Gen Z is facing the worst youth unemployment rate in decades. Here is how it's different

CBC

a day ago

Graduation cap in hand, Sarah Chung is posing for photos in school regalia ahead of her convocation ceremony. The campus atmosphere is joyful, but what comes next is sobering: this honours student is graduating into one of the worst youth labour markets seen in decades.
"It's bleak," said the 23-year-old graduate of the University of Calgary's media and communications program. She hasn't been able to find a job in her field and said she intends to pursue a master's degree.
"I believe that it's tough just because of everything that's happening with the economy, with our society and with politics," she said. "There's a whole [lot] of talk about 'there's a recession coming.' I'm not an economist, but I can also see it as well."
Chung is part of a generation facing Canada's highest youth unemployment rate in about a quarter-century.
Apart from the pandemic, Canadians between the ages of 15 and 24 are facing the highest youth unemployment rate this country has seen since the mid-1990s, according to first quarter data from Statistics Canada.
At that time, Jean Chrétien was Canada's prime minister, Gen Z was but a twinkle in their parents' eyes, and the global workforce had yet to be transformed by social media, gig work and artificial intelligence.
Fast forward to 2025, and Canada's youngest workers are grappling with a perfect storm of economic conditions: an inflation crisis that came on the heels of a pandemic; a surge in population growth that has outpaced the number of available jobs; and now, a country teetering closer to recession as the U.S. trade war wreaks uncertainty on the economy.
One expert says youth unemployment can be a "canary in the coal mine" that foreshadows broader troubles in the labour market.
"It's kind of an early warning indicator," said Tricia Williams, director of research at Future Skills Centre, a Toronto Metropolitan University lab dedicated to studying the future of work.
"It's not just about getting jobs and skills experience. It's about the larger structural supports and the environment that young people are coming into."
Labour market whiplash
The Canadian labour market has endured a kind of whiplash in recent years.
After pandemic-era restrictions were lifted, companies celebrated with a hiring spree — the economy regained jobs it lost during the crisis and Canadian youth reaped the rewards of a summer job boom.
But employers were soon struggling to find workers and fill postings, a result of the workforce having shrunk during the pandemic. The federal government and public policy experts prescribed higher immigration as an antidote to the shortage, which led to a rise in the Gen Z and millennial working population.
Hiring sentiment "was really high coming out of the pandemic, which probably was never going to last," said Brendon Bernard, a senior economist at Indeed who closely follows youth labour market trends.
As the hiring backlog cleared, other conditions started to slow the economy down, he added.
The onset of a fierce inflation episode in mid-2021 triggered a domino effect: consumers pulled back on spending and the Bank of Canada began an aggressive interest rate hike cycle, leading businesses to delay hiring as economic confidence deteriorated.
Older workers started working second jobs to pay the bills during the affordability crisis. Some experts suspect that the automation of routine tasks could be leading to fewer entry-level opportunities, but there isn't enough data to say how widespread this is.
"As things have turned back and employer appetite has fallen back down to earth, the youth employment situation has weakened," said Bernard.
'It is disheartening'
Youth unemployment started ticking back up in the spring of 2024. At the same time, the number of young people not in education, employment or training — an economic measure called the NEET rate — has risen among youth in their early 20s, mainly driven by non-students having trouble finding work.
Bernard said there was some cautious optimism at the beginning of this year, when the labour market seemed to be stabilizing. But the Canadian economy has been rocked by U.S. trade war uncertainty since April, potentially stifling the hiring appetite as the overall unemployment rate rises.
"It is disheartening," said Thivian Varnacumaaran, an electrical engineering student in his final year at York University who estimates that he's applied for 400 to 500 jobs — with no luck — since he started searching in December.
"I wouldn't say I'm pessimistic, but I'm really realistic about the situation," the 25-year-old added.
Charles St-Arnaud, chief economist at trade association Alberta Central, says the economy is now "sluggish" even without having breached recession territory. He expects more signs of deterioration in the coming months, and noted that young people will likely bear the brunt of those conditions.
"Often businesses do what I would call the 'last in, first out' type of strategy when they reduce headcount," said St-Arnaud. "The younger population that has been just hired are more at risk of being laid off in a downturn."
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The number of temporary foreign workers hired in Canada ballooned over the last two years — particularly in food and retail industries — and the youth unemployment rate has soared alongside it. Andrew Chang explains the government changes that led to the hiring spike, and why economists believe it's having a serious impact on both young job seekers and the broader economy.
The scars of unemployment
The bleak hiring landscape has some young people taking jobs just to stay ahead of the bills.
"I spent two hours sweeping yesterday, and I have a mechanical engineering degree," said 24-year-old Ben Gooch of Dundas, Ont.
The McMaster graduate is working part-time at a garden centre to cover some of his living expenses, having applied for upward of 100 jobs since December with only a handful of interviews to show for it. "I feel like I'm just throwing darts out at a wall and hoping to get lucky and hit something."
Data shows that it's fairly common for young graduates to work in a job that only requires a high school diploma.
But Canadian research has shown that being unemployed at a young age during a recession can lead to a persistent but non-permanent earnings loss for many years after — a well-studied phenomenon known as " wage scarring." Other research also suggests that entering the labour market during a recession can impact a person's health outcomes.
"Where it can lead to scarring — I mean, we might think of it as sort of a temporary blemish — but it can have long term implications when the economy goes into a serious recession," said Miles Corak, an Ottawa-based economics professor at the City University of New York's Graduate Centre.
"Long-term earnings prospects are dampened for people graduating during the recession — not because they're not getting jobs, but eventually they fall into a part of the labour market that isn't as high-paying, in types of occupations that they didn't anticipate doing," said Corak.
The economic downturns seen in Canada during the early 1980s and 1990s show the impact of that scarring.
Youth unemployment reached a peak of 18.3 per cent in 1983, and rose again to 17.2 per cent in 1992 and 1993, with real wage declines observed among the 17 to 24 cohort in the years afterward.
'I'm kind of waiting for life to start'
The lack of opportunities for young people aren't good for the rest of the country either, said Williams, the researcher. "Young people are a treasure of resource that we need to support and also yield dividends from," she said.
Corak offers a different perspective. "I'm not so certain that it impacts the economy [so much] as the nature of our economy gets imprinted more clearly on younger people," he observed.
Some young people, he noted, are doing very well and earning more than their parents did, while others are losing ground. "What we're seeing is many young people much more stressed, and running faster on a treadmill to stay still."
Lately, Gooch has been reflecting on where his parents were at this stage of their lives. By the time they were in their mid-20s, they were working on their careers, owned real estate and were building a life together, he said.
The young engineer hasn't given up on his search — he's applying for jobs across the country and abroad, both in and out of his field. He's accepted that he doesn't know what his circumstances will look like in a year.