble securing a job and are holed up their parent's basement until they are financially stable.
According to a recent BMO report, this is not true. As a matter of fact, they may be better off than their parents.
For the sake of this discussion, the millennials are those in the 25-to-34 age bracket. The comparative years for their parents were in the 1980s.
One argument is that jobs are easier to find now than in the 80s. Remember, there was a recession at the start of that decade and unemployment carried on for a few years afterwards. According to Statistics Canada data, the unemployment rate and duration of unemployment were both higher in the mid-80s than today.
Similarly, better-educated young people today have a median income that is two-per-cent higher (all figures adjusted for inflation) than their parents. To be fair, median income did fall in the early 80s from the more prosperous late 1970's. It's also important to note that median income fell again in the mid-1990s.
In that vein, young families in this age group are considerably wealthier than their peers 30 years ago when it comes to income. However, on the down side, more young families owe more today than in their parent's time. A higher proportion have debts (2.4 per cent) and mortgages (6.4 per cent). It's also probably fair to say that there is more student debt today as well.
Largely due to external, government-imposed charges, the cost of housing is considerably higher relative to the median wage rate now than it was 30 years ago. The Toronto and Vancouver markets badly skew national figures, driving national averages skyward. These numbers are not broken down by BMO regionally, but it's fair to speculate that the costs and averages vary from province to province.
On the other hand, mortgage rates are considerably friendlier now than in the early 1980s. Young people have been able to lock in for five years at rates unheard of by their parents, who are able to tell horror-stories of rates that were above 20 per cent in 1981.
Our 25-to-34 generation appears to be well on their way towards taking over and doing just fine financially. There will be bumps and hurdles, but their time is coming.
Mike Moore is the president of the Manitoba Home Builders' Association.
Republished from the Winnipeg Free Press print edition May 24, 2014 F6
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