The government proudly touts Canada’s performance in the post-recessionary world as one of the strongest recoveries among developed nations.  But while political talking points are great for government slogans, many Canadians feel left behind by the supposed recovery, and instead feel as if they are still trapped in the economic crisis.

During the recession, companies instituted massive layoffs that forced thousands of people out of work.  Industry wide cost cutting measures are one of the major trademarks of an economic upheaval as companies reduce their business costs by eliminating human capital.

Many laid-off workers were baby boomers who were approaching retirement, but still required enough income to put away into a savings account or retirement plan before leaving the labour market behind.  Other laid-off workers were part of Generation X, considered the successive line to the boomer generation.

As a result, while the economy may be in recovery, the jobs market is still difficult for many people to navigate – especially the youngest job seekers, or Generation Y.  Economists regularly indicate that Gen Y workers are the future of Canada’s economic strength, and will provide the financial support for boomer retirees.

However, despite the remarks from the country’s leading economists, younger people are increasingly being left behind.  Due to the recession, Gen Y workers are now competing with thousands of workers who provide years of job experience to potential employers.  At the same time, tens of thousands of Gen Y workers are competing with each other for what is a shrinking number of entry level jobs every year.  As a result, young workers in need of experience are losing the few opportunities available to overqualified elder workers in need of employment.

The trend is noticed by Canada’s major banks as well.  The CIBC put out a report earlier in the year predicting the standard of living for Gen Y workers will be significantly lower than in past generations.  A generation-wide reduced standard of living means young people will have fewer options for a financially sound lifestyle, including limited mortgage financing options.

The government tightened mortgage lending rules in 2012, which many economists predict will most significantly restrict would-be Gen Y homebuyers.  A home is one of the most important assets for young people to build long-term wealth and financial security, two important requirements for Canada’s aging population.  Many bankers hypothesize that the government went too far in restricting access to home financing, and that younger people in particular will have fewer options to pay for a home of their own.

As the baby boomers, who form a large portion of the Canadian demographic enter retirement, social services like healthcare require financing from younger workers to continue providing assistance to retired citizens.  But if Gen Y workers are living lower standards of living with few homebuying and mortgage options, there is little money to spare to pay for Canada’s cherished social programs.

Young people, more than ever, should review all their options when applying for financing to ensure they get the lowest mortgage rates possible.  The government’s tougher lending criteria make the process more difficult and will likely require many Gen Y buyers to settle for homes that are their second or third choices.  But by analyzing the market and all viable options before submitting a mortgage application, Gen Y buyers can still find ways to qualify for home financing while continuing to support Canada’s aging population.

Gen Y workers need job opportunities to invest in their futures, as well as support elder people exiting the workforce.  But without investments from the government or the private sector to put Gen Y to work, everything goes downhill.



Ray is an ex-financial adviser and the founder of Financial Highway. Currently working in the financial industry and working towards completing his Chartered Financial Analyst, CFA, designation.