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Op-Ed: Leeching kids, sapped parents & the parable of the financial cave

According to the survey — conducted by CIBC — roughly 25 percent of Canadian parents are paying $500 or more per month to keep their adult offspring afloat.
Among the common headlines, expect to see “Parents feeling the pinch of supporting Adult Children” or, “Parents say their adult children are draining their nest egg.” Lazy reporting, to say the least; most salient in the conversation not had — is there more at play here than leeching kidults?
During Business Day AM, CTV`s Chief Financial Commentator Pattie Lovett-Reid described parental support as “economic outpatient care” — parents who foot the phone bill of their children. Lovett-Reid asked parents to think about how long they should be willing to pick up the bill for the phone services their adult child can clearly not afford. Lovett-Reid then asked parents to have a tough-love conversation with their kids, to not delay their own retirement and to make sure they ask their kids to, a la Stephen Poloz, network and take unpaid work; what an excellent solution! Do not take handouts from your parents but do take unpaid work. That will surely allow you, dear kidult, who can’t afford a phone, to succeed in this world. Lovett-Reid, amused and upset, also reminded viewers that some kids even think of their parents as personal ATMs; why, the gall of those children! In reply, I would have asked, if they have no money and no job, where would they get any? Is it that they see their parents as ATMs or that the question was framed in such a way that elicits such a response? (That poll was also commissioned by CIBC.) To be fair to Lovett-Reid, she was not nearly as insulting as Poloz, the governor of the Bank of Canada, who quipped “adult children stuck in their parents’ basements because they can’t find adequate employment should take unpaid work to bolster resumes as they wait for the recovery to take hold.”
While I’ll move beyond the caustic shortly and get to the point of this article, I will say much the same conversation occurred during the CTV News round-table, City TV morning news, and on News Talk 770 (to quote the latter, “It appears fewer Canadian parents are reaping the rewards of financial freedom in their later years and it’s all because of their children [emphasis mine].”)
What stuck out like two sore thumbs was that there were no “kidults” in the conversation who could speak to the economic conditions that have led to such circumstances, and that the very people who are essentially calling the younger generation either lazy or incompetent or both are largely successful baby-boomers who have no sense of what it’s like to not be able to pay the bills (City TV’s evening news did include interviews with such people). Worse, when these baby-boomers were similar in age to their now-destitute children, the economic opportunities before them were myriad and relatively well paid (I have plenty of anecdotes and am waiting for reply from Stats Can to verify the general consensus among those I spoke to — expect this in the comments section as soon as the information is available. The information was not readily accessible on Stats Can). There is also no mention of the fact that Poloz, Lovett-Reid and so many of the other “experts” on the subject are in fact representatives, present and past, for the financial sector of government and banks… With this in mind, it is not so surprising that they would blame the kids for not being more saleable and parents for not being more corporal, is it? Any sort of smoke and mirrors will work here, any sort of flames that cast shadows on the wall of the cave… Just don’t let kids or parents see the real world of finance for what it is. For if it were acknowledged at all, it may lead parents to a better understanding of why their kids, in far too many cases, are not able to afford basic living expenses.
To leave the cave and enter the real world, in 2013 the average median income in Canada for an individual (ie, one that is not in a ‘census family’) was $32,020. This number represents the average wage of a Canadian who does not have a partner, and while the average annual salary for a “basement-dwelling adult child” may be less than the median average for those not in a “census family,” let’s use this as our benchmark. Taking $32,020 and then considering the cost of living, it becomes quite evident that the issue of kids cracking the nest egg is much larger than what Lovett-Reid seems to think can be reduced to an apparent worldview among kidults that their parents are personal ATM machines.
Let’s assume rent will be $750 per month (in Toronto and most major cities this will let you into a small, likely infested tenement, but hey, there’s a roof). Over 12 months, this comes to $9,000. Let’s now assume that Kidult X opts to use public transit (and that public transit is viable for s/he). At $144 a month (the cost of a TTC metropass in Toronto), this is another $1,728. For food, let’s assume Kid X spends $20 a day (for breakfast, lunch, dinner, snacks and drinks, this isn’t exorbitant); the child has now spent an additional $7,300 over the year. Taxes will run Kid X roughly $4,400 (provincial, federal, EI contributions). A phone bill of $75 a month will tack on another $900. Let’s now add on around-the-house essentials. If one could do it for $20 a week, I would be utterly dumbstruck but let’s pretend our noble Kid X can, and with that add on another $1,040. Being from a family (who wants Kid X out of the effing basement), we should assume that at least twice a year Kid X needs to buy presents for at least a few people; Again, I’ll trend conservative and suggest this would cost $750 (that’s 15 gifts at $50 each… Would that even cover Christmas?). Perhaps Kid X wants to take a course in school, or perhaps has a social life, or perhaps has a car and insurance to pay for, or perhaps has an illness not covered by the national health care system. One should hope not because then, quite quickly, Kid X is in serious trouble. I mean, Kid X has already spent $25,118. If we take estimates for the cost of the above to be $2,000 (for education, what a crap course that would be!), $2,000 (for entertainment – by the way, this works out to roughly $39 a week, which is awfully boring), $6,000 (for a car and insurance, another absurdly low estimate), and $1,500 (for medical care) we’ve got a problem. Kid X just broke the bank! Annual expenditures just reached $36,618. Thus, even using liberal earning averages and conservative spending habits, those single kidult leeches are in the hole to the tune of roughly $4,500 per year… Ouch! And forget a vacation — that would just set Kid X further back.
You would think that it must be the sign of a tough economy, no? I mean surely — surely — if there was a way for the job makers that run the country, that rule high finance (Lovett-Reid’s old job, Poloz’s current), that set benchmarks for wages et al, to improve conditions for the basement folk, they would. Or would they? Last year Royal Bank of Canada brought in $9,277,000,000 in profits. TD Bank brought in nearly $8 billion. Bank of Nova Scotia profited to the tune of just over $7 billion. There were scattered natural resource companies that did extremely well, too. And CIBC, the author of the opinion poll which has sparked the nonsense about dependent adult children, brought in just about three billion in profit.
Risking repetition as the numbers above speak for themselves, the problem with this segment of Canadian economy — with adults who still need financial support from their parents — has not to do with kids being lazy or viewing their parent(s) as an ATM, but with Canadian corporations and the extremely poor wages they offer.
To be clear, if a child at an age is in fact a parasite on the accounts of their parent(s), there is something wrong. Time to flip burgers, brother or sister.
Still, the idea of CIBC using a “poll” to produce incendiary flames, to cast new shadows in the cave of Canadian finance is at best facile and at worst wicked. Breaking off our shackles, and ascending to the profitable world in which they operate, it seems to me that the problem is not, on average, due to dependent adult children but rather is due to the economic system that has allowed, for example, Canadian banking behemoths to offer a median income of $29,188 to their bank tellers; a nice entry level position that a basement kid just might get, which, as argued above, is not close to enough to hack it solo, a job that will instead of allowing for independence force that child to return to the basement after a year or two of trying to make it, only now with such a nice pillow of debt that they need Mom or Dad to foot the phone bill. In short yet in many ways, if parents want to know where their nest egg has gone and why, they ought to chat with the authors of the study that has kicked up this controversy.

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