Do you know anyone in the 15- to 24-year-old age bracket? If you know 10, odds are that at least one of them is unemployed. While the national unemployment rate (as of March 2013) is a relatively reasonable 7.2 per cent (“reasonable” provided that you’re not one of the 7.2 percenters), the rate for 15- to 24-year-olds is double that at 14 per cent. Here we look at some of the reasons why, and the implications of underemploying our youth.
Why So High?
When the world’s stock markets collectively imploded in 2008, many would-be retirees realized that their anticipated savings had nose-dived. So, rather than retire early, many have chosen to stay in the workforce until they’re 65 (and even beyond), and so there’s a trickle down effect of jobs not becoming available.
The recession also led to many layoffs. Now, when job openings do appear, younger workers find it impossible to compete with their more-experienced elders.
And it’s not just experience they’re lacking. In March, the C.D. Howe institute released a report suggesting that “a mismatch of skills and jobs” was largely to blame. The report called for a federal government to emphasize skills training, particularly for the disproportionately underemployed youth labour market, to help better match the workforce to currently vacant jobs.
What Are The Impacts?
At the end of January, TD Economics looked at the long-term impacts of youth unemployment and concluded: “Being unemployed at a young age can have a long-lasting impact on an individual’s career prospects.” It seems that being unemployed right about the time you first enter the labour market will negatively impact your earnings for years after you do finally land a job. The financial industry’s term for this painful experience is fitting: it’s called “wage scarring.” To put a number on that ugly term, TD estimates that over the next 18 years those effected will collectively lose $23.1 billion in lost wages.
To combat this, many students are going back to school to attain second and even third degrees. But every year that they’re not earning money, they’re building up debt. The Canadian Federation of Students keeps a tally of the collective amount of money Canadians owe under the Canada Student loans program. The number is at more than $15.2 billion and rising.
Leaving The Nest
One direct impact of low employment is that young people are staying at home longer, or moving back in with their parents after brief ventures on their own. While it hasn’t had an effect yet, a lack of young people renting their first apartments and eventually buying their first houses could drive help down the national housing and rental markets.
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The Bright Side of the Pond
As bad as 14 per cent unemployment sounds, pity our young cousins in Europe and other parts of the world. According to TD Bank, the overall unemployment rate for 15- to 24-year-olds in Europe is 24.4 percent, but those numbers are skewed up by astronomical rates of unemployed youth in Spain (57 per cent) and Greece (58 per cent).
An International Labour Organization study found the worst regions, on average, were the Middle East and neighbouring North Africa, where slightly more than one in four young people (27 per cent) were unemployed.
This post is also available in: French