Finally things were looking up. For years Joe Martin had found himself stuck in a series of lousy jobs. As a teenager he served time at McDonald’s. In the wake of the 1990s recession he toiled at a golf course for low wages alongside disgruntled university grads. Later, he installed garage doors, working for years to earn meagre raises with zero benefits. Then, three years ago, Martin finally caught a break. He landed a coveted spot on the assembly line at Cami Automotive in Ingersoll, Ont.—and everything began to fall into place. At $33 an hour the pay was good. The full benefits package was even better. He met Kate Fisher, another employee, and with a sense of confidence born of their joint paycheques, they bought a small home together in nearby Dorchester and prepared to have a child. “We were able to actually have a plan that we could move forward on,” says Martin, who’s now 36. “Things were looking good and the company said if there was ever any trouble, they’d just reduce production and rotate layoffs.” After a pause, he adds, “It didn’t work out that way.”
Last spring the couple both received pink slips, making them front-line victims of the unemployment storm to come. In June, Fisher gave birth to a baby girl. And Martin, already a father of three, now finds himself right back where he started. He’s working with garage doors again, earning $11 an hour while his fiancée struggles to raise their young family. “I’m starting all over,” he says. “We have no idea what we’re going to do to get by. It’s the same thing for everyone we know. My generation is in serious trouble.”
Canada’s economy is built on a simple but deeply entrenched belief: that every new generation will do better than the one before it. But now, as we slide into what is expected to be a long and painful recession, there’s a very real feeling the cycle of generational one-upmanship has come to an end. Mounting evidence suggests today’s 18- to 40-year-olds are struggling just to keep up with the lifestyle their parents once enjoyed, let alone pull ahead. It’s all the more frustrating because before the recession hit, workers such as Martin were just starting to gain some traction—for the first time in their lives, they really felt like they were getting ahead. Then they slammed into the recession. It’s left experts asking some uncomfortable questions. Will younger workers ever dig themselves out of the hole they’re in? And could this be the first generation in decades to do worse than their parents?
Many Canadians certainly seem to believe younger workers are at risk of being left behind. In an Environics Research Group survey published last year on behalf of the federal government, the majority of people in Canada said they felt they were better off financially than their parents were at the same age. Yet when asked about the prospects of the next generation, only three in 10 thought younger people will pull off the same feat. They have good reason to be pessimistic. When you look at the most crucial yardstick of our financial well-being—our paycheques—you find that young workers are indeed falling behind. In 1976 the median income for families in the 25-to-34 age group was $56,300 (after adjusting for the effects of inflation). Three decades later that figure has actually dropped to $50,100. And with the economy backsliding, economists warn incomes could take an even bigger hit.
There’s more to the gloomy outlook facing the under-40 set than just dwindling pay. Students preparing to enter the job market today are already shouldering a huge burden. Many are staying in school much longer to chase higher degrees, in the belief that an alphabet of credentials after their names will guarantee a higher paying job. It was drilled into the head of Kate Fisher, Martin’s fiancée, as she was growing up. “Parents push you to go to university so you can do all these great and wonderful things,” says Fisher, who graduated from the University of Guelph in 2004 with a degree in geography and minors in biology and environmental studies. “But not everyone is going to get those super-high-paying jobs that we got our degrees for. I’m not a doctor, or a lawyer, or a teacher. I’m just a regular middle-class person trying to make a living.”
Even when students do land a position in their field, chances are they’ll still lag those who came before them. Extra degrees do boost incomes. But with so many master’s and Ph.D.s floating around, that framed piece of paper on the wall now offers less bang for the buck than it used to. Numerous studies have found that to earn what a regular university graduate made 30 years ago, one must now obtain an additional M.A., or even a PhD, which entails an extra five to nine years of schooling. Put another way, says Richard Shearmur, a research professor at the University of Quebec, after inflation, a 25-year-old who graduated this decade can expect to earn just 85 to 90 per cent of what the same graduate would have pulled down in 1980.
The lower income is bad enough, but all that extra schooling comes with a hefty price tag too. In 2006, the average graduate left school with about $24,000 in debt, up dramatically from $8,300 in 1990, according to the latest report from the Canada Millennium Scholarship Foundation. (All figures are in 2006 dollars.) What’s more, over the same period, the number of university students in hock when they graduated jumped from 45 per cent to nearly 60 per cent. More debt, more degrees and more time spent in school. “It all adds up to most people below the age of 40 having a harder time settling down and acquiring the lifestyle their parents thought was normal when they were under 40,” says Shearmur.
Not that older Canadians typically have much sympathy for those toiling away in school. With more thirtysomethings boomeranging back to mom and dad’s place, there’s a suspicion that young people are choosing university life as a way to avoid the harsh realities of the working world. Yet there’s no denying that the world is far more complex and competitive than it used to be. Today, goods flow across borders with ease, as do jobs. Trade has helped lower the price of flat-screen TVs and the grocery bill, but many believe globalization has also put downward pressure on what Western countries can pay for skilled labour, since it can often be done cheaper overseas. “When I was young, Canadians didn’t have to compete with people all over the world for jobs, but now to a greater extent they do,” says Malcolm Hamilton, of Mercer Human Resource Consulting in Toronto. More and more, it looks like the days of landing a decent-paying job fresh out of high school are over.
But despite all that, after a full quarter-century of spinning their wheels, there were indications earlier this decade that young workers were finally making up for lost ground. It wasn’t just Martin who had seen his fortunes improve. After decades of lagging previous generations, younger workers were pulling ahead, at last. Between 1997 and 2007, hourly wages for workers under the age of 35 outpaced those for all other age groups, according to a Statistics Canada report released last year. Suddenly, with unemployment at a 30-year low and companies struggling to find workers, the new generation finally seemed to have the upper hand. “At last those groups that had been left behind were becoming more valuable as a source of labour,” says Roger Sauvé, president of People Patterns Consulting. On top of that, the younger generation was told they could expect an employment windfall as Canada’s 10 million baby boomers, fully one-third of the population, began to retire.
Then, with almost no warning, young workers ran headfirst into what may be the worst recession in decades. The economic collapse has already claimed 274,000 jobs in Canada over the past four months. Economists believe that figure could easily rise by another 200,000 by year-end, and even that could prove to be optimistic. With each round of layoffs, any hope young workers had of negotiating higher salaries is slipping away. “This generation has been screwed by demography,” says Linda Duxbury, a professor at Carleton University’s Sprott School of Business. “They’ve been through a recession, a jobless recovery and stagflation, while the baby boomers got in there and clogged up all the jobs in the hierarchy,” she says. “Finally, they thought, this was going to be their time. And now we have another recession.”
Duxbury hopes that the situation for young workers will improve somewhat when the economy finally rights itself. “We had a profound labour force crisis before the recession, and when we come out of this recession, we’re still going to have a labour force crisis,” she says. Because of that, she thinks employers are being incredibly shortsighted by focusing on younger workers when it comes to layoffs. “I’m warning employers, if you treat them badly now, it’s going to come back and haunt you.” Still, depending on how long and deep this recession goes, it could certainly wipe out the meagre gains of the past few years. And if it does, then today’s young workers will have the dubious distinction of going down in history as the first Canadian generation ever to do worse than their parents.
Even if things do improve for young workers down the road, it’s cold comfort to couples such as Martin and Fisher. They’re still trying to figure out how they’ll cope with the mortgage payments and other costs of raising a family over the next few years. After catching a tantalizing glimpse of the lifestyle their parents enjoyed, now it’s back to square one. “I can’t get out of the bucket,” says Martin. “I don’t know how I’m supposed to get out when there’s no work.”