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- Younger households, particularly those with income earners in the millennial age group, face graver economic crisis that those from older generations, found a recent study.
- Generation X households posted a debt-to-income ratio of 220 per cent in 2019, highest among all generations.
- For millennials, the debt-to-income ratio surged from 178 per cent in 2010 to 199 per cent in 2019.
The COVID-19 pandemic poses a greater threat to the economic well-being of younger households, particularly those with income earners in the millennial age group, than any other in Canada, pointed a study published on Saturday, December 12.
The study, titled ‘Inter-generational comparisons of household economic well-being’, noted that younger households in the country are in the grips of financial crisis because:
- Their incomes are largely dependent on wages and salaries
- They are faced with relatively higher entry costs in terms of housing
- Their debts are comparatively higher and rising against their income
- Most of them are employed in sectors that have been acutely impacted by the coronavirus pandemic
- Last but not the least, younger households tend to have less equity in real estate and financial assets which they could lean on in times of crisis
Millennials Earned & Spent More Than Gen X in 2019
The study is based on data provided by the Distributions of Household Economic Accounts (DHEA). And the DHEA stats show that millennial households (with major income earners who turned 31 in 2019) recorded an average disposable income of C$ 80,200 last year. Meanwhile, their consumption expenditure amounted to C$ 80,189.
Generation X households (with major income earners who turned 31 in 2002) made an average disposable income of C$ 68,700 in 2019 in inflation-adjusted terms. That year, they spent about C$ 68,688.
Gen X Records Highest Debt-to-income Ratio, Millennials Right Behind
Generation X households posted a debt-to-income ratio of 220 per cent in 2019, highest among all generations. But a point to keep in mind here is that the ratio has actually dropped by 18 percentage points since 2010.
For millennials, on the other hand, the debt-to-income ratio surged from 178 per cent in 2010 to 199 per cent in 2019.
As the debt-to-income ratios rises, loss of jobs and other COVID-related financial hiccups may make it increasingly tough for millennials to shoulder their debt obligations.
©Kalkine Group Image
The study also pointed that more number of millennials lost their jobs than workers from older generations in services-producing industries amid the pandemic.
In the second quarter of 2020 alone, millennials lost employment at a rate of about 45 per cent year-over-year in the industries involving accommodation and food services. The job loss rate for millennials stood at 29 per cent YoY in the information, culture and recreation industries, and at 20 per cent in retail trade in Q2 2020.
