Unemployment among those aged 15 to 24 has seen a decline from 14.6 percent last September to 12.6 percent in July, but the rate is still high compared with Canadians in other age groups, according to a study published by TD Bank on Aug. 12.
The youngest workers—teenagers aged 15 to 19—have been disproportionately affected by the currently weak job market, partly because of shrinking employment opportunities in sectors that traditionally employ younger workers.
Accommodation and food services and retail trade account for most of the decline in youth employment, with roughly 25,000 fewer young workers employed in the two industries than in 2019. Both are highly cyclical sectors that traditionally employ the highest concentration of young people.
The accommodation and food services sector, in particular, was greatly impacted by the pandemic and has been slow to recover. However, younger workers have maintained and even gained their share of employment within the sector. This suggests that the sector’s smaller overall size is what’s driving the decline in overall youth employment, and that if the sector continues to recover, those jobs could come back.
The study indicates that there are also more youth competing for jobs due to strong population growth. In particular, the number of those aged 15 to 24 increased by 360,000 between July 2023 and now, with those aged 20 to 24 accounting for more than 60 percent of that growth.
The rise in the number of youth aged 20 to 24, combined with an increase in unemployed youth who are 15 to 19 and entering the labour market from school, suggests that underemployment among older youth may be crowding out younger workers from jobs they would traditionally have filled, the study indicates.
However, the study suggests that a current decline in youth population growth is expected to cause the labour supply to stabilize.
The study finds that youth unemployment in Canada is not likely being affected by the rise of artificial intelligence. The rate of unemployment among younger workers aged 15 to 19, in particular, began separating itself from the larger economy prior to the COVID-19 pandemic, before the emergence of AI and is closely tied to the rise of remote work. This has reduced opportunities for young people to learn skills on the job and from mentors, the study indicates.
“AI may prove to be an additional headwind over time,” “but the evidence today points more broadly to a changing model of workplace organization having a large impact on entry-level jobs.”
