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Gen Y Faces Big Risk

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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.

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-- 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.