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The latest report to pit one generation against another to see who has it better has come out in favour of Millennials. BMO Economics jumped into the comparison game and came to the less common conclusion that young Canadians today are doing quite well for themselves, actually.
“There is a popular notion that Millennials will become the first generation to do worse than their parents economically,” said Sal Guatieri, Senior Economist, BMO Capital Markets, in the news release.
“However, apart from taking on bigger loans to buy pricier homes, young Canadians today enjoy better job prospects, earn more and are wealthier than in the 1980s.”
The report analyzes how Millennials (those born between 1981 and 2001) and baby boomers experience a number of different economic factors such as median income, the labour market, housing and debt.
The findings? When it comes to finding work, BMO says Millennials have a 93 per cent chance of finding a job, compared with 90 per cent for young Canadians who were job hunting in the mid-1980s. Today, unemployed Millennials go without work almost a month less than their boomer counterparts did in the mid-80s.
One way that the boomers had a job market advantage was in full-time work. More young people today either have a job or are searching for one, though fewer work full-time.
In terms of pay cheques, the median income of people aged 25 to 34 years was $33,900 in 1984-88 (adjusted for inflation). In 2011, the median income for that particular age group $34,700, meaning millennials can buy about 2 per cent more goods and services than their parents could in 1984. BMO suggests this is due to higher education rates among young people today.
Though, there’s less of a contrast if you go back another decade. “One caveat is that median income was higher in the 1970s, before the 1980s’ recession took a severe toll on workers, so the starting point for our comparison matters,” said Guatieri.
The economic picture isn’t completely sunny for young Canadians nowadays. BMO noted that when it comes to debt and housing, Millennials aren’t faring so well.
In 2012, 84.4 per cent of Canadians aged 25 to 34 years had debts, while in 1984, 82 per cent did. Plus 85.6 per cent of young homeowners held a mortgage in 2012 while 79.2 per did so in the eighties.
Soaring tuition costs have also saddled Millennials with student debt. Tuition costs have risen an astonishing three times faster than consumer prices since 1984.
Then there’s the issue of home prices. The average house price was 10.4 times the median income of young families in 2011, more than double the ratio it was thirty years ago, relative to income. And while mortgage rates were in the double-digits in 1984, young homeowners have to pay more to service a mortgage, especially in pricey markets such as Toronto and Vancouver.
If young Canadians need more proof that they’re real estate situation is worse, consider this news: in Metro Vancouver, baby boomers are sitting on $163 billion worth of property.