What Did The “Jobless Recovery” Bring?

Today, after the so-called “jobless recovery”, we can try to see the improvements in people’s standard of living. If there were any such improvements to acually see.

According to a new report, released by the advocacy group Young Invincibles, today’s millenials (the generation of people betweent the ages of 18 and 34) are earning on average 20% less than their baby boomer parents. They also owe more than their parents did at the same stage of their lives.

All figures in the research come from data by the US Federal Reserve, and have been adjusted for inflation (for example, an annual salary of $10,000 US some thirty years ago would equal about $19,500 today). The survey focuses on people who were between the ages of 25 and 34 years in 1989, and the data for the same age group in 2013 (the last year this detaied data is available for).

Considering that, let’s take a look at the nimbers. The average salary for a person with a degree and with student debt in 1989 was $67,880 (adjusted for inflation). In 2013, it was $50,727, or $17,153 less. The average income for a person without a degree in 1989 was $49,024, while today it is $36,523, or $12,500 a year less.

The above concerns annual income, or the salary each of us gets for the work that we do. Now let us look at wealth. Wealth is determined as the difference between what you own and what you owe. That is, if you were to sell evertything that you own today – your home, your car, fruniture, computer, valuables, etc. – and you use that money to pay off your debts – mortgage, car loan, credit cards, credit lines and any other forms of debt you might have, – how much money will you be left with? This is your net wealth (also sometimes called equity). For many, the result can even be negative – they would still have debt left at the end of the day. They would have negative net wealth, also sometimes called negative equity.

The average wealth of a person between the ages of 25 and 34, with a degree and no student debt, in 1989 was $125,572, and 24 years later had fallen to $75,000. The average wealth for those who had a degree with debt, in 1989, was $86,547, while today it is only $6,600 – a whopping decrease of $79,947 (or 92%)! For people without a degree, the average net wealth in 1989 was $16,322, while today it stands at $7,750. Notice two imortant things: First, the enormous decrease in the net wealth of people who had to get student debt in order to get a degree (because of the rising cost of higher education); and, second, the fact that today, a person without a degree has a higher average net wealth than someone who has a degree and student debt!

Another fact worth mentioning is the net wealth for the entire group of people between the ages of 25 and 34, regardless of education. Today, the millenials, on average, have a net worth of only $10,900, compared to $25,035 in 1989 – or a decrease of 56%! Millenials also have significantly lower home ownership rates, and much more college debt than the baby boomers did at the same age.

So, here again, we have to go to what I had been writing about before: We cannot continue to live like it’s still 1989. Too many things have changed. We cannot continue to think that getting a degree – any degree, – will get us, or our children, a better quality of life, a better salary, or will help us build more wealth. It depends – on the subject you want to study, the availability of jobs after graduation, and especially on the amount of debt one has to incur in order to get the degree. Having a better quality if life during tough times is not impossible – with or without a degree, – but it does require a different way of thinking and a different perspective on what’s most important in life!


Now The Recession is Going Mainstream

In an unexpected statement on January 2, 2017 in front of Global TV’s nightly news cast, “Global National”, professor Ian Lee, MBA director, Sprott School of Business of Ottawa’s Carleton University, simply said: “I could see us [Canada] being in a recession in 2017-2018.” I had to pause for a moment and remind myslef, yet again after last week, that yes, this is, in fact, a mainstream news channel.

The thing about recessions is that you never know you’re in one until you’ve already been in a recession for at least six months. Meaning, the government has to oficially announce two consecutive quarters of negative growth – the definition of a recesion. Canada already had one negative quarter in 2016, with GDP falling by 1.6% in the second quarter, its worst performance since the Great Recession. So, for all we know, we could already be in a recesion, but will only find that out in the second half of this year!

For sure, for many Canadians, it already feels like a recession. People in Ontario have been struggling for months now with high Hydro rates, which, in many areas of the province, have increased by more that 100%! Add to that the new carbon tax, which would increase the price of gas at the pump by 4.3 cents per litre, implemented in the province as of January 1, 2017, and all the negative consequences it will bring – like higer prices of food, clothes, shoes, furniture and everything else that has to be shipped and transported by trucks – which is basically everything that we eat, wear, need and use, – and there isn’t much hope left for the regular people!

In Newfoundland and Labrador, the provincial government is hiking its income tax rates – for the second time in six months! It is the only province increasing income tax for people in all tax brackets, hitting especially hard low-income families and the middle class.

In Alberta, in addition to the stagnation that started about two years ago, and the highest unemployment rate since the 1980s, a new carbon tax comes in effect. It will also affect the price of gas, which will, in turn, lead to an increase in the price of everything else.

Add all that to Canada’s Food Price Report, published by researchers at Dalhousie University in Halifax about a month ago, which found that the average Canadian family will pay about $420 more for food in 2017, and things only start to look even more gloomy. This represents an average increase in food prices of 3% to 5%, with the highest increases forecast for meats, fish and vegetables – up to 6%. The main concerns of the report were changing weather patterns, the falling Canadian dollar, and – you guessed it – the new carbon pricing implemented by the federal Liberal government.

We are all looking to a future of rising inflation, depreciating currency, and a falling standard of living. The middle class is being wiped out. People are strugling to make ends meet. The debt to income levels of Canadians rose – from 165% in the first quarter of 2016, to 168% in the second quarter. But it is possible to have a relatively good quality of life even during tough times. We do need to change our way of thinking, and the way we live, but it is possible. This is my experience, as someone who has actually lived through an economic crash and 1080% hyperinflation, and is also the reason why I wrote “Survivng Tough Times” – to share my story, and the way we lived through the crisis.