Youth Unemployment: A 'Bust' Priority

by David K. Foot

Reprinted from the Globe & Mail, October 14, 1997.

The recent Throne Speech outlined the federal government's legislative agenda for the next year. Prominent among the priorities was a concerted effort to combat unemployment among Canada's young people. This was backed up by a re-announcement of a $90-million commitment to federal participation in Career Edge, a private-sector consortium that provides internships of up to one year for job-seekers needing work experience in new careers. This new program will provide internships in the federal public sector for 3,000 people aged 15 to 30 over three years at an annual maximum of $15,000.

Such an important and much-need initiative was long overdue. Getting young Canadians into their first jobs has always been a major challenge, and with the onset of the recession of the 1990s the youth unemployment rate soared to unprecedented levels.

Or did it?

At about 17 per cent, the unemployment rate among workers under 25 is nearly twice the national rate of 9 per cent. In 1996, an average of 391,000 youths were unemployed - a tremendous waste of an important national resource, especially since these people are supposed to have the most up-to-date skills needed in a technologically fast-moving economy. Moreover, successfully integrating young employees into the work force is essential not only to retain their skills in this country, but also to secure their contributions to a pension plan urgently in need of them - which was another of the Throne Speech priorities.

However, historically the youth unemployment rate has averaged about twice the national unemployment rate. It has always taken time for young people to gain work experience. In fact, in recession-bound 1983, when the peak of the baby-boom generation was under 25, the unemployment rate among workers under 25 averaged 20 per cent, and there were more than 600,000 young unemployed job-seekers - over 50 per cent more than today.

History has even more lessons. In 1983, almost half (48 per cent) of the unemployed were under 25. Today, this same group accounts for slightly more than one quarter (27 per cent) of the unemployed. In 1996 there were more Canadians unemployed in the older 25-to-34 age group (396,000) than under 25 (391,000). That includes the disadvantaged Generation Xers born in the back quarter of the baby boom in the first half of the 1960s who are now over 30. Favourable public policy has, once again, passed this group by.

And while the unemployment rates for older workers are lower than for younger workers, their relative position has deteriorated significantly. The 35-to-44 unemployment rate was 87 per cent of the national average in 1996, up from 67 per cent two decades before. This group's share doubled from 12 to 24 per cent of total unemployment over the period. A similar story can be told for those of older ages.

Over the two decades from 1976 to 1996, the number of unemployed in Canada almost doubled from 754,000 to 1.47 million people (down slightly from 1.65 million in 1993). Over this period, however, unemployment almost quadrupled in the 35-to-44 age group and tripled in the 45-to-54 age group, whereas it increased by only 8 per cent in the 15-to-24 age group.

So: Youth unemployment remains a major problem that requires urgent policy attention. But is it at unprecedented high levels? Clearly not. The unemployment problem has aged with the baby-boom generation. For every unemployed young person under 30, there are now almost two unemployed older workers. The target of the Throne Speech is the baby-bust generation, born over the late 1960s and 70s, who are far fewer in number than the boom generation who preceded them or the echo generation, born in the 1980s, who followed them.

While it might be argued that the federal government is providing demographic leadership at this time in preparing for the echo generation, who are now about to enter the labour force, the Throne Speech largely ignored the unemployment problem that has boomed in the work force over age 30. Further leadership is necessary in both the public and private sectors if we are to get Canada back to working to its full potential.

David K. Foot is a professor emeritus of economics at the University of Toronto, and co-author of the Boom, Bust & Echo books.