2012 vs. 1984: Young adults really do have it harder today
All young adults who think they’re getting a raw deal in today’s economy, let me tell you about how it was back in my day.
In 1984, my final undergraduate year of university, tuition cost more or less $1,000. I earned that much in a summer without breaking a sweat.
When I went looking for a new car in 1986, the average cost was roughly half of what it is now. It was totally affordable.
The average price of a house in Toronto back in 1984 was just over $96,000. I wasn’t buying just then, but it’s worth noting that the average family after-tax income back then was close to $50,000. Buy a first home? Easy to imagine for new graduates of the day.
I had it easier than today’s twentysomethings, and I have no problem saying so. But quite a few others can’t see what all the fuss is about when it comes to the financial concerns of today’s young adults.
This became clear as responses poured in to last week’s column tying the Quebec student protests to the financial challenges faced by people who are trying to make the jump from college and university into the work force.
Some responses were heartfelt, like the one from a 78-year-old gentleman who said he grew up “in abject poverty on a farm” and worked to pay for his education. But other comments reflected a view that today’s young adults should just grow up.
My sense is that’s what they’re trying to do. But it’s tougher out there than some of you might know.
After earning a three-year BA (majoring in political science) at York University in Toronto back in 1984, I landed a summer job as a copy editor at The Canadian Press, the national wire service. I earned enough to spend a year in Ottawa earning a bachelor of journalism degree at Carleton University. I had to work the Christmas holidays at CP to top up my savings, but I was financially self-sufficient and incurred zero debt.
Today, financial self-sufficiency is impossible without taking breaks from school to work. The Bank of Canada’s handy inflation calculator tells us that my $1,000 tuition back in 1984 would cost $2,028 today if it increased just by the inflation rate annually. But according to Statistics Canada, the latest read on average tuition fees is $5,366.
In Ontario, the minimum wage is $10.25. A student who puts in a 40-hour work week for 12 weeks would stand to make about $4,900. That’s a sizable shortfall on tuition, never mind the cost of student fees, books and living expenses. As a parent of an 18-year-old heading to university out of town next year, I can tell you that budgeting $18,000 to $20,000 per year is prudent.
Buying a house is another point where the experience of older Canadians is unlike what today’s younger generation faces. Canadian Real Estate Association data show the average national price of a home in mid-1984 was $76,214. If houses kept up with inflation – and that would be a pretty good result all on its own – the average house would now cost $154,587. In April, the actual average was $369,677.
That’s an annualized gain of 5.8 per cent across the country. In cities like Toronto and Vancouver, the yearly increases are even more pronounced.
House prices themselves are an abstract number – the real question is how affordable a home is. Data from a 2011 Conference Board of Canada study on income inequality shows the average family after-tax income in 1984 was $48,500. In 2009, the latest date included in the study, income levels had risen to $60,000. In 1984, a house might have cost a family 1.6 times its annual income. Today, we’re looking at a multiple of something around six.
Not everything is more expensive for today’s young adults – mortgage rates were in double digits back in 1984 (but then again so were savings rates), and cars have pretty well risen in price along with inflation. And not everything is worse, at least on the surface. Today’s headline unemployment rate of 7.2 per cent beats the rate of almost 12 per cent back in the mid-1980s. Look deeper into those numbers and you find a youth unemployment rate of 18 per cent back then and 13.9 per cent today. Young adults haven’t benefited nearly as much as the overall population from declining unemployment trends.
Back in my day? Economically speaking, life was easier for the young adult.
I wonder if its true minimum wage is $10.25 in Ontario.
It would be somewhat sad and ironic if minimum wage in Canada were higher than the United States.
May 12, 2012, 12:08 AM
It's true, min wage is 10.25 in Ontario and now BC. BC (where I live) had the lowest min wage for over 8 years which was stuck at 8.25. Over this last year and a half, they raised it 75 cents every 6 months until it reached $10.50 this May. This was considered to be quite oppressive.
In places like Alberta, min wage is quite higher. I know you could work at a McD's or Tim Hortons and get 14/h. Alberta though is a very scarce province though. The majority of the population is Ontario, with small, equal amounts spread out then over the other provinces. In Alberta, about 90% of the work force is in oil. The men can make good money by being in labour camps and drilling oil, but that then leaves very little left for other places to gather employment. So they then raised the min wage for menial jobs to attract people.
Also, I don't think it needs to be said, that regardless of the min wage, anywhere you go pretty much, you won't get a 40 hour week. Unless you've been working for your employer for 5+ years and established seniority, or you work for a Union, it's quite common for someone to get anywhere from 22-30 hours a week. This is also probably common in the states.
I don't know what houses or apartments are like cost wise to try and buy your first, but I know they're not cheap here. Granted, most houses here come with a good chunk of land, but you won't find a 1 or 2 bedroom house, on land, for less than 200K, and that's gonna be a beater. We have a slightly higher min wage, but our living costs are probably a lot harsher than yours too.
. . . Lightning x Aerith . . .
Mnimum wage in the United States is $7 - $8.
Canada's living expenses are a little higher than the United States. Not a lot higher, only a little. I think our healthcare is more expensive. Real estate costs nearly the same.
I hope none of the candidates running for President kiss ass in saying: "AMERICA IS THE GREATEST COUNTRY ON EARTH" & everyone still living in the 1960's nods and says: "oh, yeah, buddy. oh yeah".
If we were the best we'd pay our workers more than Canada does.
I don't know that living costs and real estate is the same in Canada as it is in the US. With the way your economy is, you can buy a house significantly cheaper there than you can here. Foreclosures and the market going down has made houses, beaters and small ones, extremely cheap, well around just 100K. Try find something small in Canada, you won't cause our economy is a lot more stable. Anything will go around 250K and that still needs work on it too.
. . . Lightning x Aerith . . .
In the state I'm in, houses cost $300,000 - $600,000. Land and homes here are very expensive.
I think american mortgage interest rates are 2% - 4%. Canadian interest rates are something like 1%. Even if your real estate were more expensive the interest rates could well offset the expense. -shrug- I think your property taxes are much lower than ours, also.
June 21, 2012, 7:52 AM
Uh i'm not american but i just wanted to say, imagine doing the jump if you dont have any parents
Also!, in holland (where i'm from) its impossible to do it without creating a debt, and choosing the wrong "path" in your education is a real financial killer.
Dont know about wages, but making that jump is so fragile imagine if you catch a disease and you gotta pay up but you cant work.
I know you dont have enforced healthcare yet but thats also gonna be a problem, here our healthcare becomes more expensive each year we pay around 170 dollars a month and the first 270 dollars wont get covered by that healthcare
I blame privatization (dunno how to say it in ENG)