Youth unemployment isn’t a real problem






Political leaders rarely vow to tackle unemployment for redheads.

And they hardly ever, if at all, promise to create jobs for short people.

Which leads me to wonder why they’re so obsessed with youth unemployment.

In last week’s Toronto mayoral debate, the herd of would-be leaders tripped over themselves to explain how they would tackle the scourge of young adults not earning bread.

It’s an old story.  For the last decade, the federal NDP and Liberals have been promising bananas for businesses who hire youth.  They also, apparently, support ‘evidence-based policy.’

Youth unemployment is one of those things that we’re supposed to be worried about, like Africanized killer bees or gang initiations.

Youth = good.  Unemployment = bad.  If something bad is happening to something good, it must be a big problem, right?

Problem is, leaders have a tendency to jump on this issue without actually looking at the issue encompassing it.  They’ve basically licked off the creamy part of the Oreo and discarded the rest.

Here’s the most important set of statistics —per the Statistics Canada Labour Force Survey — that underline just how much of a non-problem this is.

First off, it’s important to remember that the data grouping we usually look at isn’t really ‘youth.’  StatsCan groups its age groups as 15 to 24, 25 to 54, and 55 to 64.  So the ‘youth’ bracket doesn’t include that age when a lot of 20-somethings actually settle into careers, and it includes high school students.

The overall unemployment rate for the 15 to 24 age bracket is just under 14%.  Gasp, horror, etc.

That’s more than twice as high as the 25 to 54 age range!

The normal response to that is to say ‘hey, look, a problem.’

But here’s the issue — if you break down that unemployment rate, it makes sense.  The youth unemployment rate for those kids who have no degree, certificate or diploma of any kind (meaning they didn’t graduate high school, probably because they’re still in it) is 23%.  That number shrinks to 12% for those who graduated high school, and falls to 9% for those who have finished university.

Still pretty high, though, right?

Well part of the issue is that the labour force is also quite a bit smaller.  The youth participation rate is 64%, which is some 20% lower than the next age group.  You can chalk that up to a handful of reasons — they’re in school, they’re on a gap year, they living on a trust fund, or, they’ve given up looking.

If you look at the employment rate — which is the number of people working, as a percentage of the general population —youth who have received any sort of degree or diploma are more likely to have a job than those 55 to 64.

Are we fretting about pre-retiree unemployment?

This isn’t a new thing.  The youth unemployment rate in 1992 was nearly 4% higher than it is now.  (Admittedly, the general unemployment was similarly higher.)  The general youth employment rate has gone up-and-down for two decades, but we are currently right on the average.

But youth unemployed has creeped up since the 1980s.  There’s also the obvious reality that youth unemployment is the product of a growing middle class.  The more that families can afford to support their children, the less the children need to work.

Important, too, is that youth unemployment isn’t steady across the country.  General unemployment skews youth unemployment higher, as a bad job market sheds unskilled workers first, and tends to force mobile job-seeking youth to move away.

The youth unemployment rates in Nova Scotia and Ontario, for example, are 9% higher than the general rate.  In Alberta and Saskatchewan, it’s only 4%.

Consider this: the unemployment rate for young workers in Alberta who have finished college is actually lower than the unemployment rate for the 25 to 54 age group.

So the obvious point is that: if you want to fix youth unemployment, make your economy better.

But maybe there are ways that the government can make things for young workers less bad.  The problem is, the NDP/Liberal plan isn’t going to work.

Anyone entering the job market for the first time naturally has less experience, less training and — more so in unionized shops — less seniority.  That means if bad times come around, they’re the first to go, and the last to be re-hired.  You can try to distort the system to leverage them, but why?  They are less desirable employees.

That’s not to say that we should just not care about young workers because they’re crappy employees.  Rather, we should probably look towards making them better employees without offering corporate subsidies to make companies less competitive, by forcing un-skilled workers on them.

Harper’s job grant is a pretty good example of how to do things properly.  It specifically targets those lacking required skills, but who don’t qualify for EI —like, of course, most youth.

Of course, you can always make the case that on-the-job training is the best kind.  And maybe it is.  But throwing cash at companies to hire young workers doesn’t actually offer any job security.  What’s more, the NDP and Liberal plans have usually suggested some form of EI deductions or tax breaks for the companies —the companies would still need to cover much of their salaries and, say, health benefits.  If you ponder on that for a few minutes, you realize the fundamental flaw: for skilled labour, companies tend to be willing to pay premium rates for higher-skilled workers, whereas in lower skilled jobs, companies are more willing to take lower-skilled workers if they come at a discount.

So the grand scheme of trying to pay-off companies to hire young workers might be a big boon to fast food joints and it may, as a result, lower the youth unemployment rate, but there’s no guarantee that it would put youth on a career path and actually fix a structural problem.

Paradoxically, the NDP also want to institute a federal minimum wage, which is a sure-fire way to exacerbate the youth unemployment problem.

While there’s lots of good reasons to have a minimum wage in line with what the market can support, raising the cost of labour reduces employment in the short-term.  And, of course, youth are the first to go.  You can probably argue that everyone is better off in the long-term when low-skill workers get paid better, but that doesn’t erase the initial problem.

Piling on, I’d also argue that we might be overstating the problem by ignoring the trend of freelance and contract work.  Aggravatingly, StatsCan doesn’t break-down self-employment statistics by age, so we’ll just have to make a leap in assuming that younger workers are more likely to be working contract jobs.  In that scenario, they might consider themselves either unemployed or outside the labour force — indeed, contract workers might get EI while taking odd jobs — but they’re still working.

So it’s possible that our failure to capture really accurate data on freelancer workers is skewing the field a bit.  And it also means that we’re ignoring a problem — freelancing, economically, sucks.

You’ve got fewer labour rights, no employer medical benefits, and a remarkably precarious working situation.

The NDP, here, hit on some novel ideas when they proposed an urban worker strategy.  The obvious reality is that if you can make life better for young self-employed workers — making sure they get paid on time, creating a non-court recourse to go after delinquent employers, cracking down on unpaid internships — you can make that avenue more viable.

But you know what the best part of about being a youth is?  You grow out of it.

Youth unemployment is inherently short-term.  As young workers get more experience, work odd jobs, freelance, go back to school; they become more desirable workers.

So maybe we should stop clutching our pearls and, unless we’re interested in sending Tiny Tim back to work in the factory, stop tilting at windmills.



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Follow Justin Ling on twitter: @Justin_Ling

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