Young people earning less than their parents

Extra years in school aren't paying off financially for many of Canada's young people, who are better educated but worse paid than people their age a generation ago.

According to census data released Thursday by Statistics Canada, workers between the ages of 25 and 29 make less than their predecessors, especially men.

In 1980, median earnings for full-time male workers in that age group were equal to $43,767 in today's wages. In 2000, they had dropped to $38,110 and by 2005 they were at $37,680.

While women have statistically always earned less than men, their drop in wages was notably less drastic. In 1980, women aged 25 to 29 made $32,813 in inflation-adjusted dollars. In 2005 they earned just slightly less, $32,104, according to the report, titled "Earnings and Incomes of Canadians over the Past Quarter Century, 2006 Census."

The trend toward reducing wages for young men began in developed countries around the world in the early 1980s, according to StatsCan analyst Rene Morissette. At that time, economists believed new technology was replacing young workers, he told The Canadian Press.

Around the same time, some companies began to offer new workers lower wages than senior employees in order to reduce costs while maintaining morale among senior staff, he said.

More service jobs

These days, young people are staying in school longer and men are less likely to find full-time work once they finish, unless they work in the trades.

Another factor in lower incomes is the expanded service industry, which usually pays less than other sectors such as manufacturing. Morissette suggested increased employment in service is responsible for about 15 per cent of the decline in young people's wages.

Reduced wages for young people means that by the time they reach 30 or 35, most have significantly lower savings than their parents did at the same time.

While young people were the hardest hit group of respondents, they weren't the only ones suffering from a downturn in financial fortunes.

Middle class treading water

Thursday's report stated lower-income people are making less money than ever while the rich get richer. Middle-class people are treading water, still making close to the same amount of money they were 30 years ago.

Between 1980 and 2005, median earnings increased by 16.4 per cent for the top 20 per cent of full time workers increased only 0.1 per cent for those in the middle 20 per cent fell 20.6 per cent for those in the bottom fifth.

Workers today make a mere $53 more annually than in 1980, when adjusted for inflation, the census states.

"People are pedalling harder than ever," the Canadian Centre for Policy Alternatives' Armine Yalnizyan told CTV's Canada AM on Thursday. "Women are really the big news story in preventing the middle class from collapse."

As income rises for the upper class, housing prices tend to be draw upwards as well, making it ever more difficult for lower-income people to own homes, she said.

The combination of rising housing costs and lower income affects young families and new immigrants the most, she said.

"The gap between Canadian born (people) and immigrants is growing," she said. "They're doing worse off than similar types of immigrants in the 1980s."

If stagnation for the middle class and reduced fortunes for those in the bottom bracket is the norm despite the booming economy, we're looking at a rough future, said Yalnizyan.

"The economy hasn't performed like this in 50 years. This is as good as it gets."

James Morton
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