Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors
David Macdonald

GET UPDATES FROM David Macdonald
 

Gen Y Faces Big Risk

Posted: 11/26/2012 4:35 pm

In an interesting new piece, the Huffington Post tries to determine if it's really tougher for Millennials than it was for Boomers as part of their Asking Y series.

Certainly lots of things have changed since the 1970s: gas has gotten more expensive, electronics have become dramatically less expensive and cars cost about the same.

But one thing's for sure, life has gotten a whole lot riskier -- thanks, in large measure, to governments and corporations, which have been intent on offloading all kinds of risk onto regular Canadians.

For Canadians who are down on their luck, this is certainly true. When you fall, the safety net is much more frayed than it used to be. For instance, government cuts to Employment Insurance (EI) means that half as many laid off Canadians get EI benefits compared to the early 1990s.

But the risks have grown for everyone in the middle class, not just the unemployed.

Tuition is a great example of this risk shift. Beginning in the 1990s, provincial governments of all political stripes started hiking tuition fees, forcing young Canadians to take on deeper levels of debt in order to get the education they need to succeed.

It took on steam towards the end of the 1990s. Today, the minimum wage summer job that used to pay for tuition isn't enough. Debt is now the standard fill in for rising fees. In provinces like Alberta and Ontario, tuition fees have risen so high that student debt has become a mainstream concern.

Although the "average" student makes more with a university degree, plenty of university graduates find themselves stuck in dead-end jobs pouring coffee or working in the mall. Of course, this is one of life's big risks: Do I take four years off to go to university or do I go to work right away?

Boomers and Millennials have faced the same life choice. But for Boomers, choosing post-secondary education didn't mean taking out a debt the size of a house downpayment. For Millennials, if the education gamble doesn't work out, they now also have a sizeable debt hanging around their neck.

For anyone graduating at the wrong time -- basically at any point after 2008 -- or graduating from the wrong program -- say, autoparts design -- the roll of the post-secondary dice can prove devastating.

Obviously, education costs are front of mind for Millennials, but increasingly the dream of retirement is proving to be a risk for anyone 30 or younger. Boomers commonly received what is becoming a rare find: a company pension plan. The boomers' company pension agreed to pay a certain amount a month in retirement (otherwise known as a "defined benefit" plan). If some of the pension plan's investments didn't pan out, the original company was often called upon to increase their contribution. In essence, the workers and the company shared the retirement risk. Not so today.

Unless you work in a unionized workplace (and even then, not necessarily), this type of retirement risk-sharing is becoming exceedingly rare. If young workers get a retirement plan at all, it's in the form of RRSPs. Under the RRSP route, the risk is entirely shifted to the worker. Now, in addition to raising a family and holding down a job, young workers are expected to come home every night to beat the stock market, crossing their fingers that the market doesn't crash and melt away their retirement investment.

This doesn't even begin to touch on the steep risks inherent in buying a home today. Average mortgage payments haven't changed dramatically since the time boomers entered the buyer's market. What has changed is the cost of buying a house: that has ballooned over the past 12 years in Canada.

More house for lower payments means that anyone buying a house is heavily leveraged and is vulnerable to fluctuating mortgage rates. There has yet to be a major housing price collapse in Canada, despite the fact that debt ratios are now worse in Canada than they were in the U.S. before its crash. However, the risk of a reversal falls squarely on new home buyers -- read: Gen X and Millennials.

The risks may be higher, but for a select few, so are the rewards. For the richest 10 per cent of Canadians, this riskier world has paid off handsomely. The rewards of having the right parents, of graduating in the right program in the right year, of getting into a house at the right time and buying RRSPs in the right market can be significant. Those rewards are magnified by lowered income taxes and halving of corporate tax rates.

If the past 20 years has shown us anything, it is that after the dice has come up enough times in your favour, wealth becomes self-perpetuating. But the door has been closed on the generations coming up behind the Boomers. For the first time since the post-war era, Canadians are beginning to question whether their children and grandchildren will do better than their parents.

That's not some baseless fear, as corporations and governments relentlessly shift risk from the collective to the individual. And it's Canada's Millennials who may end up paying the stiffest price.

Loading Slideshow...
  • Think you know your generation?

    The Huffington Post Canada and Abacus Data surveyed 1,004 Canadian millennials from across the country on a variety of issues. Here's what we found:

  • Biggest challenges?

    We asked 1,004 Canadian millennials to rank the biggest challenges facing their generation.

  • What's the biggest challenge facing your generation?

    2% rank the decriminalization of marijuana as No. 1 or 2.

  • What's the biggest challenge facing your generation?

    5% of millennials rank internet regulation and online privacy as one of their top two issues.

  • What's the biggest challenge facing your generation?

    7% rank bullying as the first or second biggest challenge.

  • What's the biggest challenge facing your generation?

    8% of millennials rank retirement security No. 1 or 2.

  • What's the biggest challenge facing your generation?

    11% of millennials say access to quality health care is one of the generation's top two challenges

  • What's the biggest challenge facing your generation?

    20% of millennials rank pollution and environmental protection as No. 1 or 2 of the biggest challenges faced by this generation.

  • What's the biggest challenge facing your generation?

    20% say affordable housing is in the top two.

  • What's the biggest challenge facing your generation?

    24% of millennials peg the cost of education as their first or second choice for the generation's biggest challenge.

  • What's the biggest challenge facing your generation?

    27% say the cost of food, gas and consumer goods are in the top two.

  • What's the biggest challenge facing your generation?

    32% of millennials chose "student debt and personal debt" as the first or second biggest challenge.

  • What defines a good citizen?

    We asked 1,004 millennials between the ages of 18-30 what it takes to be a good Canadian citizen.

  • What defines a good citizen?

    15% of millennials say it takes being active in political parties...

  • What defines a good citizen?

    28% of millennials say donating money to charity makes a good citizen..

  • What defines a good citizen?

    35% of millennials say that being active in social organizations is important to citizenship..

  • What defines a good citizen?

    63% of millennials say being informed about current events is important..

  • What defines a good citizen?

    64% of millennials say being able to fluently speak one official language is important..

  • What defines a good citizen?

    74% of millennials say a good citizen is someone who always votes in elections.

  • What defines a good citizen?

    81% of millennials say good citizens honestly pay their taxes.

  • What's the biggest challenge facing your generation?

    43% of millennials rank the availability of quality jobs as their first or second choice.

  • Health Challenges

    We asked 1,004 Canadian millennials what were their generation's biggest health challenges

  • Biggest health challenge facing your generation?

    3% say pollution

  • Biggest health challenge facing your generation?

    4% say sexually transmitted infections

  • Biggest health challenge facing your generation?

    7% say disease

  • Biggest health challenge facing your generation?

    11% say poor nutrition

  • Biggest health challenge facing your generation?

    16% say obesity

  • Biggest health challenge facing your generation?

    17% say addiction

  • Biggest health challenge facing your generation?

    19% say mental health

  • Biggest health challenge facing your generation?

    26% say lack of physical activity

  • Relationship status

    Some views from 1,004 Canadian millennials on marriage and family..

  • Relationship status

    18% of millennials are in a common law relationship

  • Relationship status

    66% of millennials are single

  • Relationship status

    15% of millennials are married

  • Do you ever want to get married?

    63% of unmarried millennials say <strong>yes</strong> 13% say <strong>no</strong> 24% say they are <strong>unsure</strong>

  • Do you ever want to get married?

    65% of <strong>unmarried women</strong> say <strong>yes</strong> 13% say <strong>no</strong> 22% say they are <strong>unsure</strong>

  • Do you ever want to get married?

    61% of <strong>unmarried men</strong> say <strong>yes</strong> 13% say <strong>no</strong> 26% say they are <strong>unsure</strong>

  • Is marriage an outdated institution?

    33% agree 67% disagree

  • Do you have children?

    12% of millennials surveyed have children 88% do not

  • Do you want to have children at some point?

    64% of millennials say yes 12% say no 24% are unsure

  • More On Millennials

    Huffington Post Canada's series on millennials, Asking Y. <a href="http://www.huffingtonpost.ca/news/generation-y" target=blank>Visit it here</a>.

-- Abacus Data has focused research on the Canadian Millennial. Read more here.

What do you think about this story? Join the conversation below or tweet us @HuffPostCanada with the #AskingY tag. We may feature your comments in an upcoming post. You can also check out our Tumblr, and our dedicated page for more from the Asking Y series.
 
FOLLOW CANADA