Canadian Millennials: Winning

They're more likely to have what many young Americans don't: jobs, homes, and healthy paychecks.

The Edmonton Eskimos cheer squad performs during a CFL football game in Calgary, Alberta. (Todd Korol / Reuters)

American Millennials aren’t doing so hot: Compared to how their parents were doing when they were in their 20s, they’re less likely to have a job, they’re making less money on average, and they’re less likely to own a home.

The post-recession story of North American Millennials, though, includes another narrative, one that’s a lot cheerier: Canadians’.

Canadians between the ages of 25 and 35, according to a report from TD Bank, are doing quite well, relatively speaking. They’re wealthier, more likely to be employed, and more likely to own a home than their American counterparts.

As of last year, for instance, about 36 percent of American Millennials were homeowners, while more than half of Canadian Millennials owned a house. On a similar note, more than half of Canadian Millennials bought their first homes at an earlier age than their parents did.

Homeownership Rates for Americans and Canadians Under 35
Note: The most recent data from Statistics Canada is from 2011, so data from Ipsos Reid was used for 2014 (TD Economics | Data: Statistics Canada, Ipsos Reid, U.S. Census Bureau)

Perhaps more Canadian Millennials are able to afford houses because they had better luck during the recession? Not so, it turns out: Canadian Millennials and American Millennials both accounted for about 70 percent of job losses during the recession. What’s been different between the two countries since then is how the employment rates between these two generations have diverged:

Employment Rates for Americans and Canadians Between 25 and 34
TD Economics | Data: Statistics Canada, BLS

A big cause of this gap, though, goes back to a development that predates the recession by nearly a decade. Through the ’80s and ’90s, American and Canadian women between the ages of 25 and 34 were roughly equally likely to be employed. But then, around 2000, as can be seen in the graph above, their fates diverged pretty dramatically. That happens to be the time—“likely not a coincidence,” the authors of the TD report write—when the Canadian government expanded its parental leave requirement from 10 weeks to 35, a policy change that particularly affects this demographic.

With so many dual-earner households, it’s no surprise that household income has been rising in Canada in a way that it hasn’t been in the U.S. Canadians between 25 and 35 are making more money now than Canadians in that same age group were 15 years ago—something that’s not true of young Americans now and young Americans 15 years ago. (It’s important to read the following graph not as a comparison between Canadians’ earnings and Americans’ earnings in any given year—because that’d be mixing up currencies and buying power—but as a comparison of how today’s Canadians and Americans stand relative to Canadians who were between the ages of 25 and 35 in any given year.)

How Today’s 25- to 35-Year-Old Americans and Canadians Compare to 2000’s: Household Income in the Past 15 Years, by Country
TD Economics | Data: Statistics Canada, U.S. Census Bureau, TD Economics

So what on earth is Canada’s secret? The answer isn’t exactly mysterious: wise policy making. For one thing, there was that parental-leave expansion, circa 2000, that made it much easier for women to work. And then there is higher education. Households led by Canadians 35 or younger held on average roughly $16,000 (U.S. dollars) in student-loan debt in 2012; in 2013, the corresponding average in America was $27,000. Students in Canada are graduating with less debt because tuition costs have been rising much more slowly there than in the U.S., with public universities remaining quite affordable. On top of all this, it can’t hurt that Canada has a social safety net that’s much more thorough than America’s.

True, some of Canadian Millennials’ prosperity is a matter of good luck. Home values in their country have nearly doubled in the last decade, leaving their parents more money to pass along to their children than America’s Baby Boomers had after a decade of volatile housing prices. But even that is to some extent the product of good public policy: The Economist chalks Canada’s avoidance of a housing crash to “prudent banking regulation.”

In the next few years, though, TD Bank expects this Canadian-American gap to narrow. Canada’s housing market has matured to a point where it’s hard to see it expanding substantially, whereas economists are predicting increased numbers of Millennial homeowners in the U.S.

Of course, having so much household wealth tied up in home values leaves Canadian Millennials much more vulnerable to getting hit hard by a housing crash than American Millennials. But as long as that doesn’t happen—and as long as there’s no other major economic calamity—Canada’s young people are in a very good position for the years ahead.