Generation Squeeze: young Canadians, high cost of living, and stagnant incomes

Canadians in their 20s, 30s, and 40s squeeze in more education, savings, and delay starting the lives they want

Art by Mikayla Croucher

Art by Mikayla Croucher

Young adults in Canada are struggling to make ends meet and it’s because of the high cost of living and housing crisis in the country. 

The “generation squeeze” is defined as people in their 20s, 30s, and 40s who are facing the harsh reality of having “stagnant incomes and difficulty finding good jobs,” and “high costs for things like housing and child care.” Ultimately, these groups of Canadians are being “squeezed” as they work to navigate a life that comes with growing debt and a high cost of living. 

Generation Squeeze is an organization created to advocate for young adults who are faced with the rising costs of living while trying to build their future. 

In comparison to 1976, the income for people aged 25 to 34 decreased from $58,300 to $53,000. This includes 70 per cent of young adults today completing post-secondary education, as opposed to only 30 per cent 46 years ago, according to Generation Squeeze statistics. 

Young adults today are also faced with an average of $23,000 in student loan debt, an amount that was $16,000 46 years ago. The benchmark price of a detached home in Metro Vancouver was over $1.23 million in June, compared to homes under $200,000 in 1981. 

There is a vast difference in living as a young adult four decades ago compared to today. 

Umair Muhammad, campaigner at Generation Squeeze, describes this reality as “intergenerational unfairness.” He says the future young people and future generations are being given are worse off from the one older generations had to face. 

With the work done at Generation Squeeze, Muhammed says the organization wants people to understand the need for change and for future generations to live in a world that is better than the ones their parents and grandparents lived in. 

“We promote well-being for all generations. It’s not as if we’re trying to say that older generations don’t deserve what they have, or that they shouldn’t have that. But we also want [inclusivity] with the generational well-being,” Muhammed says. 

Housing affordability is one of the main issues Generation Squeeze focuses on in their advocacy. According to the Canada Mortgage and Housing Corporation (CMHC), Ontario and British Columbia are the top two provinces in the country with the highest cost of housing. Forty-five per cent of a B.C. resident’s “disposable income” goes into purchasing an “average” home, and 40 per cent for an Ontario resident. 

A Generation Squeeze report from 2020 found that the economy in B.C. was not allowing people to make enough money to afford a house. In Metro Vancouver, a place where more than 50 per cent of B.C.’s population reside, the cost of housing needs to decrease by $704,000 to be affordable for people between ages 25 and 34. 

It would almost take 37 years to save 10 per cent for a down payment on a detached home in Vancouver. The average home price in B.C. was $947,216 in June. 

The cost of housing has increased over the years, and Muhammed says the trend is going in the wrong direction. In 2012, people should have looked at the cost of housing and created actionable steps to stop the rising costs, he says. 

Muhammed says different levels of government, from municipal to provincial to federal, need to come together to fix the housing crisis in the country. 

The last time housing was affordable was between 2003 and 2004, according to the 2022 CMHC report. It also shows that restoring housing affordability to every province by 2030 would mean building more than 22 million homes. 

Aled ab Iorwerth, the deputy chief economist for CMHC, says housing affordability differs depending on the country’s geographical region. Areas like Vancouver, Toronto, and Montreal stay at the top for housing affordability challenges. He says the challenges also include renting a place and not just home ownership. 

For the Metro Vancouver region especially, employment growth is in the city centres and some people don’t want to or can’t commute far distances, so there is an increase in housing demands. 

“Because of the absence of housing supply, affordability of rental structures is very tough. There’s just simply not enough housing supply at the moment. With more housing supply, we would expect there to be more affordability so price growth would come down,” ab Iorweth says. 

If increasing the country’s housing supply isn’t possible, the CMHC report suggests an increase in multi-generational families living together. They also suggest turning retail, industrial, and existing housing buildings into multi-units. 

ab Iorwerth says things like building more houses and creating policy changes can help with improving affordability. But, he also acknowledges the challenges with the state of the economy and finding enough people to build the homes. While these suggestions do help, ab Iorwerth isn’t sure if they are enough to improve housing affordability in Canada. 

Some of the suggestions from Generation Squeeze to improve housing affordability include making the cost of homes match the income, protect renters and rental housing better, stop relying on real estate to fix the economy, and decrease income tax while increasing the tax for housing wealth. 

Using real estate to fix the economy is an area Generation Squeeze stressed on in their report. With the rising cost of homes, the report shows the annual income of Canadians needs to increase by a large margin in order for people to be able to purchase homes that suit their needs. 

Certain policy changes have made some Canadians see purchasing a home or land as “investment and retirement strategy,” the report says. Those same people are also hoping the land or home they purchase can turn in a good profit and ensure “financial security.” 

“This is a very complex problem. We have to, as a society and as governments that manage our society, stop looking at housing as an investment. People live in homes or rent homes because they want to have a place to live,” Muhammed says. 

When some people purchase houses, they do it with the mindset that a few years down the road, the value will rise and most of it will be “untaxed inflation in value.” When this happens, Muhammed says people can get a home equity loan which they can use to improve their houses or put towards more investments. 

“When it comes to housing, as we say in Gen Squeeze, we have an addiction to high and constantly rising home prices in this country. That’s the paradigm we have to change,” he says. 

Muhammed says shifting the paradigm involves thinking of ways to zone for different types of housing, and making sure the housing priority is not placed only on single detached homes. 

To curb this problem, Generation Squeeze wants the government to create ways for Canadians to have “financial security” outside of home purchases for investments. In case the housing value were to drop for certain homes, Generation Squeeze wants protection for the people who would be affected. 

Muhammed says Generation Squeeze is trying to relay the message of hopefulness. Right now, young people look back at their parents’ time and how they already owned homes, and they wonder if it will ever be the same for them. 

“We have the means to turn things around if we organize to push for change,” Muhammed says. 

In 2019, the B.C. government released a plan to tackle the province’s affordable housing challenges. The plan included ways to help people earning a low to middle income salary, people experiencing homelessness, as well as other vulnerable groups in the province. 

The Building BC: Community Housing Fund diverted $1.9 billion to create 14,000 rental homes for people earning “low-to moderate-income.” For 1,700 affordable rental homes, $208 million has been put into the Affordable Rental Housing program for four years. 

For people experiencing homelessness, the government has reserved $1.2 billion to create 2,500 housing units to be built over 10 years. 

The government is also increasing the foreign buyers tax to 20 per cent and expanding it to urban areas, and introduced the speculation and vacancy tax meant for people purchasing homes in B.C. but not paying any provincial tax. 

ab Iorwerth says older generations that have paid off their mortgage are having to take in their children because of how unaffordable housing is. 

He says many people are having to put a lot of their resources into housing, which affects their living standards and how they use their money overall. It also creates economic and social problems. 

“Housing affordability is incredibly important and … in order to achieve that we need a snap change in the amount of housing that is required. We [also] need a lot more density of housing in order to try and combat the effect of climate change,” ab Iorwerth says.