Are young Canadians being held back?

Hey there, time traveller!
This article was published 10/07/2025 (262 days ago), so information in it may no longer be current.

As graduation season has drawn to a close at high schools and postsecondary institutions across Canada, the euphoria of accomplishment is rapidly being replaced by the sober prospects of finding employment in what has been reported to be a difficult, and perhaps deteriorating, labour market. For Manitobans 15 to 24 years of age, the unemployment rate has risen from 11.7 per cent in May of 2024 to 14.8 per cent this May, a pattern repeated across Canada.

Whether looking for permanent or summer employment, youth face a tough labour market. May unemployment rates of 5.9 per cent in Manitoba and seven per cent across Canada are the highest since 2016 outside the pandemic years. The unpredictable U.S. administration and its tariff policies along with the inexorable march of technological innovation threaten to squeeze the labour market further. Summer job postings have declined each year coming out of the pandemic.

Parents share these concerns as their children look for rewarding work and opportunities to get on with their lives. Most parents are more than willing to provide a home until their children can afford their own accommodation, at least up to a point. Most parents also want that point to arrive within a reasonable period.

Are we entering uncharted territory with our youth? Is there cause for alarm? I don’t think so for two fundamental reasons.

One important feature of the youth labour market will always be the process of entry. Young workers need to understand the labour market and its opportunities as well as their own capabilities and preferences. That process typically leads to spells of job search that are longer and more frequent than for older workers.

The result of these entry pains is higher youth unemployment. The interesting fact from today’s perspective is that the unemployment rate for youth 15 to 24 years relative to prime-age adults 25 to 54 has stayed about the same over a long period. The ratio was 2.3 in 1976, when the modern Labour Force Survey was introduced, and 2.4 in 2024.

It would be cause for concern if there were a discernible upward trend in the youth unemployment rate relative to the rate for prime-age adults over time, but that has not been the case. There was a dip in the ratio from about 1980 to 1995, but it could not be said to be a consequence of an improved labour market. Rather, this was a turbulent period of manufacturing decline, high inflation and a deep recession when youth unemployment averaged 15 per cent compared to 8.4 per cent for prime-age adults, both higher rates than today. As the labour market recovered and unemployment rates fell to 4.7 per cent for prime-age adults leading up to the pandemic, the youth unemployment rate fell similarly to 10.7 per cent. When the overall labour market inevitably recovers once again, job prospects for young workers should improve commensurately.

A second important and enduring challenge for young workers is limited earning ability starting out. Finding jobs that value their capabilities and accumulating work experience take time and lead typically to a steady progression of earnings with age, a well documented feature of the labour market.

Recent data on earnings and age reveals that the median earnings of fully employed Canadian men and women with a high school diploma are $55,000 and $39,000, respectively. Workers in their early twenties with high school earn only a little more than half that median salary, however, and do not reach median earnings until their mid-thirties. For men and women with a university degree, the corresponding median earnings are $90,000 and $76,100, but they again do not reach this level until their mid-thirties.

There is no indication in what I have read that this pattern of earnings progression, and the so-called college premium attached to it, has changed substantially over time. Thus, young workers may have a bit more trouble finding a good job right now but their future prospects for good jobs and career advancement should not be seriously compromised.

What has changed for young workers, then, is the rapid increase in the cost of housing, especially since the 2008-9 recession. Media concern with housing affordability seems to be concentrated in Southern Ontario and British Columbia, where the ratio of the home price index to median income exceeds eight, the benchmark for affordable housing. Elsewhere in the country, however, that ratio is far below eight, as low as five in Winnipeg and four in Regina.

In this dual housing market, young workers are likely to find affordable housing outside Southern Ontario and B.C. once they have settled into employment. As their earnings prospects grow, including the possibilities of family formation and a second earner, they should still expect to do quite well in many parts of the country.

These considerations should give some comfort to young workers living outside the hot housing areas. It may also give pause to graduates thinking about where to resettle in Canada. Those aspiring to independence and comfortable housing early in adulthood may want to consider good job offers in tandem with the surrounding housing market.

Wayne Simpson is professor emeritus of economics, University of Manitoba.