Canadian millennials better off than U.S. counterparts: study
A new report from TD Economics says that 50 per cent of Canadian millennials owned a home, compared to 36 per cent of Americans from the same age bracket.
Michael Shulman, CTVNews.ca
Published Tuesday, December 1, 2015 9:29PM EST
Older Canadian millennials have fared well in the years after the recession of the late 2000s -- at least compared to their American counterparts.
A new report from TD Economics says that Canadians between the ages of 25 and 34 are wealthier, more likely to own a home and have a job than their neighbours to the south.
Millennials, characterized by the study as those born between 1980 and 2000, are widely seen as facing tough job prospects and barriers to home ownership, despite being the most highly educated generation in history.
In the report, economists Beata Caranci and Diana Petramala say there is "no disputing" they were "disproportionately impacted during the recession," with those 28 and younger accounting for nearly 70 per cent of the job losses in Canada and 50 per cent in the U.S.
But those jobs returned "quickly," at least in Canada, where as of September unemployment for the age bracket was 6.7 per cent. In the U.S., the unemployment rate averaged 8.6 per cent between 2010 and 2013.
While the report says that younger millennials between the ages of 15 and 20 continue to face "significant economic challenges," including high unemployment, the prospects have shifted for those between 25 and 34, particularly those in Canada.
The study says that despite the average price of a home being nearly "six times that of income," Canadian millennials have managed to outpace their U.S. counterparts in home ownership.
As of 2015, more than 50 per cent of Canadian millennials owned a home, compared to 36 per cent of Americans from the same age bracket.
While Canadian millennials are more likely to have more debt, the study says this "primarily due to mortgages." They've been able to take on this debt thanks to lower 5-year fix mortgage rates, as well as slashed down payments for first time homebuyers.
This has allowed them to build greater wealth with their home. Millennials in the U.S. had on average a net wealth of US $76,000 in 2012, nearly half that of their Canadian counterparts.
However, the report says Canada's housing market is at a "mature" phase, leaving little room for gains in homeownership rates.
The authors also add that higher debt levels accrued by Canadian millennials could leave them "more vulnerable" should the housing market collapse.
Women in the workplace
Millennials in Canada have also had better job prospects since the 2008-09 recession.
The study says that the participation of women in the workforce is in "large part" responsible for the country's higher employment rate and income.
While employment numbers for men between the age of 25 and 34 have "stagnated," in Canada, women are working at "near-record high levels."
South of the border, millennial women have a smaller presence in the labour force.
The report says this discrepancy began in 2001, shortly after the Canadian government expanded parental leave from 10 to 35 weeks.
American millennials have also been saddled with greater student debt than their Canadian counterparts.
The average American student loan balance topped US$27,000 in 2013, compared to numbers from 2012 that indicate the average is less than US$12,000 among Canadians.
The TD report says that this gap can be explained by the fact that Americans tend to stay in school longer, in pursuit of post-graduate and professional degrees, and have been hit by a greater jump in tuition costs.
Despite trailing in many economic indicators, the report predicts that American millennials are likely to catch up thanks in part to "strengthening housing and job markets, as well as "comparatively high education levels."
"Over the next few years, Canada's 25 to 34-year-olds are likely to continue to enjoy the edge in terms of most key economic and financial indicators compared to similar-aged Ameri¬cans. However, some closing of the gap appears likely," said the report.