By Matt Gurney
My first visit to Occupy Toronto brought me into touch with three distinct kinds of Occupiers. There were the crackpots, of course, ranting about alien invasions. There were the full-time activists, who'd rally against rain delays during baseball games if someone gave them the bus fare. But there were also a lot of polite, intelligent young people, who would sheepishly tell you (but only when asked) that they were there because they'd tried to do everything right and still weren't getting ahead. For someone who had high expectations for their life, and finds themselves falling behind while others surge ahead, jealousy and resentment is natural. As much as anything else, their presence at Occupy Toronto is cathartic. It's a place where they can share their bewilderment about their lack of success with others in a similar boat.
Many will mock and dismiss them, and demand they suck it up, get a job and move out of their parent's basements (or tents in a public park). And for some, including a young man I spoke to who went on welfare because he was tired of working in the food service industry, that's good advice. People like him simply encourage the stereotype of the Occupiers as work-averse bums. But a new survey of Canada's youth offers another possible explanation: Young Canadians are financially illiterate, and have no idea how the real world works.
The survey, the National Report Card on Youth Financial Literacy, was conducted by the Innovative Research Group on behalf of the British Columbia Securities Commission, and interviewed 3,000 Canadian teenagers who had recently graduated from high school. Most of them had moved on to post-secondary studies. The conclusions, while not surprising, are still bleak. Some examples: When asked how much they'll be making in 10 years, the kids are about 300% too optimistic. The average answer was $90,000 a year. The actual average wage for that age group is $31,648. The median answer to that same question was $70,000, and the real median wage for that age group, $26,000. Almost three-quarters believe that they will own their own home within a decade. The stats show that number is closer to two-in-five. The survey also finds that while the recent high school graduates pay lip service to basic rules of financial planning, many of them don't live up to them: More than half already carry debt (with an average debt-load of $8,000), a quarter of that debt is typically outstanding credit-card balances, and 25% of those with debts aren't doing anything to pay them off.
Many of these students believe they'll have their student loans paid off within five years of graduation; meanwhile, student debt levels are hitting record highs. According to Statistics Canada, by 2005, the average student was leaving post-secondary education with $18,000 in student debt, and the Canadian Federation of Students is claiming that today, that number is closer to $25,000. Unemployment for that age group is around 15%, double the national average, and as stated, the jobs they graduate into pay far less than what they'd hoped for, leaving many of these students questioning if their education was worth the investment. StatsCan has found that while Canadians with student debt have about the same overall debt load as those without it, student debts are not productive. The result: Canadians with student debts have a lower networth and fewer assets than Canadians with comparable, non-student debts.
These data didn't surprise me. I recently caught up with an old friend, someone I'd gone to elementary and high school with. We're demographically similar, from the same affluent Toronto area, and have a similar educational background. He, however, is something of an activist, and was loudly championing the Occupy cause on social media. When I asked him, sincerely and politely, why he felt so strongly that the Occupiers were right, he honoured me with an honest, thoughtful reply.
“I did everything my parents told me,” he said. “I took all the right courses, got good grades, went to the right university. I listened to my professors there, and did what they said I should. I did extracurricular work out of school, got an advanced degree. And then I found out that my education was 20 years out of date, and there were almost no jobs out there. The only job I could get in my chosen field would never be enough to pay off the debt I took on to get the education that was supposed to make me a successful, self-sufficient citizen. So now I'm working at a bar for minimum wage just trying to pay my bills. For my entire life, I was misled about what I needed to do. So were thousands of others. And people wonder why we're upset”
My friend agreed that he made his own choices, and wasn't deliberately tricked by the system. But he also feels like he went into the world without the educational tools needed to make sure his freely made choices were informed ones. In that, the British Columbia Securities Commission would agree with him — the entire point of their survey was to demonstrate that Canada needs to adopt financial literacy classes as part of the high school curriculum.
It couldn't hurt, but the problem is bigger than that. First of all, teachers — hard working and valuable as they are — are among the least well-equipped in our society to teach financial literacy. Canadian teachers generally receive well-above average salary, spectacular benefits, generous defined benefit pensions and their powerful unions assure them of near-total job security. The handful of thirty-something teachers I know are among the least financially literate people around, and it won't hurt them a bit — while most of us need to scramble to succeed, teachers (and similarly compensated civil servants) need to work very hard in order to fail.
Unfortunately, it's becoming increasingly clear that financial literacy isn't something that Canada's youth have learned at home, either. Young Canadians, those with too much debt, overly optimistic assumptions and little plan for the future, are actually faithfully following in their footsteps of their similarly financially illiterate parents. The Baby Boomers seemingly absorbed none of the frugality of their parent's generation. Over the last decade, the personal debt load of adult Canadians has soared, and now surpasses the mark that Americans reached before the economic crisis in 2008. Recent polling has shown that Canadians want to retire at the average age of 63, but will either be forced to work longer (sometimes much longer) or retire while still carrying debt, hoping that their pensions and investments are enough to pay off their final bills and also keep them comfortable. What might save the Baby Boomers, and will probably not save their children, is that the Boomers can hopefully count on a generous inheritance from their parents. It's doubtful that many of the cash-strapped retirees of today, counting on an inheritance to pay off the mortgage, will leave much behind for their children, the Occupiers of today.
Getting the youth of today educated in basic financial literacy would be a good start, even if it would mark a change from the self-esteem based curricula of today, which would probably prefer to gloss over the fact that some people will enjoy greater financial success in life than others, that hard work matters and sometimes, people fail. And it will do nothing to solve the problems of either the frustrated Occupiers or the indebted Baby Boomers who raised them. But just because the horses have bolted doesn't mean the barn door shouldn't be fixed. Courses in basic financial literacy might be cold comfort to those camped out in Canada's parks or hoping their RRSPs can cover their mortgage, but if nothing else, it might help get future generations of Canadian students into the 1%.