Canadian unemployment is world class amounts of bad, but it’s even worse if you’re a young person in the country. OECD data shows the rate of unemployment amongst member states. Canada is currently a big stand out, with the highest rate amongst G7 countries. The unemployment trend isn’t evenly spread out though, with young people overrepresented. The disproportional hit young people are taking is leading to a k-shaped recovery. Typically when these are formed, further demographic inequality is forming.
What Is A K-Shaped Recovery?
A K-shaped recovery is when two divergent trends emerge after an economic shock. It tells us a trend is recovering at different rates, time, or velocities. When this happens, two segments begin to look like the letter “K” on a chart. To put it bluntly, it means one area of the economy is being neglected, or in some cases targeted for slower growth. Today we’re specifically looking at how youth unemployment has been evolving.
People dismiss youth unemployment as not important, largely because they don’t understand what it means. Youth unemployment is defined as the rate of people under the age of 24 that are actively seeking work. It’s a mistake to think these are just kids with a part-time job, since many have already graduated from college. When this demographic has a high rate of unemployment, a host of problems crop up.
High youth unemployment is a mismatch between labor and jobs. Countries with aging populations can see people retire faster than youth are employed. This results in an increasing dependency ratio, and a higher economic burden later on. Young people also face a host of other personal issues. Delayed savings and investing for retirement, buying a home, and generally a poor quality of life. The failure of one demographic also tends to be a liability of the next generation as well. That means a little neglect for an area of the economy today, can turn into a massive problem later. Now, let’s see where we are with youth unemployment.
One In Five Canadian Youth Are Unemployed And Looking For Work
Canada’s unemployment rate is high, but youth unemployment isn’t even visible without a telescope. The general rate of unemployment came in at 9.4% in January, up 8.8% from the previous month. Those 25 and older had an unemployment rate of 7.78%, up 6.88% over the same period. Youth unemployment was an astronomical 19.7% in January, up 10.67% over the same period. This means young people are overrepresented in the growth of unemployment. As you might have guessed, it looks like a K.
Canada’s Unemployment Rate Is Heading For A K-Shaped Recovery
The unemployment rates of Canadian youth, and those 25 years and older. Source: OECD, Better Dwelling.Canada’s Youth Unemployment Rate Is Unusually High For An Advanced Economy
Canada’s youth unemployment is also unusually higher compared to other advanced economies. The latest reported data for the G7 had an average youth unemployment rate of 12.7%, which is 35.73% lower than Canada. As for the OECD average of 37 advanced economies, the youth rate of unemployment is 14.4%, about 26.78% lower. Canada’s rate of youth unemployment is almost double that of the US, and just behind the Slovak Republic in the OECD.
Canadian unemployment is lagging, but youth are disproportionately impacted. Canada’s youth unemployment is rising at a much faster rate than older people are seeing. This is creating a distinct divide within the country, and starting to turn into a k-shaped recovery. Canada’s youth unemployment rate is also significantly higher than its G7 and OECD peers.
The issue is going to become much more complicated with real estate affordability. Canada’s home prices are the fastest rising in the G7, despite leading in unemployment. The government is flooding the economy, but it’s almost exclusively just inflating asset prices. None of this cash is reaching youth in a gainful or sustainable way. In fact, it’s just fueling further inequality.
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Not too surprising as youth tend to work retail jobs that would be impacted by pandemic and shutdowns.
Unemployment rates don’t include students. These are adults, likely with degrees and diplomas, that are unemployed.