Recent reports indicate that the employment situation for young people in Canada is even more dire than that of the general population. A study by CIBC found that 420,000 aged 15 to 24 are neither employed nor in school, and the youth unemployment rate for May was 13.6%, nearly double the overall rate.
What’s worse, the June employment outlook survey, conducted by Manpower Canada, found that only a fifth of employers are planning to increase hiring in the near future, the lowest level in three years.
Time Magazine, among others, has attempted to place the blame for the high rates of joblessness among young people on a sense of entitlement and unrealistic expectations. While there is probably some truth to this assessment of the new generation, it comes across as the stereotypical griping of old men about how much better things were when they were young, and amounts to little more than idle scapegoating. The phrase “blaming the victim” springs to mind.
In reality, the problem of youth unemployment is a general symptom of weak overall economic conditions, not of the laziness or self importance of young people. Perhaps more importantly, however, it is also a consequence of labor regulations that make hiring more costly. When employers are unable to hire as many workers as they would like, they prefer to select older workers with experience over new entrants to the labor market in order to reduce turnover costs.
Measured in purchasing power parity, the average hourly minimum wage in Canada is higher than that of every other country besides Luxemburg, Belgium, France and Australia. While minimum wages only affect entry level service sector jobs for the most part, these are the jobs that young people typically get in order to start building experience and learning how to work. If they are missing out on these sorts of jobs early in life, they will be at a competitive disadvantage when they get older and try for more professional jobs, not having had the experience of learning to cope with the rigors of the workplace or having references to vouch for their abilities.
Canadian labor laws still favor unions (although their influence has shown recent signs of weakening) which also tends to keep wages above market levels and crowd out younger, less experienced workers. Occupational licensure laws serve a similar function, preventing entry into many fields due to the extensive costs, both of time and money, of being legally permitted to work.
As bad as the youth unemployment problem is now, it is only likely to get worse as older, experienced workers retire or die off, leaving behind a workforce that is still largely unskilled, inexperienced and unprepared to take up the mantle of their predecessors. When that happens, we are likely to witness a major slowdown in the economy as resources have to be diverted to training a new crop of workers all at once, while productivity will drop off until such training is complete.
By maintaining a regulatory system that handicaps the young, Canada and other advanced countries are sowing the seeds for future labor problems far worse than anything we are seeing today.