In the months and years that followed the great financial crisis, young Canadians struggled to gain stable full-time employment. Many turned to gig work, underemployment and even unpaid internships to make ends meet. At the time, economists warned us that this would have profound effects on their future wellbeing — professional, financial and even personal.
We’ve entered a comparable period since the end of the Covid pandemic. Statistics Canada reported today that the unemployment rate among 15- to 24-year-olds hit 14.5% in August. That actually represented a minor improvement from the July’s 14.6% figure. Not counting the worst months of the pandemic, July’s result was the highest recorded since September 2010.
On Thursday, Desjardins published a report on youth unemployment detailing multiple factors behind the numbers. “Current economic weakness helps to explain part of the recent rise in the youth unemployment rate,” wrote its authors. “But it doesn’t explain all of it.”
They point to an increase in young temporary residents, further growth in the so-called gig economy and greater investment in labour-saving tech, perhaps driven by minimum wage hikes. It’s a toxic mix.
“[U]nemployment early in a career can have lasting impacts, including reduced earnings not only in the present but over one’s lifetime,” the report reads.
Desjardins economist LJ Valencia is one of the co-authors. He and I spoke Friday about why unemployment among young Canadians — a statistic often buried in news coverage — deserves greater attention.
“This has a lot of consequences,” he said. When 20-somethings have difficulty getting their careers going, “that affects their earnings potential.”
That in turn can have a broader effect, Valencia told me. “It has long lasting impacts, not just to the state of the labour market, but to the overall future state of the economy.”
This summer, young adults are facing a rise in unemployment rates “that normally one would see during a recession,” Valencia said.
This is not a systemic issue, but we aren’t looking at a short-term recovery either. TD Economics has forecast 0.9% GDP growth for Canada this year, and an overall unemployment rate of 7.3% in the fourth quarter. There isn’t much optimism about next year either.
“A lot of businesses have really dampened their hiring intentions,” Valencia said. “They’d like to invest more money to help their company … but because of the uncertainty that’s caused by trade and these on-and-off tariffs, it’s hard for a business to really plan forward.”
Two takeaways.
First, your clients who’ve got kids in this age range probably didn’t plan on supporting them to the extent they are right now. They deserve a check-in.
Second, this is a useful lens through which to view clients and prospects who entered the workforce shortly after 2008. Their early career did not follow a traditional path, in all likelihood. Even those who’ve recovered financially from that rocky start experienced a kind of stress comparable to those who came of age during the Great Depression. Their relationship with work and finances will be at least partly informed by those tough years for the rest of their lives.