As the economy slows and unemployment rises, the discussion has inevitably turned to the plight of youth in Canada who are facing the worst youth unemployment rates in decades. As one report has stated: “Apart from the pandemic, Canadian graduates between the ages of 15 and 24 are facing the highest unemployment rate this country has seen since the mid-1990s, according to first quarter data from Statistics Canada.” Not only are recent graduates faring poorly but even summer employment is at a premium and some of the blame has been placed on the recent admission of record levels of low-skilled migrant workers. When combined with persistently high prices including the cost of housing and economic uncertainty the current situation particularly with Generation Z is being seen as anxiety inducing and the worst ever.
Figure 1 plots the monthly youth unemployment rate obtained from Statistics Canada covering the period January 1976 to April 2025. Current youth have experienced the highest youth unemployment rate ever in the recent past – that of the pandemic – but the COVID-19 Recession was not a standard recession in that much of the downturn was policy induced because of shutdowns and lock downs which is some countries lasted longer than others. Youth unemployment in Canada peaked at 30 percent during the pandemic and was the highest ever during the 1976 to 2025 period. However, what is notable is that even including the pandemic in drawing a linear time trend (which would serve to pull the line upwards), there is a noticeable downward trend in youth unemployment rates over this entire period.
As for the claim that the current youth unemployment rate of 14 percent is the worst since the recessions of the 1990s, it was higher during the Great Recession of 2008-09 – at over 15 percent – and even higher during the recessions of the early 1990s and early 1980s. Indeed, if one is looking for anxiety causing economic events for Canadian youth, the period from 1970 to 1995 saw recession over 1973-75, stagflation during the mid and late 1970s, a recession in 1981-82, a major stock market crash in 1988 and another recession in 1991-92 followed by the federal fiscal crisis.
It cannot be denied that Generation Z youth and younger Millennials are having a particularly tough time now given that they were born in the first decade of the 21st century and have gone through the 2008-09 Great Recession, the pandemic, a major bout of inflation and now the uncertainty regarding the economy because of the trade and tariff war. However, what one terms as the worst ever seems to have become somewhat subjective and generally refers to whatever is the memory span of the afflicted generation or cohort. And the matter is not helped by what is often the short-term focus of media analysis in terms of time spans that consider a couple of decades ancient history. It often helps to put things in a longer historical perspective which of course is limited by the availability of the data. It also helps to try and measure economic distress more quantitatively and with as broad a measure as possible.
Figure 2 puts together several variables that can be considered as having an impact on the welfare or misery of people in general and youth in particular – alongside the youth unemployment rate are plotted the central bank rate and the CPI All Items monthly inflation rate (seasonally adjusted). It turns out that along with youth unemployment being higher in the late 1970s and early 1980s relative to the present, so were inflation rates and the bank rate. The bank rate meant that mortgage rates for first time home buyers coming onto the market were extremely high and while one can argue that housing prices were extremely low even relative to the incomes earned at the time the fact remains that frequent recessions and job losses combined with rising food prices created challenges for the youth of that era also.
Trying to put the misery of youth today in some kind of historical context requires a more multi-dimensional measure that tries to combine another of factors over time - enter the misery index. The misery index, an economic indicator first created by economist Arthur Okun during the 1970s, was designed to measure economic misery. The 1970s were marked by what is known as stagflation and were characterized by high inflation and unemployment, following the oil price shock and its quite significant macroeconomic impact on everyone including youth. The misery index added the rate of inflation to the unemployment rate, with higher totals indicating more economic distress for the public. While not a perfect measure of economic welfare, the misery index can be useful in gauging the current mood of economic angst and misery. Using monthly data from Statistics Canada, the next chart plots monthly for the period 1976 to early 2025, what can be termed a Youth Tri-Misery Index -the sum of the central bank rate, CPI All Items Inflation Rate and the youth aged 15 to 24 unemployment rate.
As Figure 3 illustrates, youth misery has been on the rise since even before the pandemic. It had been on a persistent downward trend since the early 1990s with the reversal starting somewhere around 2016-17. Misery shot up during the pandemic and after the post-pandemic drop has resumed an upward trend with the present impetus being rising youth unemployment even as the bank rate and inflation have come down. However, the peak period for misery over the entire 1976 to 2025 period based on the measure provided in Figure 3 is not the present but the early 1980s.
A 20-year-old coming onto the labour market in 1981 would have been born in 1961 – ostensibly a member of what is considered the blessed baby boom generation. And yet, 1961 represents the tail end of the baby boom and the tail end of a boom has its own unique dynamics. It is much like arriving at a wedding after 11 pm. The main meal has been served and program of events completed but you can still have a few drinks and perhaps partake of a light midnight buffet dinner. The 20-year-old coming onto the Canadian labour market in 1981 had already seen a recession and stagflation as a teen, experienced a recession in the early 1980s, may have bought a house at double digit interest rates in the early 80s, saw a boom in the mid 1980s, a stock market crash in 1988, and a major recession in the early 1990s (during which many lost the house they had bought in the early 1980s). And if they worked for the public sector in the 1990s experienced either federal and provincial restraint brought about by the federal fiscal crisis. It was not exactly a picnic - I know, I was there - but escaped relatively unscathed though marked with a perpetual risk averse caution.
My point is not that the youth of the past had it harder than those of the present. I really do not know how a current twenty-year-old feels when faced with economic challenges given the experiences and, background and preparation they have had to date. However, youth at any point in history face challenges and the key should be to address the problems they face at a point in time rather than engage in inter generational comparisons of how hard done by someone is or how the past had it better. Much of the current attention especially within the framework of social media seems designed to inflame feelings between cohorts and generations rather than devise and implement solutions to pressing problems like rising youth unemployment or the cost and affordability of housing.
For example, there seems to be a perception that people can be easily divided into generational cohorts, and this division is then used to stereotype the experience of each generation. For example, it is true that older Canadians on average have experienced a windfall in wealth due to the rise in prices since 2010. However, not every older Canadian has a house in Toronto or Vancouver that represents a multi-million-dollar nest egg. Even the much-maligned baby boomers have had a more diverse set of economic experiences than one might expect and not all are effortlessly gliding from one shopping and travel experience to another funded by their bounteous home equity. Growing up is a tough experience and we need to help those having a tough time, but we should start by being a bit more grown up in the analysis and conversations that we have.
