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rob carrick

Baby boomers are parents and grandparents, but not all of them are brimming with empathy for young adults who complain about how hard it is to succeed in today's economy.

So let's talk money. Boomers, who's going to buy your house when you're done with it? Who are the taxpayers of the future who will help pay for your health care and the Old Age Security you get to collect at age 65 (while everyone else waits to 67)? Face it, boomers. You need those young people to deliver.

They may disappoint you, though. Young adults are racking up big debts to pay for postsecondary schooling and they're having trouble finding career-building first jobs. Some are moving back in with their parents and working either for free through unpaid internships or taking dead-end jobs just to pay the bills. If this situation gets any worse, the younger generation might not feel too co-operative toward the older one.

In a few recent columns, I've looked at some of the financial challenges facing young adults (you can see the list at the bottom of this column). Now it's time to consider some possible outcomes if nothing changes.

First, though, let's be clear there's an issue here.

Pollster Frank Graves has been looking at generational issues a lot lately and he believes that Canada's top challenge today is ensuring a smooth succession into adulthood for today's young people.

Since the Second World War, it has been a core belief in this country that each new generation would do better than the preceding one. Now, the pattern has broken. "We now have a generation that believes it's doing worse than the generation before it," said Mr. Graves, president of Ekos Research Associates. "The belief in progress that we have in Canada is in terrible disarray, if not shattered."

This isn't about kids not being able to afford smart phones and iPads, and it's not a matter of twentysomethings who need to suck it up and then grow up. We're talking about a developing sense of dislocation and frustration that you can see very plainly in an e-mail that a frustrated 29-year-old job seeker sent me last week (you can read it online here.)

The vast majority of Canada's young adults don't actually want to rebel – they want to conform. They want to graduate, find a job, pay back their student loans and become good little consumers. The dream of home ownership is still alive for them, at least for now.

Too bad housing is so unaffordable to young people. Partly, this is the result of a long housing market rally that continues in most parts of the country. The average national price hit $376,000 in April, which means you need just under $19,000 to make the minimum 5-per-cent down payment.

To start saving for a down payment, you first should have paid off your student debts. To do that, you need a job that pays a fair bit more than you need to live on. The job also has to offer the potential for pay increases ahead. Without the benefit of a rising salary over the long term, paying the bills as a home and parent becomes ever more stressful.

It's tough finding first jobs with upward mobility, and that suggests two possible outcomes for housing. One, young adults will have to wait longer to buy first homes, which means they'll very likely carry mortgages well into their 60s. Saving for retirement will be tricky in that case.

The second possible outcome, and we're already seeing this in the United States, is a growing number of renters. Renting actually makes sense in a tough job market because it gives people the mobility to go where the employment prospects are best. Many people will still aspire to own a house, but some may write off home ownership as unattainable. Worst case, Generation Y's revenge on the boomers turns out to be a home-buying strike.

Whether young adults buy later or not at all, it's bad for the boomers who in the next two decades must sell the houses that comprise a huge chunk of their personal wealth. But underemployed adults don't just affect the housing market. They also consume fewer goods and services and pay taxes at levels below their potential. Where there were four working taxpayers to every senior in 2011, there will be just two by 2030. The better employed that young adults are today, the better the chances are that they'll be productive taxpayers in the decades ahead.

Boomers, you vote and you have the ear of politicians. How about asking that some attention be paid to the young people you'll soon have to rely on to secure your financial well being?

Further reading

A 29-year-old reader of this column speaks out on the difficulties of landing a career-building first job.

Carrick column – Young Adults Have A Right To Be Up In Arms.

Carrick column – 2012 vs.1984: Young Adults Really Do Have It Harder Today.

Readers of the social news website Reddit comment on the 2012 vs. 1984 column.

Rob Carrick answers questions about the 2012 vs. 1984 column on Reddit.

Excerpt from a new book called The Clash of Generations, which shows how the United States is on a path where government resources will increasingly be consumed by the elderly.

Rob Carrick's new book, How Not to Move Back in With Your Parents: The Young Person's Complete Guide to Financial Empowerment.