A new study from Hoyes, Michalos & Associates Inc: ‘Student Debt Crisis – a Generation Buried in Student Debt’ finds student debt contributed to 17.6% of Ontario’s reported insolvencies in 2018, and a record over the firm’s nine years of collecting such data.
Factors cited behind the insolvency “epidemic” are high tuition costs and an increased debt load owed to private lenders. Meanwhile, 86% of those filing for insolvency are working, but the report notes “graduates leaving university often end up working in unpaid internships, part-time positions, and minimum wage jobs. They are increasingly unable to find a stable job with enough income to support both student loan repayment and living expenses.”
Corporate profits have enjoyed a decade of record growth, and surpressed wages have been a big part of that story. Profits are also a reliably mean-reverting series historically and employers cannot have it all their way for ever. Underpaid workers and unpaid internships are extractive and ultimately destructive to longer-term economic viability and social stability. Companies will now have to give– by writing off bad debts and paying higher wages and higher tax rates–in order to get–in terms of more customers who can consume their goods and services. This will lower corporate profits. Here is a direct video link.
