Do youth really have it harder?

Sure, young people have higher expenses, but they also have advantages that previous generations didn’t have.



From the Summer 2012 issue of the magazine.


When the Quebec student strike began in February, no one in the province, nor the country, was prepared for the strength and dogged determination of the movement. It quickly became apparent that the protests were not just about tuition hikes: they were fuelled by a sense that young people today face a barrage of economic ills that their parents and grandparents didn’t, such as huge debt loads, limited career options and soaring home prices. But is it really true that young people today are getting a raw deal compared with previous generations?

According to Mercer actuary Malcolm Hamilton, the current crop of young adults is likely to accumulate more student debt, but their education will pay off in the long run. A greater percentage of young people are going to college and university than ever before, and they will find it easier to land good jobs—albeit in a larger, more competitive workplace.

Hamilton admits that the job market is tough, but that’s nothing new. “Weak job markets for young people have been a regular occurrence for some time,” he says. “If you go back to the early ’90s, youth unemployment rates were much higher.”

But what about housing prices? In recent years, the cost of a typical house has soared to five times the average income. Hamilton points out that this phenomenon has been largely fed by astoundingly low interest rates—and low rates actually make homes more affordable: in 1981, 42% of pre-tax household income went toward mortgage payments, and this dropped to 30% in 1991, and 20% in 2001. Now it’s sitting pretty at 24%. “To complain about house prices being high is like complaining about mortgage rates being low,” says Hamilton.

And while recent investment returns have not come close to those of the 1980s and 1990s, today’s twentysomethings have access to far better investing tools than their parents, who grew up in the golden age of high-cost mutual funds and $200 stock trades. Low-cost exchange-traded funds (ETFs) and online brokerages offer tremendous opportunities for young people looking to build wealth over a lifetime.

4 comments on “Do youth really have it harder?

  1. Some rebuttals: Yes, youth have more education, but they have less experience. Many work places demand experience but youth can't get it because older adults have a monopoly on it.

    Regarding houses, sure mortgage rates are low, but youth are saddled with more debt which they struggle to pay off while older folks get in and buy the housing that the youth could possibly afford.


  2. I suspect the author also walked to school in 5 feet of snow, uphill, both ways.

    "in 1981, 42% of pre-tax household income went toward mortgage payments, and this dropped to 30% in 1991, and 20% in 2001. Now it’s sitting pretty at 24%. "

    Those numbers, if true, disprove your argument. We see that pre-tax household income toward mortgage payments actually increased since 2001 despite higher income and decreasing interest rates and mortgage payments for existing home owners.

    That 24% number is "sitting pretty" for the moment because the number of buyers since the bubble began hasn't yet been enough to skew the data. So, once interest rates go up in the next few months and years, and today's youth get into the housing market, we should be looking at, what, 50% of pre-tax household income went toward mortgage payments? Maybe higher?


  3. The writer didn't consider the down payment for a house. 20% down payment on $300,000+……who on earth can save for that with loads of student loans?? Lots of holes in this article. And why are we comparing to the 90's?? Pretty sure my parents were my age in the 70's…….


  4. I graduated 12 years ago from grad school, and it took me 6 years to get a permanent job. Meanwhile, I was buying a small condo two years out of grad school (admittedly with a contribution from my parents that was 10% of my home – I paid the other 10%). I finished grad school with $60K of debt – it could have been worse, but I worked through school and every summer. I finished paying for school three years ago – it took me 9 years to pay it all off, and that included a small inheritance from my grandmother. Today, I have a full time job, benefits, and a nice home – but it was a battle. I think I'm stronger for it.


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