Ontario’s economy is 2nd-worst for young people. But it’s the worst on 1 thing: study

globalnews.ca
By Jesse Ferreras

First, it was British Columbia. Now Ontario is feeling the squeeze from a group that advocates on behalf of Canadians in their 20s, 30s and 40s.

Generation Squeeze released a report titled “Ontario is the second worst economy in Canada for younger generations” on Wednesday.

It shows that Ontario’s economy is gradually making life tougher for residents under the age of 45.

And though B.C. is worse in most areas, there’s at least one where Ontario takes the cake.

The report, by Generation Squeeze founder Paul Kershaw, was similar to another study about B.C. that the group released last month.

Both aimed to looked beyond economic indicators such as GDP growth and employment rates and compare the lot of today’s young Ontarians against that of same-aged people in 1976, which was around the time that most Baby Boomers started out as young adults.

This report was particularly tough on the Ontario Liberal government, and how economic trends have persisted during their time in office. But Generation Squeeze was careful to note that it “does not recommend or endorse any political party.”

“Gross domestic product and blunt employment indicators are insufficient metrics to evaluate the performance of the general economy,” Fatin Chowdhury, a Generation Squeeze organizer, said in a news release.

“It is time we asked instead: what kind of growth are we achieving?”

Full-time earnings in Ontario for typical 25- to 34-year-olds in 2014 fell by $4,600 from the period of 1976 to 1980, the report noted.

That was less than than the drop of $8,440 in B.C. But it was still steeper than the national average decline of $4,020.

While full-time earnings fell for several age groups in B.C., in Ontario they were stable for 35- to 44-year-olds; they went up $2,100 for the typical 45- to 54-year-old; and jumped by $1,400 for typical people aged 45 to 64 years old.

But there is one metric related to incomes that was worse in Ontario than in any other province: earnings since 2003, the year that the Ontario Liberals took office under premier Dalton McGuinty.

Ontario is the only province where full-time earnings for 25- to 34-year-olds fell in that time, dropping by $2,700.

Full-time earnings for Ontarians in this age group grew by $2,000 under the Progressive Conservative (PC) government that reigned from 1995 to 2003, and jumped by $1,800 under the Liberal government that was in office from 1985 to 1990.

Full-time earnings also fell by $1,200 under the NDP, which governed from 1990 to 1995, and by $10,600 under the Progressive Conservative government that was in office from 1976 to 1985.

These trends have happened as it’s become more and more difficult to afford a home in Ontario.

The average price of a home hit $535,931 last year, representing an increase of $334,585 since the period of 1976 to 1980 - a sharper hike than in any province except B.C., where home prices grew by $474,338.

With that increase, “the harm to young people’s home purchasing power has occurred primarily under the watch of the Ontario Liberals starting with Premier McGuinty, and now accelerating under Premier [Kathleen] Wynne,” the report said.

Home prices have accelerated by $251,505 since 2003, the Liberals’ first year in office. They’ve jumped by $113,019 since 2013, Wynne’s first year as premier.

Again, these increases were second to price hikes in B.C. in those time periods. But they’ve still been enough to force young Ontarians to save a mountain of money just to make a 20 per cent down payment.

Under past Ontario governments, young adults would only have had to work five to eight years to save enough money for such a payment, Generation Squeeze said.

That has grown to anywhere between eight and 15 years under the Ontario Liberals since 2003.

The bulk of the increase has happened since 2003 - young people must work an additional 6.9 years in the time that the Liberals have been in office.

The number of work years needed to save has grown by 2.8 years since Wynne became premier.

“For every year that Ms. Wynne has been premier, the Ontario economy evolved so that young adults have fallen around a further year behind in terms of saving for a home,” the report said.

And young Ontarians need to work additional years all over the province.

In the Greater Toronto Area, they only would have needed to work for six years from 1976 to 1980. Today, they have to work for 20 years if they want to buy an average-priced home there.

In Ottawa, they only would have needed to work five years to save for a 20 per cent down payment back then. Now, they have to work for nine years.

Debt is also a problem for younger Ontarians.

The ratio of net government debt to GDP stood at 27.2 per cent in 2003; it climbed to 40 per cent in 2015. The amount of public government debt per person has hit $22,473, up from $14,183 in 2003.

Younger Ontarians are also facing mounting personal debt levels - though Generation Squeeze admitted that limited data is available. Changes in personal debt levels could only be analyzed for the years 1999, 2005 and 2012.

But Generation Squeeze nevertheless found that personal debt has grown by at least $19,000 for the typical Ontarian under the age of 35 since 1999, and that their net worth fell by $4,000 in the same time frame.

People at this age don’t normally own homes, so the debt was attributed to costs such as post-secondary tuition, child care and rent.

Their debt increased by $50,000, with their net wealth jumping only by $35,000.

“In other words, for every dollar of net wealth gained by a young person in this age group by comparison with the same aged person in 1999, they had to take on $1.41 in debt,” the report said.

Generation Squeeze offered a number of recommendations to improve the lot of younger Ontarians.

The group urged political parties to adopt “Homes First” housing policies that would direct domestic and foreign investment into “more beneficial types of housing supply,” such as “more purpose-built rental housing” and “diverse multifamily housing.”

It also encouraged political parties to push for density in an effort to increase home supply.

One of its biggest recommendations, however, was that governments conduct age-based analyses of their spending in annual budgets. It argued that this can help people evaluate the “efficiency and fairness of government spending and revenue collection between generations.”

Colin Busby, the associate director, research with the C.D. Howe Institute, took some issue with certain findings in Generation Squeeze’s report, though he agreed that there are “pressing concerns” around intergenerational equity.

He told Global News in an email that today’s labour market is “very different,” with changes such as increased participation for women aged 25 to 54.

In 1965, only about 35 per cent of women in that age group participated in the labour force. That has since climbed to over 80 per cent.

“So comparing average earnings over time neglects the massive changes to the labour force over this time,” he said.
Busby also said people should be cautious about the metric that shows today’s young people have to work more years to afford a down payment.

“It is not a comprehensive measure of housing affordability, but more importantly it is not the only thing that younger generations want to spend their money on and on which they may derive satisfaction,” he said.

But Busby also offered further evidence that Ontario isn’t the best place for younger people.

He noted that there has been a net loss of 3,000 Ontarians between the ages of 20 and 44 to other provinces since 1990.

And that, Busby said, is the “most telling overall indicator of satisfaction and opportunity, in my opinion.”