Times are tough for young people leaving the family nest.
They may be better educated than in the past, work and earn more than previous generations, but the explosion in the price of rents and houses is cutting their wings.
We are flirting with intergenerational inequity, judge Guy Cormier, president of the Mouvement Desjardins, who this week welcomed hundreds of young people to TOHU to imagine solutions to the challenges that affect them.
The housing crisis, climate change, mental health at half mast…
It’s really too unfair, as Calimero, unlucky chick from a 1970s cartoon, used to say.
Unlucky, today’s young people? It depends on the points of view.
The X’s will argue that they had to settle for McJobs out of college because the unemployment rate was three times higher than it is today.
And boomers will say that there were no childcare services or parental leave in their day and that their mortgage was costing them 20% interest.
All of this is true.
But right now, we have to recognize that inflation – particularly high in groceries and housing – is hitting low-income people the hardest. And so the young people.
Moreover, those under 30 are the only age group to devote more than half of their consumer spending to essential goods, notes the chief economist of Desjardins Group in a series of very interesting studies on the youth1.
With the housing crisis, rents have never been so scarce in 20 years and houses have never been so affordable for a generation.
The environmental crisis will not help.
Forest fires, floods… The natural disasters that strike us will further erode housing affordability, by inflating damage insurance costs.
More broadly, the costs associated with climate change could increase inflation, which could reduce profits and increase interest rates, warns the Bank of Canada.
Nothing good for the finances of young people, many of whom no longer have children so as not to further harm this deranged planet they have inherited.
But all is not black. On the contrary, Quebec has made great strides over the past 20 years in terms of intergenerational equity.
For example, we gave a boost to the Quebec Pension Plan (QPP) by raising the contribution rate to ensure that there will be money left in the kitty to pay the pensions of young people. In addition, the plan has been enhanced to help new generations who have less access to a plan with their employer.
On the public finance front, Québec has also made considerable progress, in particular with the creation of the Generations Fund.
For decades, we could seriously fear that Quebec would not be able to offer future generations the same services, without taxing them more. A flagrant sign of iniquity.
But the tide is turning.
Our public finances are entering a zone of long-term sustainability, according to the Chair in Taxation and Public Finance at the University of Sherbrooke, which will soon present a new analysis on the subject.
This is great news for young people!
Let’s continue this momentum. Intergenerational equity must be a beacon that guides the management of our public finances.
Concretely, what can we do?
- Resist the temptation to reduce payments to the Generations Fund in order to grant tax cuts, while the Quebec budget is still in the red and services and infrastructures are in intensive care. It is unfair to young people.
- Tackle the maintenance deficit of our infrastructures, a $35 billion deficit that continues to grow. We don’t want to leave crumbling roads, hospitals and schools to young people. We need a solid and transparent plan, like the one that allowed us to regain control of our public finances from the 1990s.
- Avoid launching new public infrastructure projects, such as the 3e link, which will tie up already scarce labor and drive up the costs of maintaining existing infrastructure as well as building and renovating homes.
- Double housing construction to successfully meet demand. To do this, we must remove the obstacles that are holding back residential housing starts, which are on the decline. For this, it is necessary in particular to modify the zoning to better densify the cities where public transit is offered. A smart way to fight the housing and environmental crisis at the same time.
- Provide budgets to adapt municipal infrastructure to climate change, an annual bill of $5.3 billion, according to the Insurance Bureau of Canada. And of course, finding the political will to achieve our greenhouse gas emission reduction targets.
- Invest in mental health, as the pandemic has been particularly hard on young people, especially women. Offer more work/family flexibility, but also more mentoring to prevent them from finding themselves in a vacuum at work. Alone in front Zoom.
In short, instead of splitting the bun between generations, let’s work together to clear the clouds that darken the future of young people. Ultimately, any society will benefit.
1. Read the three studies by Jimmy Jean, chief economist and strategist at Desjardins: