Struggling to Keep Up with the Cost of Living: Young Canadians Under Pressure
Introduction
For generations, Canadians have grown and worked for the goal to save and build their futures. It represented a way, or perhaps even a promise, that hard work could achieve a comfortable life. However, today, that is no longer the case as economic stagnation and weak real wage growth limit young Canadians’ ability to build financial stability like those of past generations. Rising costs, stagnant wages, and housing issues remain central to the issues of the Canadian youth and young adults. Despite Canada projecting economic growth now and in the future, for those under 35 years of age, the numbers paint a much different picture.
Unfavourable Labour Market Conditions
Wages for young Canadians under 35 years old are no longer keeping pace with the increasing cost of living. Between 2020 and 2025, Canadians under 35 years were the only age group whose income growth failed to keep pace with inflation, falling roughly 8 percentage points below the national average over that period (Battaglia, 2025).
Alongside weak income growth, young Canadians experience comparatively lower employment rates and overall higher unemployment. Between 2020 and 2025, employment rates for young Canadians peaked at around 93% in 2021 but have since steadily declined to roughly 88% in following years, placing them about 10 percentage points below Canadians aged 65 and older and roughly 5 percentage points below the nearest age groups (Battaglia, 2025; Gordon, 2025).
Furthermore, a study on Canadian men showed that, for the first time in recorded Canadian history (since 1976), seniors aged 65 and older earned more on average than men aged 25–34, with senior men earning approximately $61,600 annually compared to $61,200 for younger men (Gordon, 2025). Moreover, young Canadian men have seen virtually no real wage growth over the past 25 years, earning roughly the same inflation-adjusted income today as they did in the late 1980s and 1990s.
This is resulting in a generation frozen in place, unable to move up the economic ladder and increasingly exposed to downward mobility amid rising inflationary costs.
Housing Is Increasingly Unaffordable and Difficult to Obtain
Even if incomes were rising in tandem with inflation, housing would still face a structural timing problem.
The Canada Mortgage and Housing Corporation (Laberge, 2025) breaks it down plainly; for multi-unit housing, you’re often looking at years before new units even show up on the market: 3-5 years in design and development, about a year in approvals, and then 1-2 years to actually build. That’s roughly 7-8 years just to deliver a new building. Even once new units are completed, affordability does not adjust immediately. Most housing supply enters the market at or near prevailing prices, meaning the impact on lower rents and prices depends on a gradual filtering process over time.
CMHC estimates that it can take up to 20 years for new market housing to meaningfully affect affordability for low- and middle-income households, placing the full adjustment timeline closer to 25-30 years from project inception (Laberge, 2025).
These delays have observable effects on household outcomes. Evidence from a long-run UBC study shows that, in higher-cost cities, rising rents are associated with a decline in independent household formation, particularly among young adults in their mid-to-late 20s (Wickramasinghe, 2025). As housing costs increase, more individuals remain in shared or family living arrangements, not by preference but due to affordability constraints. In this sense, housing affordability is shaping not only prices, but also the timing and structure of household formation.
Rapid Population Growth Without Per-Person Economic Growth
An OECD Economic Survey notes that Canada’s total GDP has grown since 2020, but a closer look shows that GDP per capita has nearly stagnated and has in fact declined since 2022 (OECD, 2025). The OECD attributes Canada’s recent divergence between total GDP growth and weak GDP per capita growth in large part to rapid population growth driven by immigration. While immigration brings many long-run economic and social benefits, the resulting population surge has increased competition in labour and housing markets at a time when per-capita economic growth has stagnated. This has made jobs, housing, and other essentials harder to access, not because population growth is a direct cause of poor economic performance, but because it compounds existing structural weaknesses. These effects fall most heavily on younger Canadians and others who have not yet accumulated significant assets or wealth.
Conclusion: Rebuilding the Possibility of Financial Security
The trends point to a broader structural issue rather than a short-term shock. Canada’s economy has continued to grow in aggregate, but that growth has not translated into stronger per-person outcomes. As the OECD notes, population growth has outpaced GDP growth in recent years, pushing GDP per capita below pre-pandemic levels despite headline economic expansion (OECD, 2025). While rapid population growth has increased labour supply and output, it has weighed on productivity and limited real income growth.
These pressures are falling most heavily on younger Canadians and others who have not yet accumulated assets, making it harder for work and participation in the economy to translate into financial security. In this context, the challenge is less about reversing growth and more about restoring alignment between population growth, productivity, incomes, and the cost of living.
From a federal perspective, this aligns squarely with the core role of economic and fiscal policy. The Department of Finance is responsible for managing Canada’s financial and economic framework, including fiscal policy, taxation, and macroeconomic stability, with the objective of supporting sustainable growth and living standards over time (Government of Canada, 2025). Rebuilding the possibility of financial security therefore requires renewed attention to per-capita outcomes, not just aggregate expansion, so that economic growth once again translates into broadly accessible stability.
Without improvements in per-capita growth and affordability, continued aggregate expansion risks deepening generational and distributional imbalances, rather than resolving them.
Authors: Justice Jackson, Mark Henri, and Akiff Lakhani are current Master of Public Policy students at the University of Calgary’s School of Public Policy.
References
Battaglia, R. (2025, November 26). Stagnating income threatens wealth gains for young Canadians. Royal Bank of Canada, Economics. https://www.rbc.com/en/economics/canadian-analysis/featured-analysis/insights/stagnating-income-threaten-wealth-gains-for-young-canadians/.
Gordon, G. (2025, December 12). Canadian young men are making $8,300 less while older men make $26,000 more in last 50 years: Report. The Hub. https://thehub.ca/2025/12/12/young-men-are-making-8300-less-while-older-men-make-26000-more-in-last-50-years-report/.
Government of Canada. (2025, March 24). About the Department of Finance Canada. https://www.canada.ca/en/department-finance/corporate/mandate.html
Laberge, M. (2025, February 27). Solving the housing crisis is a marathon, not a sprint. Canada Mortgage and Housing Corporation. https://www.cmhc-schl.gc.ca/observer/2025/solving-housing-crisis-marathon-not-sprint
Organisation for Economic Co-operation and Development. (2025). OECD economic surveys: Canada 2025 (Vol. 2025/12). OECD Publishing. https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/05/oecd-economic-surveys-canada-2025_ee18a269/28f9e02c-en.pdf
Wickramasinghe, S. (2025, March 27). Canada’s housing crisis is preventing millions from forming the households they want. University of British Columbia News.https://news.ubc.ca/2025/03/canada-housing-crisis-household-impact/