"A basic degree doesn’t mean that much anymore"

Even though young Canadians are more educated than their parents, they don’t earn more

Armed with a sociology degree from Carleton University, Emily Fudakowski found herself unable to break out of the bar business and headed to Korea to teach English for a year. Since returning to Ottawa four months ago, the 30-year-old has been searching for meaningful, higher-paying employment.

Broke and living once again with her parents, Fudakowski laments her situation is far different from that experienced by her mother and father. By the time her parents were her age, they owned a house in Manotick, Ont., and Fudakowski — the last of three daughters — had just been born. Her mother was working full time as a nurse, while her father was an air traffic controller. “I don’t know how they did it,” she said. “Different time. Different skill sets.”

According to new census data released Thursday by Statistics Canada, Fudakowski’s situation is typical. Young people entering the job market today may be better educated, but they’re earning less money than their parents did a generation ago. In fact, it’s a trend that began a quarter century ago and doesn’t appear to be slowing down — especially for young men entering the workforce.Across all age groups, median salaries for full-time workers have changed little in 25 years. Workers today make, on average, a mere $53 more than they did in 1980, when adjusted for inflation, according to the census.

That stagnation mainly afflicted the middle class. The top earners in Canada saw their wages increase 16.4 per cent since 1980, while the bottom rung saw a 20-per-cent decrease.

For the 25-to 29-year-old group, it’s also a story of decreasing fortunes. In 1980, median earnings for full-time male workers in that age group — the time when people are generally starting their careers — were the equivalent of $43,767 in 2005 wages. By the year 2000, they dipped to $38,110 and in 2005 they stood at $37,680.

While women have traditionally earned less than men, the year-over-year drop has proven far less dramatic. In 1980, young women made $32,813 in inflation-adjusted dollars. Their median salaries dropped a mere $234 by 2000 and in 2005 they were $32,104.

“When people reach the age of 30 or 35, many of them have accumulated less money than their counterparts did in the mid 1970s,” Statistics Canada analyst Rene Morissette said. He attributes the trend to the fact young people are staying in school longer, young men seem less likely to find full-time work once out of school and that those who do tend to be paid lower wages.

The trend towards reduced wages for young males is one that emerged in the early 1980s in many economically developed countries, Morissette said, noting economists speculated new technologies were pushing out young workers. Others believed the recession during that time may have prompted employers to try to cut labour costs by reducing the wages of fresh hires in order to avoid seriously harming morale and productivity among senior workers.

“In 2008, it’s fair to say we still don’t have a good understanding of why wages of young men fell back then,” Morissette said. Another plausible explanation is that the decline of the manufacturing sector in Ontario and Quebec — exacerbated in recent years by the loss of many automotive jobs and outsourcing to countries with cheap labour costs — has resulted in a 20 per cent reduction in the number of blue collar union jobs, as well as lower wages for those who remain, Morissette said.

“We know unionized jobs pay usually 10-to 15-per-cent higher wages than non-unionized jobs and that has certainly contributed to reducing the wages of young men during that period,” he said. According to the latest census data, the salaries of blue-collar labourers in processing, manufacturing and utilities, for example, fell four per cent between 2000 and 2005, while machine operators and fabric, fur and leather product manufacturers dropped more than seven per cent.

Even though unemployment is low in Canada, there’s been a shift towards a service-based economy — sometimes referred to as the Wal-Martization of the workforce. Often paired with lower salaries, Morissette suggested it’s responsible for about 15 per cent of the decline in young people’s wages.

Still, resource-driven areas like Alberta have been debunking the trend in recent years as those in the oil fields pull in six-figure incomes, University of Western Ontario sociology professor Wolfgang Lehmann said. In fact, the latest census data shows median salaries for full-time managers in the oil and gas sectors soared more than 33 per cent to more than $97,000 between 2000 and 2005 — the fastest increase of all occupations. Meanwhile, supervisors in the mining, oil and gas sectors saw earnings rise 17.5 per cent, while mine service workers and those in oil and gas drilling saw their salaries rise by nearly 16 per cent.

Lehmann suggested skilled trades people including plumbers, electricians, welders and carpenters, are also in high demand right across the country and can stand to make very comfortable incomes. These areas were historically filled by skilled European immigrants, Lehmann said, noting both today’s immigrant and Canadian born populations have gravitated more towards academic fields rather than skilled trades.

While many young people have opted to stay in school longer because they believe a post-secondary education will get them a better, higher paying job, others return to school after failing to break into the work force, Morissette said.

Still, the increased participation of young women in the labour market and the fact young people are cutting their expenses by choosing to live with their parents longer have helped offset the trend towards lower incomes, he added. But with that, student debt has also risen, Lehmann suggested. And in an effort to pay it off after graduation, many young people take the first job that comes their way and aren’t “particularly choosy.”

“You find yourself in a bit of a catch-22,” Lehman said. “You need to work in order to pay off your student loan but often you just take jobs just to have money that don’t pay you as well as it could if you had time to search.” Lehmann said many young people are also saddled with huge mortgages if they decide to buy a house and many find their pension prospects are far less generous than those of their predecessors.

Jennifer Macpherson has a lot of angst as she thinks about what lies ahead for her. She’s about to turn 22, has just completed a film, communications and popular culture degree at Brock University and she hopes to go into broadcasting. But she suspects she’ll need a master’s degree to get a good job and that she’ll be forced to work while trying to upgrade her education.

Meanwhile, grown-up luxuries her father and grandfather had at her age don’t even register on her radar. “At this point I pretty much worry about being able to afford anything. Even a car right now, at this point. A house is a whole other level. I can’t imagine that,” she said.

Her father Craig, now 53, spent two years in college and got his first full-time job on the night desk of the Inn on the Park hotel in Toronto at age 21. Her grandfather Gus got his break at age 18 despite never completing high school. He worked at a furniture store in southern Ontario that doubled as the local funeral home where he eventually became a licensed embalmer. He moved on to work at a finance company, at first in the collections department and later in management.

Pouring through old photos during a recent visit at her grandfather’s home in Burlington, Ont., Jennifer said it looked like an entirely different world. “My grandfather didn’t finish high school and he had a pretty good insurance job for the majority of his life,” she said. “He supported his family and they had a pretty good lifestyle. Today that’s not the way it is.” A basic university degree “doesn’t mean that much any more,” she lamented.

Whether young people can expect to trail their parents throughout their careers isn’t clear, said Morissette. “Maybe they’ve accumulated less money and have lower wealth holdings, but given that they have a higher education, maybe their earnings will grow faster than those of a typical youth in the 1970s,” he said. “Maybe when they reach the age of 40 or 45, maybe they will have caught up to the income levels of their predecessors to a large extent, but that remains to be seen.”

The looming retirement of the baby boom generation and the labour shortage that’s expected to ensue could, however, spell good news for young folks anxious to enter the labour market or earn more cash.

Still, Morissette cautions the jobs may not materialize. “In the face of labour shortages, some firms will make use of foreign outsourcing of services and will use labour abroad to fill up their orders,” he said. “These labour shortages might not necessarily lead to wage increases for younger workers.”

Lehmann added there’s also a good chance young people struggling to find well paying work today may simply be too old to take advantage by the time the market opens up.

-with a report from CP