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Boomers, Gen-X, Millennials: How Living Costs Compare Then and Now

September 28, 2024

By Erica Alini and Jesse Ferreras
Global News
November 11th, 2017


Amy Clausen wonders whether her kids will ever enjoy a life like the one she had growing up in Metro Vancouver.

It’s a thought that weighs on the 38-year-old drama teacher and mother of two while she spends maternity leave in her new home, a ferry ride away in Victoria.

Clausen remembers a childhood in a single-family home with a yard, making many friends over the years.

But when she became an adult, a condo renting at $2,400 per month was all her family could afford.

After relocating to Victoria in September, the couple started saving as much as $600 a month in rent for a three-bedroom home.

There, she’s found a vibrant community with young families and kids all about.

“We notice so many more families with young children” in Victoria compared to Vancouver, Clausen told Global News.

Stories like Clausen’s are common fare in Canada’s two red-hot housing markets of Vancouver and Toronto. They are part of the narrative that’s feeding the perception that today’s young people have it tougher than previous generations did at their age.

But does Canada really have a generational inequality issue?

Global News put that theory to the test by combing through the numbers.

When you look at earnings, generation X is the real loser

In 1977, as a wave of young Canadians born right after the Second World War was establishing themselves in the workforce, the average hourly earnings for employees peaked at over $24, adjusted for inflation. Today, young Canadians taking up their first job face a labour market where things have barely changed: The average hourly pay for full-time employees in 2016 was $27.70, according to Statistics Canada.

But wages didn’t just stagnate for 40 years. A look at the breakdown by age reveals that, especially for men, earnings for younger workers actually dropped and climbed back up between 1980 and 2017. As the chart below shows, wages fell for Canadians aged 17 to 34 through the 1980s, largely stagnated in the 1990s and didn’t start recouping the lost ground until around 2005.

There are several factors that help explain the drop. The first one is the recession of the early 1980s, which hit young people the hardest, as economic downturns usually do, noted Thomas Lemieux, professor of economics at the University of British Columbia.

The decline of the manufacturing sector started weighing on wages, as well.

But the drop was also likely the effect of a wave of boomer kids flooding the labour market, said René Morissette, research manager at StatsCan’s Social Analysis and Modelling Division.

The decline likely hit some of the younger boomers, born in the early 1960s. But it was Canadians born in the mid-1970s, in the middle of the age bracket of generation X, that had the worst timing by entering the job market in the mid-1990s.

Millennials don’t exactly have it easy. The median hourly wage for today’s workers between the ages of 17 and 24 is still 10 per cent lower than it was in 1981. But millennials did, at least, start their career at a time when wages were once again trending upward.

Indeed, Canadians in their late 20s and early 30s today enjoy slightly higher wages than their peers did in 1980s.

Same pay for more time in school and higher costs

The wage growth enjoyed by older millennials is modest and becomes even less impressive when you consider that today’s young workers are much more educated.

Although baby boomers already had more schooling than their parents, the trend toward higher and higher education rates continued through the decades. In 1976, just over 10 per cent of Canada’s prime-aged workers had a university degree, according to Statistics Canada. In 2014, that share was just short of 30 per cent.

And yet, better educated young workers failed to command significantly higher wages.

Millennials are also facing living costs that are likely considerably steeper in at least two respects: education and housing.

The price of a university degree today is much higher than it was for generation X, let alone boomers, with undergraduate tuition fees rising from $3,500 in 1993-1994 to $6,571 for 2017-2018.

And then, of course, there are housing prices.

Housing is hammering millennials most of all

If gen-Xers received the biggest blow in terms of earnings, millennials are the ones who got slammed by the housing market, according to Paul Kershaw, associate professor at UBC’s School of Population and Public Health and founder of Generation Squeeze, a group that advocates for young Canadians.

And “housing prices have risen much more dramatically [than wages],” noted Kershaw.

Boomers’ timing entering the housing market wasn’t perfect. Young homebuyers in the early 1980s faced not only a housing bubble but double-digit interest rates.

Things, however, eventually worked out for the post-war generation. The homeownership rate among Canadians aged 65 and over was 74.6 per cent in 2016 compared to 61.2 per cent in 1984. And boomers reaped the benefits of the current housing boom, with the median net worth for households headed by a senior rising more than four-fold from $111,693 in 1984 to $460,700 in 2012 (in constant 2012 dollars), according to a 2014 analysis by BMO Financial Group.

“The typical senior is nearly nine times richer than the typical millennial, a wealth gap between similar age groups that has more than doubled since 1984,” reads the report.

It’s not easy for young families to escape the squeeze

Nowhere have young Canadians felt the crunch of housing prices as in Vancouver and Toronto. But Canada is a big country with lots of real estate markets where median incomes are still enough to buy the detached home of every middle-class family’s dream.

So why don’t millennials and young gen-Xers just leave for more affordable pastures?

For one, today’s generation is “more constrained to a bigger urban environment for jobs than previous generations were,” argued Kershaw.

Big cities are often where young workers are most likely to find more and better jobs.

And sometimes, even when people do move, the squeeze follows.

That’s Clausen’s fear.

Housing affordability is rapidly eroding in Victoria, much as it has in Vancouver.

Just two years ago, mortgages payments, property taxes and utility costs for your average single-family home in Victoria took up 46.4 per cent of the median pre-tax household income, according to RBC’s Housing Trends and Affordability Report.

That share now stands at 58.6 per cent.

Clausen, whose family isn’t ready to buy a house yet, is closely monitoring housing prices and hoping that the upward climb will stop.

“It’s very anxiety provoking to look around and think, wow, affordability, if we’re being blown out of this market, just like we got blown out of the Lower Mainland, you know, we’re watching that happen.”