Millennials richer than their parents at that age: BMO report
TORONTO – Many millennials may not be living in their parents’ basements after all.
A new report by BMO Economics suggests that young Canadians, specifically those between 25 and 34 years old, are on average richer than their parents were at that age.
Using Statistics Canada data and other metrics, the study found that millennials today have more money than the generation preceding them at the same age.
Millennials had a median income of $34,700 in 2011, compared with $33,900 (when adjusted for inflation) among those in the same age bracket 30 years ago, says the report.
“This means millennials can buy about two per cent more goods and services than their parents could in the mid-1980s,” writes BMO senior economist Sal Guatieri. “That doesn’t sound like much, but the difference adds up over time.”
The report suggests young families are also wealthier than their parents were. Net median incomes for the head of a household aged 25 to 34 years old was $52,000 in 2012, nearly double the income of $28,752 in 1984.
However, although they may be richer, millennials also have more debt than their parents at the same age.
BMO says 84.4 per cent of households headed by young people owe some form of debt, compared with 82 per cent of the same households in 1984. The number of millennials who have a mortgage, at 85.6 per cent, is also higher than those in the same age group, at 79.2 per cent, in 1984.
“Though saddled with more debt and costlier homes, young people tend to be wealthier, have a little more spending power and enjoy better job opportunities than three decades ago,” wrote Guatieri.
The report noted that one area that has worsened in the last 30 years has been the rising cost of housing, which has been attributed to bigger mortgages and more debt.
“Although earning slightly more than their parents did in the 1980s, millennials need to pay more to get their foot in the housing door,” he said, adding that the average house price in 2011 was ten times the median salary of a young family. In 1984, this ratio was only about five times.
“While many baby boomers prospered financially in the past thirty years, one could say that their children are starting new careers and families on an equal, if not firmer, footing in most regions,” concluded Guatieri.
A number of reports have suggested that the wealth of millennials has been negatively impacted by a variety of factors, including higher rates of unemployment and higher tuition rates.
© The Canadian Press, 2014