EISEN: Canada's summer job market slump is bad news for young people in more ways than one

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According to new data from Statistics Canada, young Canadians are facing a historically challenging job market. In June, the unemployment rate for young people (aged 15-24) was 14.2%, up from 13.5% in June 2024, which was already a bad year in historical terms. By comparison, in the pre-pandemic years from 2017 to 2019, the average youth unemployment rate in June averaged 10.9%.

If you’re a young Canadian, or are related to one, this likely comes as no surprise. Summer jobs are getting harder to find.

When we zero in specifically on students returning to school in the fall, we see similarly bleak numbers and a worrying multi-year trend. In 2022, the June unemployment rate for returning students age 15-24 was 10.2% — that number climbed to 15.8% last June and 17.4% this June (outside of the pandemic years, this is the highest June unemployment rate for this group since 2009).

Moreover, while the unemployment rate shows the share of people in the workforce (that is, people working or looking for work) who are not employed, in recent years there has also been a significant drop in the employment rate (the share of people who have paid employment). In June, the youth employment rate was 54.3%, down from an average level of 58.4% from 2017 to 2019.

Of course, all of this is bad news in the short term for young people who are missing out on employment income. However, for young Canadians who can’t find summer jobs, there could also be negative lifelong effects. According to several decades of research, early connection to the workforce can increase employment prospects and wages in adulthood. Young Canadians missing out on work can experience “prolonged scarring effects” that can hurt their “human capital and future development.” In other words, the less work experience you have in your younger working years, the less prepared you may be for a career and future job opportunities.

So, how can policymakers help increase employment opportunities for young Canadians?

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Some experts have pointed to the large influx of temporary foreign workers who compete with young Canadians for entry-level jobs. It’s also noteworthy that many provinces have increased their minimum wages substantially over the past decade. Because evidence suggests that higher minimum wages can reduce youth employment, these increases may have made it more difficult for young Canadians to find work this summer. Policymakers should review any policy that may limit employment opportunities for young Canadians.

Summer jobs aren’t just an important source of income; they are also an opportunity to gain experience, knowledge and connections, which can provide benefits for a lifetime. Canada’s multi-year summer job slump isn’t just a seasonal problem; it’s a serious long-term challenge that may cause lasting harm to a generation’s economic future. Policymakers should treat it as such.

— Ben Eisen is a senior fellow with the Fraser Institute.